October 16, 2015
The Qualifying Offer Slows as it Grows
In the excitement and immersion of the playoffs, some extraneous news tidbits can go fly under one’s radar for a while. Things affecting teams not playing on into October do continue to happen during the month; they just get less attention. So it was that Jon Heyman reported, a week ago now, that the qualifying offer (QO, from now on) teams will need to offer free agents hitting the market next month in order to get a draft pick if they sign elsewhere will be $15.8 million. I didn’t catch wind of that news until Thursday afternoon.
It’s interesting information, though, and it makes for some interesting analysis. Consider the progression of the QO since its first winter in 2012:
Because of the broader economics of the game—skyrocketing TV revenues, especially, and their large and far-reaching effects—the market value of a win in free agency is growing at a rate much higher than 3.3 percent. Given that, it’s likely that we’ll see a record number of QOs handed out, and we might finally see one or two of them accepted by the players to whom they’re given. Today, let’s run through a few of the fringe cases and try to decide whether a QO is in order (and then, from the player’s perspective, whether it’s worth the risk to pass one up).
Defining the Set
First of all, in order to find the cases most worth discussing, we should get the guys who will absolutely receive and decline QOs out of the way. In my view, they are:
There are 12 names there. There are another nine guys, though, who have at least some case for receiving a QO, and/or who present an interesting dilemma when it comes to whether they should sign up for that offer or test the open market with the ball and chain on their ankles:
Let’s take these on individually.
Brett Anderson: It’s only been one healthy season for Anderson, for whom health was elusive for half a decade, but it was a good season, too, and Anderson has name value and pedigree going for him. Given the Dodgers’ wealth, giving him a QO is a wise risk. If Anderson takes it, they can certainly live with paying their fourth starter $15.8 million, under the current market conditions. If he doesn’t, he might get stranded on the market for a while, but as long as he signs by next June, the Dodgers still get their pick in return for him.
From Anderson’s side of the table, it’s a tougher call. He played on a one-year deal in 2015, and though he thrived, his track record for health is spotty enough that a multi-year deal has to carry some appeal. On the other hand, the market figures to regard a pitcher with a long injury history who would cost the signing team a draft pick with some wariness. In fact, in a strong free-agent pitching class that includes multiple pitchers without QOs attached to them, Anderson could really find himself without a taker. If the Dodgers make the offer, Anderson should take it.
Wei-Yin Chen: According to our DRA-driven pitcher value metrics, Chen was worth 1.9 WARP in 2015. He hasn’t been worth so much as two full wins since 2012. It’s precisely the slow advancement of the QO amount that makes Chen’s case interesting. Even a year ago, it would have been pretty easy to say that $15.3 million was too much to offer a back-end starter like Chen. Now, though, that feels a bit more palatable, as the increase is less than the minimum salary of a big-league player, and the likely inflation of the value of pitchers like this on the market almost surely outstrips that by half.
The Orioles should make the offer to Chen, in part because they figure to lose both Davis and Wieters as QO-attached free agents, and Chen would make a clean set of three sandwich picks between the first and second rounds if he elected not to sign. That’s a bonanza for a team who seemed to see one competitive window close in 2015, and they shouldn’t pass it up. Chen, meanwhile, is relatively healthy and dependable, and also 30 years old. He’d have to sign for a lower annual average value than the QO offers, but he should find a tidy three-year deal somewhere for money almost as good each season. He and the O’s are each beneficiaries of the flattening market.
Marco Estrada: This one is truly fascinating. Estrada has flashed the kind of ceiling that makes a QO seem easy to risk, but until this year, he’d been pretty bad for a few years. Issuing a QO to him would be a major declaration of faith, either in the breakout season he just had or in his ambition overwhelming his good judgment. Estrada offers upside, but even at a surprisingly slow growth rate, the QO is a rather high-stakes gamble to take without cause. As much as the thought of losing him without compensation might sting the Jays front office, they need to be willing to do it. Pop-up pitcher seasons are too vulnerable to reversion, and the risk of Estrada busting at nearly a $16-million salary in 2016 is too high.
Dexter Fowler: Fowler nearly falls into the category of open-and-shut offer-and-decline cases. He has a long track record of getting on base as a center fielder and leadoff man, and though 2015 hasn’t been his best season, it has been his healthiest. It seems pretty clear that the Cubs will make him the offer—it’s a no-brainer, in fact.
