Jeff Curry-USA TODAY Sports
Draft pick compensation is proving to be a deterrent to clubs looking to sign elite free agents.
Kyle Lohse waits for a phone call every day, hoping for news from his agent that a major league baseball team is interested in signing him to play baseball for the 2013 season. All 30 major league teams have begun spring training, and exhibition games have begun.
Lohse has spent the last five seasons with the St. Louis Cardinals, posting a 16- 3 record with an ERA of 2.86 and a WHIP of 1.09 last season. He finished seventh in the Cy Young voting, and rightly expected to be able to land a nice multi year contract after helping the Cardinals to yet another appearance in the National League Championship Series.
But he waits. He works out to stay in shape for the season, and he waits. And he wonders. Why is it, after such a fine season, in fact two fine seasons, having won 14 games with a 3.39 ERA in 2011, the phone is not ringing, and no offers are forthcoming?
The Cardinals made Lohse a "qualifying offer" equal to about $13.4 million after the season, and he understandably turned that down, not wanting to pass up what might be his last chance at a large multi-year contract. Only nine free agent players received qualifying offers, and all of them declined them. Such chances don’t come around very often. This should be his chance to make it big.
The problem is the new compensation scheme. When a player declines a qualifying offer and signs with a new club, that new club must forfeit it’s highest available unprotected draft pick, while the player’s former club receives a compensation pick at the end of the first round in the draft. The first ten selections are protected, so any club that has a first round pick from No. 11 down has that extra steep price to pay for signing an elite free agent, and that clearly has been a deterrent this winter.
First-round draft picks now come with a slot allowance in the draft, so that if a club forfeits a first round draft pick, they also forfeit the slot money that goes with it. They can’t just go "over slot" as the Tigers have done in the past with a player like Nick Castellanos, and get first round talent after the first round. So, clubs won’t easily part with those first round selections.
The players gave up quite a bit in the last round of bargaining with the owners. For the first time, there are hard limits on the amount of bonus money that newly drafted players can be paid. They can’t be given a major league contract, and all clubs should be saving a lot of money if they had been making any sort of investment in the draft previously. The new limits on draft bonuses won’t impact the salaries of the players who voted to ratify the new agreement, but it’s a major concession to owners nonetheless. In exchange, the players got rid of much of the compensation for free agents, and a few more players qualifying as "super two" arbitration eligibles.
Of the nine players who were given qualifying offers, three of those resigned with their former clubs. David Ortiz signed a $ 26 million, two year contract with the Red Sox. Hiroki Kuroda signed a one year, $ 15 million contract to stay in New York. Adam LaRoche, finding no takers on the free agent market, signed a two year, $ 26 million contract with the Nationals, plus an option for a third season.
Of the six remaining elite free agents, five of them have found new homes, but it wasn’t easy for them. Michael Bourn was the most recent to sign, settling for a four year contract at $ 12 million per season to play in Cleveland. He joins Nick Swisher with the Indians. Cleveland has a protected first round pick, so they only lost a second round pick to sign Swisher, and a third round pick to sign Bourn. These players came cheaper to Cleveland than other teams would have had to pay.
Three of the nine elites signed new contracts with clubs that do have to give up their first round draft picks next June. The Angels stole Josh Hamilton from their division rivals, the Texas Rangers. The Nationals signed Rafael Soriano, and the Braves signed BJ Upton. In the case of the Braves, they’ll lose the no 28 overall pick, but they gain a compensation pick just a few slots down because they’ve lost Michael Bourn. That compensation pick is essentially a late first rounder. In fact, the Mets made a conditional offer to Bourn. Conditioned on the club being able to convince MLB to give them special treatment to avoid giving up their first round draft pick to sign him.
One by one, most of the big spending clubs found ways to add talent to their rosters and avoid giving up their first round draft pick. The Yankees kept Kuroda, but let Swisher and Soriano go, so they will actually have three first round picks. The Tigers, who haven’t had a first round pick for three years because of signing free agents, signed Torii Hunter, who was not given a qualifying offer by the Angels, plus Anibal Sanchez. The Dodgers signed Zach Greinke, who was not subject to compensation since he was traded in mid season. They also made several trades that brought very expensive talent to L.A. The Cubs, Red Sox, Giants, Rangers, White Sox, Orioles, Mets- all clubs except Washington and the Angels, avoided losing their first round draft pick this winter.
The net result is that, of all the players who reached free agency this off season, only two were able to sign contracts with new clubs who lost a first round selection to sign them. Is that how it was supposed to work? Not as far as the players association is concerned. While the players don’t have a problem with teams that lose a free agent player being compensated, they certainly do have an issue with compensation serving as a deterrent to clubs signing baseball’s best players.
The new collective bargaining agreement did close several loopholes in the free agent compensation system. No longer can a team trade for a "rental" player in July and receive compensation when the player leaves after the season. No longer will clubs receive compensation first round picks for losing a mediocre "type B" free agent relief pitcher. In fact, the new rules have eliminated compensation for all but those elite players who receive a qualifying offer.
But while the new agreement fixed many problems, there is one rather significant problem that will probably have to be dealt with by modifying the new CBA, to soften or remove the deterrent to signing elite free agent players.
MLBPA director Michael Weiner told Mark Feinsand of Sulia.com
"I can’t promise you that we’re going to be able to rectify it, but I know there will be discussions. It’s mostly good, but that part of it hasn’t worked out the way that we expected.”
Meanwhile, there is some speculation that Kyle Lohse may have to settle for a one year contract, or sign a short term extension to stay in St. Louis, unless he can find that rare club that can both afford to pay him and would not give up a first round draft pick to sign him. Most of the clubs that have protected picks are not big spenders. Those clubs have those picks for a reason.
Players wait a long time, and work their way through the minor leagues and six seasons of "club control" in the major leagues before they are eligible for free agency. If the cream of the crop free agents can't find contracts, the incentive that clubs have to extend them is lessened, and the amount that top players get paid will inevitably be less than free market value.