MLB free agency: Everything you should know about the new qualifying offer system

Take a deep breath folks. The smell of hot, burning stove is in the air. When the temperatures go down, the stoves get going, and you’re going to hear a lot of a random and technical terms over the next few months that you’ve pretended to know the meaning of. The most current one you’ll blankly nod along to? “Qualifying offer.” But fear not, we’ve got the answers to all of your questions about what that entails and how it can effect your favorite player.

What is a qualifying offer?

A qualifying offer is basically a move to cover your butt from every angle. If teams want to receive compensation in the event that one of their free agents signs with another team, they first have to extend a qualifying offer to them.

The offer is only for a year and is a fixed amount decided by the league. This year it’s $17.4 million. Compensatory picks are handed out based on the previous season’s standings, just like normal draft picks.

Hold up—CBA? What’s that? The acronyms hurt.

The CBA is the Collective Bargaining Agreement - the agreement between Major League Baseball and the MLB Players Association that breaks down the rules and financial structure of baseball. It is revised every five years with its most recent ratification coming last winter. Typically the revisions are mostly about minimum wage for players and trade deals—that’s where the QO comes in. (Sidebar: The most recent CBA was actually the one that called off home field advantage in the World Series going to the winner of the All-Star Game.) If they can’t come to terms with each other, guess what? No baseball. It’s always nice when there isn’t a baseball lockout.

Who is eligible to receive a qualifying offer?

Players who have been with a team for a full season and have never received a qualifying offer before are eligible, so pour one out for that midseason trade addition you were really hoping would stick around. Where the the most recent CBA comes into play here is that now players who have previously received a QO are no longer able to be extended one. Players have ten days to decide (until Nov. 16) if they’re going to accept the offer or not and take into consideration their potential on the free agent market.

What’s the salary for a qualifying offer?

The qualifying offer is based off of the average of the 125 highest paid players. This year’s QO is $17.4 million, a $200k increase from last year. Yay inflation!

When will this firestorm of news start?

Teams can extend qualifying offers to eligible players as soon as the World Series ends and have a five day period to pass the paperwork. That would mean Monday at 5 p.m. is the deadline for teams to extend qualifying offers, with the players then having 10 days to accept or decline.

What happens if a player doesn’t accept it?

They hit the free agent market, with draft pick compensation now attached. That sometimes hurt free-agent value in the past, though the new CBA should prove to help players in this situation.

What do teams sacrifice by signing a player who declined a QO?

You know how when the draft rolls around you often see teams picking in the slots of other teams as a compensatory pick? Well part of the reason those exist is because of the qualifying offer system. If a team signs a player who rejects a QO, that team then loses their draft pick to whatever franchise it was the player turned down. Now you don’t have to just nod along in complacency while the 2018 draft picks are announced and the order is weird! The only pick that’s safe is the team’s highest pick.

Another brand new feature of the latest CBA is defining what picks are given up by the team. This now has to do with the franchises’ luxury tax and revenue sharing instead of being the blanket system from before.

If a team went over the luxury tax the season before, it loses its second- and fifth-highest picks in the next year’s draft. If this teams are really playing free and easy, signing more than one free agent that declined a qualifying offer, it loses its third- and sixth-highest draft picks on top of that.

If a team receives revenue sharing, gone goes the third-highest pick. The fourth-highest pick gets tacked on if it signs more than one free agent that declined a qualifying offer.

In the event that a team doesn’t receive revenue sharing or exceed the luxury tax, they would then lose their second-highest pick and $500,000 from international bonus pool money. Signing addition QO defectors also warrants giving up the third-highest pick.

What do teams receive in return when that pettiness pays off?

That handy dandy compensatory draft pick. But it also matters how much the said player signed for with another team. It gets pretty tricky, because of course it does. If the free agent signs a deal worth more than $50 million, and if the team he came from receives revenue sharing, that team gets a compensatory draft pick right after the first round. Cue all those, “Ooooooooooh, that’s what that is,” as the thought clicks in everyone’s head.

If a team receives revenue sharing but the deal is under $50 million, that pick comes after Competitive Balance Round B (following the second round).

If the team that loses a free agent pays the luxury tax, their compensation pick will come further down the line, right after the fourth round is over. If they didn’t pay their taxes (tsk tsk), and also didn’t receive revenue sharing, that pick will come after Competitive Balance Round B.

Okay, now memorize this, you’re getting tested on it later. Just kidding. But do pull up a chair and get your marshmallows everyone, hot stove is going full steam ahead until February.