Five of the highest rated free agents in major league baseball are still without contracts as the 2012 calendar year winds down. Of nine players who were given "qualifying offers" of about $ 13.4 million to stay with their former clubs, all of them declined, believing that they could get a better deal on the free agent market.
Those nine are the only players that could bring compensation to their former clubs should they sign with a new club. Those nine are the only players that would cost their new club compensation, in the form of their highest available draft pick, to sign.
Among the nine players, David Ortiz and Hiroki Kuroda quickly signed contracts to stay with their former clubs, never really testing the free agent waters. Three of the elites have signed contracts with new clubs, BJ Upton with the Braves, Josh Hamilton with the Angels, and Nick Swisher with Cleveland. The Braves and Angels will lose their first round draft picks next June, while the Rays and Rangers will gain a supplemental first round pick. The Tribe have a protected first round pick, and will lose their second round selection.
Four of the nine players who are subject to compensation are still standing in the unemployment line, looking for work. Kyle Lohse, Michael Bourn, Adam LaRoche, and Rafael Soriano are still without a team for the 2013 season. That’s four out of seven elite players who tested the free agent market.
When major league baseball players and owners reached a new five year labor agreement after the 2011 season, the number of free agent players that would subject their new clubs to paying compensation was dramatically reduced. Gone were the Type A and Type B rankings. Gone was the requirement that a player be offered arbitration, triggering compensation for the player’s former club should he sign with another club.
It was believed that only a small percentage of players figured to receive qualifying offers, and that has been the case this year. But the net result has been that there are more players subject to first round compensation this year than last.
After the 2011 season, 23 free agent players were classified as "Type A", meaning that, if they were offered arbitration and signed with a new club, compensation was paid by their new club to their former club. The number includes players who had options exercised.
Another 47 players were classified as "Type B", meaning that, if arbitration was offered and the player declined to sign with a new club, the former club would receive supplemental draft choices as compensation. That’s a total of 70 players who were potentially eligible for compensation. Again, there are some club and player options exercised in that group.
After the 2011 season, only seven of the Type A players were offered arbitration. None of them accepted. This number was slightly reduced by the transitional terms of the new CBA as the agreement was implemented last winter. Another 24 Type B players were offered arbitration by their former clubs, and none of them accepted.
One part of the process has remained constant. Former clubs of free agent players are required to make an offer in order to receive compensation. What has changed is that, instead of offering arbitration where the player would receive an undetermined amount based on salary history, years of service and performance, the club must now make a qualifying offer of a set amount.
The net result of the compensation scheme last year was that three teams, including the Tigers, lost their first round draft selections, and three teams gained a selection. Six more selections changed clubs in the second round.
There were 29 supplemental first round picks awarded between the first and second rounds. Eight were awarded for Type A players and 21 for Type B players. That’s almost an entire round of supplemental picks, all due to free agent compensation. That round of compensation picks has essentially been eliminated.
The question, then, is what impact have the new rules had on the movement of free agent players? Well, clubs will not be compensated for losing players that aren’t worth a $ 13.4 million salary. In fact, some players, such as Torii Hunter, Mike Napoli, and Edwin Jackson, were not given qualifying offers, but will receive the same or higher salary on multi year deals. Their former clubs may have left compensation on the table. Or did they?
Next June, up to seven clubs will lose their top selections, last year there were three. Up to seven clubs will receive a supplemental pick at the end of the first round. Last year, there were 29.
The number of first round compensation picks will be reduced by one for each of the four unsigned elites that resigns with his former club, or with a club that owns a protected first round pick. But will these elite players be able to sign contracts with new clubs?
It’s not unusual that some agents will over play their hands in seeking absurd sums of money in multi year deals. It’s also not unusual that some of them will get it. It’s not unusual that a couple of the top free agents have to wait until January or later to sign contracts with their new clubs. But four free agents among the consensus top ten, still unsigned heading into January is a bit unusual.
Having to give up a first round draft pick can be a big deterrent for clubs considering signing a free agent player. Not only does the signing club have to pay free agent market rates, outbidding all other clubs, but they have to give up their top selection as well for some players. Likewise, not having compensation attached can make other players more attractive to potential suitors, as was the case with Anibal Sanchez and Zack Greinke, who were exempt because they were traded during the 2012 season.
Last winter, Fielder, Pujols, and Jonathan Papelbon, who left the Red Sox for the Phillies, were the only players signed who required their new clubs to give up their first round picks. This year, two clubs so far will forfeit their top picks, and another five players are subject to compensation. It would seem that, unless there are simply more potential elite free agents this year, that clubs are more willing to make a qualifying offer, knowing the fixed cost involved, than they were to offer arbitration which could have yielded an uncertain salary.
Yoenis Cespedes didn’t sign with Oakland until early March, but he was a very special case, coming from Cuba. Prince Fielder was the last big name free agent to sign a contract in January, 2012, agreeing to a nine year, $ 214 million deal with the Tigers. Detroit also signed Jose Valverde, Johnny Damon, and Magglio Ordonez very late in the off season.
The compensation attached to some of this year’s elite free agents could seriously impact their ability to sign with new clubs. Adam LaRoche has resumed negotiations with the Nationals. Rafael Soriano, who actually declined an option for $ 14 million before declining the Yankees’ qualifying offer, isn’t finding any takers.
Nick Swisher reportedly has accepted a four year, $ 52 million offer from Cleveland, who will give up a second round pick since their top ten pick is protected. Michael Bourn, who is regarded as the best of many center field free agents, has seen the market dry up as one potential club after another has filled their center field needs.
There doesn’t appear to be any logical reason for clubs to be any more reluctant to part with a first round draft pick to sign an elite free agent than there has been in the past. Perhaps the absence of the Yankees from the bidding on multi year contracts has a substantial impact. Or perhaps the certainty of making a "qualifying offer", although significantly high at $ 13.4 million, is more attractive to clubs than the uncertainty of offering arbitration.
It would not be a new phenomenon if the compensation scheme pushed players to sign with clubs that would not give up a first round pick. Six of the nine picks that were lost a year ago due to free agent signings were second round selections. Those six picks were given up by the Twins, Marlins (2), Rockies, Reds, and Angels. Second round picks were awarded due to the first round selections being either protected, or already forfeited for signing another free agent player
If clubs remain deterred by having to give up draft pick compensation, we could even see some sign and trade deals. For example, say the Tigers want to sign Soriano but won't give up a first round pick to get him, so they work a deal with the Yankees to sign him and trade him to Detroit for a prospect.
Whatever the reason, there are some very good players still standing in baseball’s unemployment line. This was not an expected consequence of the new rules that the players bargained for.