Ervin Santana finally signed with the Atlanta Braves for one year and approximately the qualifying offer amount. We are observing good free agents being hampered by the draft pick attached to a free agent being offered a qualifying offer from his team. Players like Santana, Steven Drew, Kendrys Morales, and Nelson Cruz have been hurt by turning down their qualifying offers. Both Santana and Cruz have had to settle for one year deals while Morales and Drew are still without jobs.
The most recent agreement between the MLB and the Major League Baseball Players’ Association (MLBPA) tried to help small market teams with this qualifying offer idea. A qualifying offer is a one year deal worth the average salary of the top 200 most highly paid players. When a player turns down a qualifying offer it means the team that eventually signs the player is forced to give a draft pick to the team that offered the qualifying offer to the player. The MLB and MLBPA hoped that small market teams would benefit from getting draft picks when they lose players good enough to get a qualifying offer.
The real losers have been second tier free agents. Top free agents like Brian McCann, Jacoby Ellsbury and Shin-Soo Choo are good enough that the draft pick is not a big deterrent. Second tier free agents like those discussed above, however, are hurt because a the first round draft pick is a high price to pay for a good but not great player. This price has been made even higher because draft picks are more valuable now that international pool money is limited. If a team wants to build its system it needs these draft picks because they are limited in their ability to sign international players.
Rumor has it that the MLB will not reconsider their agreement with the MLBPA until 2016 which means this problem will persist for some time. This means MLB teams could use a solution to get around giving up their draft pick. It is clear that the first round draft pick is too high of a cost because so many players are left without contracts late into free agency.
MLB teams should take a page from the NBA and use the sign and trade. Let’s say the Texas Rangers wanted sign Ervin Santana but the draft pick was too much to give up for Santana’s services. Texas could get around having to give up this pick by making a deal with the Kansas City Royals. Kansas City offered Santana a qualifying offer so if they signed Santana to a deal obviously they would not have to pay the draft pick as compensation for signing Santana. The Rangers could make a deal with the Royals such that the Royals signed Santana and then immediately traded him to Texas for a predetermined amount of money or a minor league player. In this way, the Rangers can give up an amount of money or a minor league player that they value less than a first round draft pick. This would allow the Rangers to sign Santana to a multi-year contract without giving up their draft pick. Of course the drawback in this scheme is what the Royals get out of the deal. The Royals are effectively paid for a service rendered by signing Santana to a deal without ever intending to keep him.
The problem is that the Royals may be content to wait out the market as they clearly have done. The Braves finally decided Santana was worth the draft pick, although they clearly would not have gotten to this point had Kris Medlen not gone down. It is hard to imagine that players like Drew and Morales will remain unsigned until the draft which is why the team offering the qualifying offer may not have enough incentive to engage in sign and trades.
Will teams start using this tactic? It seems unlikely now but players are the ones who are getting hurt by the qualifying offer. As long as players like Cruz and Santana continue to settle for one year deals and less money then teams offering the qualifying offer will have no incentive to use the sign and trade. If players start waiting to sign in order to remove the draft pick compensation then this would be an excellent tactic for teams to employ.