In 2017, MLB’s most recent collective bargaining agreement went into effect, covering the 2017 through 2021 seasons. One of the key points of the new CBA was the way in which it would change the qualifying offer system. Players likely wanted the system done away with, as the qualifying offer can lower salaries, while teams, especially smaller market ones, prefer it as a way to recoup value when players leave.
Instead of doing away with the qualifying offer, the CBA overhauled the system into a new, entirely arcane process. How the qualifying offer works depends on several different factors regarding both the player in question as well as the teams involved.
This is the first offseason in which the new system will impact the Yankees. Since their free agent shopping last year was limited to the low-key signing of Neil Walker, they were largely unaffected by the qualifying offer. The Yankees will have to deal with the system this winter as they (hopefully) re-enter the free agent market, so let’s take a look at how the qualifying offer will affect them.
The qualifying offer is a one-year contract teams can offer to their impending free agents. It is worth the average of the top 125 salaries in MLB, forecasted to be $17.9 million this year. Players that were traded mid-season or that have received the qualifying offer before are not eligible to receive it this year.
A player has 10 days to either accept the offer, or reject it. A player that rejects the offer and signs elsewhere triggers a ripple effect; the team that signs him must forfeit a draft pick, and the team that lost him will receive a draft pick. The caliber of pick depends on a few inputs.
If the player both signs for a contract in excess of $50 million, and the team he departed from received revenue sharing in the previous year, the team that lost the player receives a pick after the first round. If either of those things are untrue, the team receives a pick before the third round, and if the team that lost the player paid the luxury tax in the previous year, they receive a pick after the fourth round.
On the other side, a team that signs the player, received revenue sharing and didn’t exceed the luxury tax only loses their third-highest pick. If they didn’t breach the luxury tax but contributed to revenue sharing, they lose their second-highest pick and forfeit $500K in international bonus pool money. If the team paid the luxury tax, they forfeit their second and fifth-highest picks, and $1 million bonus money.
So, based on those opaque rules, if the Yankees signed a player that rejected the qualifying offer, they would lose their second-highest pick and cough up half a million dollars in bonus money, as they contributed to revenue sharing last year but didn’t breach the luxury tax. They would receive a pick before the third round if they lost such a player.
The question now is whether the Yankees have anyone that could merit a qualifying offer. They do have a number of outgoing free agents, but a few are ineligible for the offer. Lance Lynn, J.A. Happ, Zach Britton, and Andrew McCutchen were acquired via trade during the season. David Robertson received a qualifying offer from the Yankees in 2014.
The only players eligible are Brett Gardner and CC Sabathia. Gardner has a team option worth $12.5 million; the Yankees would exercise that option before tendering him a qualifying offer. They are highly unlikely to sign Sabathia to any one-year deal worth close to $18 million.
Thus, the qualifying offer system will impact the Yankees in their attempts to sign external talent. Patrick Corbin, whom the Yankees have been connected to, will probably receive a qualifying offer. Bryce Harper will, as will Clayton Kershaw if he opts out. Dallas Keuchel and A.J. Pollock are liable to receive offers as well. Other lower level targets could possibly receive the offer, such as Charlie Morton or Hyun-Jin Ryu.
If the Yankees signed, say, Corbin, who rejected the qualifying offer, they would lose their second round pick. If they signed another free agent that rejected the offer, they would lose their third-highest pick, in this case, their third rounder. These picks aren’t hugely valuable, but they will count as a small extra cost of signing free agents.
It’s a small cost the Yankees must incur. The team reset their luxury tax penalties this year, and has no excuse to not invest heavily in player payroll this winter. Ducking under the luxury tax has the added benefit of lessening the penalty of signing free agents, giving the Yankees even less reason to avoid signing big-name players.
The entire qualifying offer system is needlessly complicated, and still only really serves to dampen demand for free agents. Even so, the impact on the Yankees this winter will not be great. A pick or two outside the first round, and a fistful of international money, is a small price when compared to the price the team will pay in salary to new players. Both prices are ones the Yankees can easily meet.