Qualifying Offer FA strategies

[Transmogrified Tiger]

I wanted to start a new thread because I think the Qualifying offer is still a bit underdiscussed in terms of how much of a limiter it could be to the Cubs offseason plans.

 

One caveat to begin with is while all the reporting I've seen expects the QO to still exist this offseason, it's possible the new CBA changes or removes it. The expectation is with a few exceptions, most Free Agents are going to wait to sign until after the new CBA is signed, and if there's any rumbling that the QO penalty will be removed/lowered, those folks would be extra incentivized to wait. But for now, let's assume the structure remains the same. A refresher on the actual consequences of signing a QO FA is in the spoiler below if you need it.

 

 

Stealing from a BN article here, but that structure means the Cubs, if they sign a QO player this offseason, will lose:

 

- Salary to pay that player

- Their 2nd draft pick(probably in the 50-55 range) and associated draft bonus pool. For reference, Triantos was taken with pick 56 this year.

- 500k in IFA money, roughly equivalent to Yohendrick Pinango (signed for 400k)

 

That's different than smaller market teams, especially successful ones. If the Brewers or Cardinals sign a QO player this offseason, they lose:

 

- Salary to pay that player

- Their 3rd draft pick(probably in the 65-75 range) and associated draft bonus pool

 

 

I spell this out because this isn't a trivial price to pay, in a league where player development and the success of pre-FA players is increasing in importance, giving away what amounts to a Top 10 prospect and a Top 30-50 prospect for the right to pay a FA salary can't be taken lightly. To that end, even high spending successful teams don't regularly make it their business to pay that price. There have been 35 FAs that rejected the QO in the last 5 years. The most successful big market teams in the 5 years that followed(Dodgers, Astros, Yankees, Red Sox) have paid the penalty to sign one of those 35 players twice: Gerrit Cole to the Yankees, and AJ Pollock to the Dodgers(the Dodgers gained QO compensation for Grandal that year). The Nationals also signed a QO FA in the same year they gained comp for another twice(Murphy/Zimmermann, Corbin/Harper) if you want to include them.

 

What this tells me is even well run teams that spend oodles on payroll are hesitant to give up the player assets to sign a FA unless they have the 'house money' of that benefit coming back to them elsewhere. I don't think that means QO FA should be off limits to the Cubs as a result, especially when it looks like an abnormal amount of QO FA's will be on the market thanks to the end of CBA/Covid weirdness in classes, but it does indicate they should have a good reason.

 

I made this a new thread because I'm curious what everyone thinks the target or limits should be for signing a QO, since I'm not sure exactly how I feel about it quite yet. What I feel most confident in saying is 1) given the FA class it's very unlikely signing 2 or more QOs is a good idea and 2) any QO player you sign needs to have pretty big upside(5+ WAR) even if it's far from guaranteed.

[Gilby]

Given the influx of low minors talent the Cubs brought in over the past year, I could see them willing to sign a QO free agent. As you said, I could also see them reserving it for a top level talent (Correa, Seager, Semien, or maybe Rodon if you trust his health ((and I think they showed interest last offseason)). I think there's virtually no chance they sign Story, Taylor, Conforto, etc for this reason.

 

There is still some good talent out there without that QO attached like all of the recent former Cubs and Stroman and Gausman. Though of course every other team will be thinking that too.

[Bertz]

One of the most interesting things to me is that teams are afraid to sign more than one QO guy, when the costs come down with each successive player (since your first rounder is forever protected). I'd think logically you'd want to sign 3 or 4 at once, and then go a few years before doing it again. But maybe that runs into the real life issue of winning those consecutive bidding wars in one offseason? Or maybe the optics of wholly punting the middle rounds of a draft?

 

For this Cubs team specifically, I can see it two ways. On the one hand the team has a ton of pretty good prospects, especially at the lower levels. If there was ever a team that could afford to punt rounds 2-4 of the draft it's this one. On the other hand, when you have a top 10 pick, part of the appeal is spending ~20% of the slot later in the draft. So you get your top 10 talent with your top 10 pick AND another top 30 talent with your second round (60ish) or third round (90ish) pick. Does that mean signing a QO guy is going to be verboten because of the opportunity afforded by our bonus pool? Or is it easy enough to shift those funds to round 11?

[Transmogrified Tiger]

One of the most interesting things to me is that teams are afraid to sign more than one QO guy, when the costs come down with each successive player (since your first rounder is forever protected). I'd think logically you'd want to sign 3 or 4 at once, and then go a few years before doing it again. But maybe that runs into the real life issue of winning those consecutive bidding wars in one offseason? Or maybe the optics of wholly punting the middle rounds of a draft?

 

I think there's a logic to this, but probably good reasons teams don't do it.

 

- One is not all Free Agents are created equal, but the QO treats them the same. If I'm a big market team who cares less about dollars, then I'd probably prefer to have e.g. Harper, Cole, and Correa if I'm giving up my draft picks than Correa, Ray, and Conforto.

 

- Another is the bidding wars thing you mention, though if there was a year this was less of a concern it's probably this year with the likely number of QO FA's.

 

- Another is around flexibility. You can say that you'll go deep on one class and then not do so for several years to avoid cratering your farm system, but the Dombrowskis of the world probably don't have that discipline, and other FO's probably understand they can always open that box when next year gets there and want to stave off that risk.

 

- The last one is that there's likely cascading effects from having such a lost year in terms of young talent acquisition, especially since the teams most likely to pull off 3-4 QO FAs are big market teams without competitive balance picks and who lose IFA money for each QO FA too. You can be smart and make up for a slight handicap in a given year, especially if you're this year's Cubs and the ACL/Low-A teams are stuffed with promise. But if you have to functionally sit out IFA and have 1 pick in the top 150 or so that's a pretty severe problem.

 

Layer on that increasingly FAs are more 31 year olds than 27-28 and you get even further from the benefit being worth the risk/cost.

[Transmogrified Tiger]

Brett points out that while the QO concern is real and the consequence for the Cubs is as significant as it can be given the current rules, there's a fair number of teams in a similar boat: https://www.bleachernation.com/cubs/2021/10/27/yes-the-cubs-have-a-qualifying-offer-problem-in-free-agency-but-so-do-a-lot-of-other-teams/

 

As a reminder, because they are a larger-market team that is not over the luxury tax, the Cubs’ “cost” for signing a qualified free agent is their second highest pick in the draft (the number 7 pick in the second round), the bonus pool space associated with that pick, and $500,000 in International Free Agent bonus pool space.

 

Other teams in that particular tier: Angels, Astros, Athletics, Blue Jays, Braves, Cardinals, Giants, Mets, Nationals, Phillies, Rangers, Red Sox, White Sox, Yankees. Among those teams, the Angels (13th in the second round), Mets (14th pick overall, compensatory), Nationals (5th in the second round), Rangers (3rd in the second round), and Red Sox (41st overall, compensatory) have similarly-valuable second-highest picks at stake. (And even for other teams in this group, the pick they have at stake is only about 10 to 20 spots below the Cubs’ second rounder, so it isn’t THAT much better.)

 

Moreover, there are two teams – the Dodgers and the Padres, per MLBTR – that are over the luxury tax, so the cost to them to sign a qualified free agent is their second highest AND fifth highest picks (and bonus pool space), and $1 million in IFA money. So that’s even worse.

 

So, you could argue that, while the Cubs have a “Qualifying Offer problem,” so do the Dodgers, Padres, Angels, Mets, Nationals, Rangers, and Red Sox. And the other large-market clubs aren’t that far off.