MLB: What qualifying offers are and why they are being raised 8.5%

Major League Baseball and the Major League Baseball Players Association (MLBPA) have agreed that the amount of money a team needs to offer an eligible free agent a qualifying offer will be upped 8.5% from last season’s $14.1 million to $15.3 million.

When the concept was instituted in 2012, the minimum number for a qualifying offer was $13.3 million.

Unfamiliar with qualifying offers? A qualifying offer is the minimum amount of money a club must offer an eligible free agent for the following year. The club has the first five days after the last game of the World Series to decided if they would like make the free agent player the offer and the player then has until the 12th day after the final game of the World Series to accept the offer.

Oct 5, 2014; Detroit, MI, USA; Baltimore Orioles designated hitter Nelson Cruz (23) hits a two-run home run against the Detroit Tigers during the sixth inning in game three of the 2014 ALDS baseball playoff game at Comerica Park. Mandatory Credit: Rick Osentoski-USA TODAY Sports

If the player rejects the offer they are free to sign with any Major League ball club. If another club (the player’s former club can still try to signe them) signs the player at anytime before the June amateur draft, then the signing club must forfeit their highest draft pick to the player’s former club.

If the signing club’s highest pick is one of the first ten in the first round then they must give up their second highest draft pick. Of course, if a player re-signs with their former club for more than the qualifying offer than this rule cannot apply.

How is the amount of a qualifying offer decided upon? Baseball’s labor contract sets the price at the average of the 125 highest contracts by average annual value.

How often do free agents accept a club’s one-year qualifying offer? In the two years that this program has been in effect, the answer is that they don’t. Not a single qualifying offer has ever been accepted.

Most players on the free agent market are looking for multi-year deals for more money so why would a qualifying offer be attractive to a free agent? It may be attractive if the player is planning on retiring soon or had a down season and would like to get their numbers up before re-entering free agency the following year.

The presence of the qualifying offer has led to a lot of big name free agents not being signed until after the June draft. Most clubs were not willing to sign most free agents (aside from the occasional superstar) to huge deals and have to forfeit getting a new young prospect for their organization to develop and groom.

This led to a lot of free agents to be left without homes until late February or March, some even later, to get signed because by that time a lot of teams, like the Baltimore Orioles and the Atlanta Braves, a chance to find out what big holes they’d have on their roster and evaluate what would be worth giving up a draft pick for.

The Braves saw two of their starting pitchers, Brandon Beachy and Kris Medlen, go down for the season with torn ulnar collateral ligaments that required Tommy John surgery before the season began. They forfeited a draft pick to sign starting pitcher Ervin Santana.

The Orioles needed starting pitching and a big power bat so they agreed to contracts with both starting pitcher Ubaldo Jimenez and slugger Nelson Cruz. Cruz ended up hitting a MLB leading 40 home runs in 2014 and will likely recieve more than the roughly $8 million for a one-year deal when he hits free agency this November.

Other free agents like Kendrys Morales and Andres Torres were signed after the June draft at a pro-rated rate because the Minnesota Twins and the San Francisco Giants (respectively) did not want to give up their draft picks, leaving the players to sit out the first three months of the season(hence the pro-rated salary).