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The Offer That MLB Players Always Refuse, Even When They Shouldn’t

It’s qualifying offer season in Major League Baseball, that most anticlimactic time of year when teams offer one-year deals to a handful of players on the brink of free agency. Those “qualifying offers” are artifacts of a system that was introduced in the last collective bargaining agreement to compensate teams that lose free agents. Every qualifying offer is the same: Teams can offer $15.8 million to impending free agents who weren’t traded in the past year for one more year of service. If a player accepts, he takes the money but sacrifices the chance to see what the market thinks he’s worth. How teams and players should go about offering, accepting and denying qualifying offers are interesting questions.

From a team’s perspective, the decision to tender a qualifying offer is relatively straightforward. Each offer is essentially a bet that the player will be worth more than the $15.8 million salary. Since each win above replacement (WAR) costs about $7 million to $8 million on the free-agent market, that wager is equivalent to projecting that a player will be worth 2 or more WAR in the coming year.1 In some cases (Jason Heyward, Zack Greinke), that’s an easy bet to take, while in others (Colby Rasmus, Ian Desmond), the projection is a little shakier.

PLAYERS WHO RECEIVED QUALIFYING OFFERS PROJECTED WAR
Jason Heyward 4.7
Zack Greinke 4.0
Alex Gordon 3.5
Hisashi Iwakuma 3.3
Justin Upton 3.0
Jordan Zimmermann 2.8
Jeff Samardzija 2.7
Wei-Yin Chen 2.6
John Lackey 2.6
Chris Davis 2.4
Howie Kendrick 2.4
Matt Wieters 2.2
Daniel Murphy 2.1
Ian Kennedy 2.1
Brett Anderson 2.0
Dexter Fowler 1.7
Yovani Gallardo 1.7
Ian Desmond 1.6
Colby Rasmus 0.8
Marco Estrada 0.8

The offer also serves another purpose, which is to reward the offering team with a valuable draft pick if the player should sign with another club; conversely, the signing team loses a draft pick. In practical terms, this has the effect of reducing a player’s value to any other team and making it easier for the original team to re-sign its free agent. In most cases, the draft pick is a small consolation prize for losing a superstar. But when it comes to some marginal players, the possible reward of the pick (worth about 1 WAR) is just enough incentive for a team to extend an offer to a player who might not otherwise be projected to achieve 2 WAR.

The choice of whether to accept a qualifying offer is harder from the player’s perspective. The qualifying offer is a low-risk, low-reward option compared with what could be a bigger payday on the free-agent market, although there’s greater uncertainty about how much the payout will be. So far, every single player who has received a qualifying offer has refused it (not counting this year’s crop). In the case of the few players who are not likely worth an offer but still receive one, the near-pathological confidence necessary to be a professional athlete may be the factor compelling them to refuse. In some instances, that’s led to decent players remaining unemployed until mid-year the following season. Just ask Stephen Drew about that.

As a result of these incentives, qualifying offer season has become somewhat predictable. The math works out so that teams tender offers to almost every remotely deserving free agent. Without fail, those free agents refuse them, only to find their eventual contract value reduced by the draft pick that their new team had to give up.

Footnotes

  1. The math is slightly more complicated than this when you consider that wins are worth different amounts to playoff contenders versus rebuilding teams and can be afforded more easily by big-market outfits than smaller franchises.

Rob Arthur is FiveThirtyEight’s baseball columnist and also writes about crime.

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