Qualifying offer as an indicator of FA value

[MNBrew]

Is the qualifying offer a legit determinant of a player's actual market value? Given how the market has behaved the past two winters, I don't think it's anything close to a "universal truth" of the FA market value.

 

I wonder about this especially because of some of the comments out there after we signed Grandal that this move adds lots more fuel to the fire of MLB heading toward an eventual labor stoppage.

 

Is Grandal valuable? Apparently very much so in many people's eyes. He was clearly the best FA catcher on the market this winter. He's also flawed and most of the catching market features mostly players who are flawed, weak overall, or both. Just because LA QO'ed Grandal and he turned it down doesn't necessarily mean the market for him was going to come in above that figure -- though obviously he thought it would (a la Moustakas a year ago).

 

Just like all the media- and agent-driven speculation that Machado or Harper may sign baseball's first $400M contract or have MLB's first $40M player salary (ridiculous!), the QO may be seen as a starting point but it's not necessarily indicative of what the actual market is. That's really determined by what any team -- or just one team -- is willing to pay an available player. And it's been quite obvious last year & this that many teams just weren't going to potentially overpay significantly in salary AND give up a high draft choice.

 

As much as I think players have been schooled by their agents to turn down QO's for the promise of a much better potential payday on the FA market, it sure seems teams have largely discarded the QO and put greater stock in other determinants of a player's worth on the open market.

 

As a secondary point . . . I don't know who Eno Saaris is, but last he kept insisting in a Twitter thread (linked from a BF.net discussion & started by his assertion that Grandal's signing was another sign of a pending labor apocalypse) that Russell Martin's 5-yr. Toronto contract was a viable comp to Grandal. I see his logic in terms of Martin's age and how his skills were viewed on the FA market, but to me he ignores the obvious and thus his logic is highly flawed: Plain & simple, Martin's market was 4-5 years ago. The winter FA market, not to mention the cumulative analytics-based approaches of front offices across most of MLB, has changed drastically in that time. In Martin's FA winter, lots of guys were still getting long-term deals and many of those guys really didn't live up to the value their contracts in the latter years (e.g., see: Russell Martin v.2018). Most GMs nowadays shy away from those except for the rarest of players either ability-wise or for whom their evaluations strongly endorse that a several-year, big-ish deal is a wise move (see: Stearns' reasons why he felt the length & dollars given to Lorenzo Cain were a safe & strong decision). Really, comparing Martin's 2015 FA deal and Grandal's deal now is apples & oranges.

 

So, BF.net populace, what are your thoughts on the merits of the QO and its accuracy as an indicator of a player's worth? Ready. Go.

[reillymcshane]

The QO is actually designed to net teams compensation (a the form of draft pick between rounds 1 and 2) for losing a good player in free agency.

 

It simply takes the mean salary of the Top 125 players in the game and sets the number - right around $18M this year.

 

It really has nothing to do with determining a player's 'value' (although the QO can suppress a player's next contract since a signing team knows they are losing a somewhat valuable draft pick to sign such a player).

[MNBrew]

Right. I get all that. But if that's true, which I believe, then players and the media have no grounds to claim FA offers below the QO figure are an indicator that the market or system is corrupt, too owner-friendly, or outright broken.

[reillymcshane]

Right. I get all that. But if that's true, which I believe, then players and the media have no grounds to claim FA offers below the QO figure are an indicator that the market or system is corrupt, too owner-friendly, or outright broken.

Okay, I get where you are coming from. I throw in my two cents.

 

I think teams are smarter about using their resources better than in the past. They aren't spending just to spend. They are willing shed contracts and avoid long term signings as they rebuild (or tank - whatever you want to call it). We have a new breed of executive/team that establishes a plan to success, and sticks to it. This means finding value on the market. No one wants to be paying Albert Pujols $30M a year to go around the bases with a walker. There are so many examples of teams getting killed by bloated contracts to aging players.

 

Smarter front offices. More teams tanking. It helps set up a trend. Not as many teams will spend. Not as many teams are willing to go with longer contracts. It's part of what you would expect with those things happening. It also means the QO isn't a given to be rejected - and it also means we'll see more and more poor miscalculations by players and their agents on their true market value.

 

All that said, are there other things going on that are contributing to the trends? Has the luxury threshold become more of a de facto salary cap - limiting growth of player salaries? Are owners percentage of profits growing? Are owners operating working together (colluding?) to help keep down salaries and years of contracts?

 

I think the players concerns are that the trends they are seeing are because teams are reaping greater profits - and not sharing them with the players as they have in the past. I don't know what is true. I see different numbers thrown out by people.

 

Sorry for the rambling. Probably didn't really answer your question. I just let the words take me this way. This might have been better for the baseball future financial thread.

[MNBrew]

Not rambling at all. I know the QO's part of the picture of baseball's future finances (and thus a potential angle within that thread), but I figured the QO is also a unique entity in & of itself.

 

Because it means a FA's new team surrenders a pick, which many teams have become less willing to do, the goal of compensating teams for losing a quality FA had consequences that ended up backfiring for many of the MLBPA's membership.

[Thurston Fluff]

While the QO has traditionally lower than what a player could get in free agency that may not always be the case. As reillymcshane pointed out it was essentially there so the team could get some compensation for losing a player. If the free agent market stays this slow one way to boost the market may be for more players to accept the QO. I wouldn't do anything for the Harper's or Machado's of the market but obviously the Grandal or Moustakas types wouldn't lose much. If enough accept to QO it might make teams stop offering it players they really don't want. Then the player would just be selling his service without having a draft pick attached to it.

[Roderick]

They could get rid of the losing the draft pick for the signing team.

 

Then there is no effect on the free agents contract and it will be true market value.

 

They could just give a draft pick to the team that loses the player from between round 1 and 2 in order of the value of the contract given out.

 

The risk is teams agreeing under the table to offer the QO, knowing the player wouldn't accept. So maybe limit QOs to a minimum threshold of contract to gain the draft pick.

[istanbultaye]

Didn't the Brewers have a Qualifying Offer backfire on them early on after the QO change happened?

[xisxisxis]

Here's Baseball Prospectus estimate of surplus value for the first 80 draft picks (based on historical data):

 

 

JosephC can do the exact numbers, but depending on the actual pick, there's some surplus value in the range $2M-$10M depending on pick. Depending on the FA, that could have an impact on what a team is willing to offer. Mathematically if we go with the $1.5M per win based on Graham Tyler's thesis, it seems that the main driver for reduced FA activity is more a rethinking of value of a FA more than the loss of surplus value from the QO pick.

[Ron Robinsons Beard]

Didn't the Brewers have a Qualifying Offer backfire on them early on after the QO change happened?

 

I thought they offered Sheets a Qualifying Offer, and he didn't end up signing with anyone until mid-way through the next season, disqualifying the Brewers from getting a pick. I could be misremembering.

[xisxisxis]

Wasn't it CC Sabathia? We didn't get a pick as the Yankees had already given up a pick?

[Ron Robinsons Beard]

Wasn't it CC Sabathia? We didn't get a pick as the Yankees had already given up a pick?

 

The Brewers got the #73 pick instead of #25 because Teixeira had a higher Elias rating at the time. That's the #25 pick the Angels ended up using on Trout. Brewers got Max Walla at #73

[istanbultaye]

Those guys were pre-qualifying offer system. Maybe it was someone that they offered arbitration to hoping to get draft pick compensation when someone else signed him, but he ended up accepting arbitration? The details are fuzzy in my memory and don't recall what player it was either.