The interesting question is whether Fowler should take it. He might find a fairly unfriendly market awaiting him, if he does decide to forego the QO. Teams will be wary of recent mistakes on players of Fowler’s ilk—a center fielder with dubious defensive credentials, some contact problems, already 30 years old. Fowler is a good player, but I’d be surprised to learn that any team feels confident about their projection of his blend of talents into the future. Will he need to move to a corner outfield spot right away, or in two or three years? Can he continue the power development he began in Chicago this year, without giving back any more of his on-base skills? How will his formerly injury-prone, uniquely tall and narrow body hold up to aging, and how will that affect his two swings? There are a lot of questions there, and it’s possible no one would offer more than $15.8 million per year to take a stab at answering them on a long-term deal this winter. Fowler might benefit from taking that nice payday, returning to the Cubs (where he’s been well-liked in the clubhouse, and has been part of something very special), and trying to give his next team a clearer idea of his long-term profile.
Yovani Gallardo: The Rangers’ choice not to trade Gallardo, after they seemed set on dealing him even late in July, might end up paying off in two ways. Gallardo already helped the team win the AL West, though he did so rather unimpressively. Now, he could net the team a draft pick, too… if the market breaks right.
Here’s why it might not break right, though. Gallardo fits into a bin with a few other, recent free-agent signees, all of whom ended up getting four-year deals worth low eight-figure annual salaries. Those guys are, in some order, Edwin Jackson, Ubaldo Jimenez, Ricky Nolasco, Ervin Santana, and Brandon McCarthy. Not one of those contracts has turned out anything other than disastrously, and Gallardo might find a shell-shocked market for players in his general tier.
If the QO had shot up this year to $16.5 million or something, the Rangers might not even extend an offer to Gallardo, for fear he would take it and further clog a complicated payroll and roster crunch in Texas. Since it’s on the right side of $16 million, though, it’ll be surprising if the Rangers don’t make an offer. After that, it rests in Gallardo’s hands.
Ian Kennedy: I list him here mostly in deference to multiple reports that the Padres are likely to pin a QO onto Kennedy. Agent Scott Boras was the one who boldly (and foolishly) tried to wait out the QO system with both Kendrys Morales and Stephen Drew in 2013-14, and Kennedy could be the next mistake Boras makes within this construct he seems to hate so much. In this particular case, though, there’s hardly any rational argument for passing up the QO if it comes. Kennedy has been worth only 1.8 WARP over the last three seasons combined, and the market simply isn’t going to pay for the fact that he used to be a Yankees prospect, nor that he won 22 games five years ago. If the Padres start to smell something fishy and suspect Boras and Kennedy might take the offer, it wouldn’t be a huge surprise if they change course and don’t make one.
Daniel Murphy: There was a report last week that the Mets weren’t going to offer Murphy a QO, but after the NLDS he just had, that might change. Heck, given that the Mets are still not the richest, most liquid franchise in the league, even the lower-than-expected salary attached to the QO might help them change their minds and offer one. Murphy must be careful; he’s too similar to Drew not to be at some risk of seeing his market disappear from beneath him. Unlike Drew, though, Murphy wouldn’t be seeking a deal in the wake of a season wherein strikeout problems began to shred his offensive value. Though his only defensive value lies in his willingness to take the field wherever you want him, Murphy should see some attractive offers in free agency, even multi-year deals. Again, if the QO is five percent higher, it might sway Murphy toward taking it, but there’s a good chance that a good three-year deal is out there for him, so at $15.8 million, he might be able to walk away.
Colby Rasmus: Here’s another case where an average regular—maybe even something slightly worse—has been made worthy of a QO by the QO’s sluggish growth. The Astros got Rasmus for $8 million on a one-year deal last winter, even without draft compensation draped around him. This year, though, Rasmus enters the market not as an injury-riddled free swinger who’s defensively stretched in center field, but as a refreshed slugger capable of handling either corner spot competently, plus plugging center when needed.
There are still issues with Rasmus, especially if his permanent answer to the questions about his defensive viability in center is to move to a corner. He strikes out a lot (a LOT, a lot). He doesn’t hit left-handers well. He’s just a piece, not a centerpiece. Even so, he’s likely to get a QO, and to pass it up for a crack at the long-term deal that never materialized last time.
Jeff Samardzija: As bad as Samardzija’s 2015 was, there has to be a part of him that badly wants to take a QO and prove himself anew. He’s hitting free agency a year too late, in terms of matching his earning power with his peak value, and he might try to get that time back by accepting a one-year shot at salvaging his hot-commodity status.
On the other hand, with the number coming in at less than $16 million, Samardzija should figure that if the offer comes, he can make more than that on the free-agent market, even if it’s over three years or so. For all his struggles, even a compensation-pick-burdened Samardzija should be able to find three or four years in the $10-12 million AAV range.
Indeed, it looks like more players than ever could be offered the QO, and most or all of them will again reject it. It will be very interesting to see how hard the MLBPA fights to either banish or scale back the QO in the next CBA, because the institution is demonstrably slowing the growth of player salaries in the most important segment of the Union’s constituency. For now, the takeaway from the early news on the 2015-16 QO is that there could be a lot of compensatory picks piling up after the first round of the Draft next June.