Top remaining free agents getting squeezed by draft compensation
They're trying not to panic. It's January, and five of baseball's best free agents remain unemployed, mostly because the law of unintended consequences struck with greater ferocity than anybody imagined. For Nelson Cruz, Stephen Drew, Kendrys Morales, Ervin Santana and Ubaldo Jimenez, all that's left is the slim hope the market will calibrate itself to fix the false mechanism wrecking it.
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Nearly 40 years into free agency, baseball still hasn't figured out how to compensate teams that lose players with results amenable to both sides. The second-longest strike in the sport's history, the 50-day walkout in 1981, came because owners took a hardline stance on rewarding teams that lost free agents. The sides settled on the first of many misguided systems, none more than today's, in which free agents who turned down a one-year qualifying offer from their team (worth the average of the game's top 125 salaries the previous season, or $14.1 million this year) cost a first-round draft pick to sign for teams with the 11th through 30th selections.
Think about that. The teams losing players gain not the pick of the team that signs them but one following the first round. Smaller-market teams won't dare throw a tender on all but the top players because of budget-wrecking worries, whereas large-market teams can go willy-nilly with their offers. Free agency is tied to an entirely separate entity, the amateur draft, which itself is not a free market because this collective-bargaining agreement called for a signing-bonus cap with major penalties for breaking it. Perhaps most damning of all is that some free agents actually want to get traded during their walk year because those who end the season on a different team than the one they started on are not subject to qualifying offers.
Now, teams are creative, agents are convincing and, for all anyone knows, once Masahiro Tanaka signs, the market may thaw and render this all much ado about nothing. Executives across baseball, however, bandy about potential destinations for the five and keep hitting brick walls, unable to find teams with the proper match of need, desire and money for a player, plus the willingness to forfeit a draft pick that because of the money attached has greater value than ever.
The confluence of this ugly scenario came from a mutual agreement between MLB and the union. The league didn't like teams piling up cheap draft picks by targeting players who would qualify for lower-level compensation, and the MLBPA didn't want 30-plus players a year subject to compensatory rules. They compromised with the qualifying offer, which neither side figured would be nearly as injurious to the market as it has been. The thinking both ways went: If a player is going to be offered $13 million-plus a year for one season, surely the open market, with all 30 teams vying for his services, will bear a deal far more bountiful.
For the top-tier free agents – Robinson Cano, Jacoby Ellsbury, Shin-Soo Choo, Josh Hamilton, Brian McCann and B.J. Upton, among others – the qualifying offer did no damage. The giant disincentive placed on two-thirds of the market, however, has forced teams that would give up draft money to start free agency by pursuing other options and left some of the best players exploring options such as returning to their previous teams, something that without the qualifying offer wouldn't have been a thought.
"Last offseason, there were a number of guys affected in ways different than we expected compared to a freer market to pursue jobs," MLBPA executive director Tony Clark told Yahoo Sports on Thursday. "It appears that's happening again."
In the previous offseason, Adam LaRoche went into January a free agent and re-signed with Washington for what was considered an under-market deal. About a week later, agent Scott Boras – who represents Drew and Morales – finagled a staggering $28 million out of Washington for Rafael Soriano (though because of deferred money it's valued at perhaps $5 million less). Michael Bourn ended up with $48 million (less than expected) when he signed on the eve of spring training with Cleveland, and Kyle Lohse, coming off a year in which he went 16-3 with a 2.86 ERA, got just three years and $33 million when Edwin Jackson, who was traded and thus without a qualifying offer, fetched four years and $52 million.
Perhaps this market will be kinder. There is more money, for one, and that's an important point to remember: While the qualifying offer has seemingly destroyed the market for some players, it is the result of a number of collectively bargained implements – namely the limit on draft and international spending – that essentially force teams to spend their money on free agents, perhaps the main goal of the union. Accordingly, teams already have spent more than $1.5 billion on free agents and may drop more than $2 billion by the end of the offseason.
"I'll be interested in how this thing hashes itself out," Clark said, and he said it with the confidence of a former player who believes in the market and the wariness of an executive who understands that unless teams change their plans in January – most consider themselves just about locked-in for the season by now – the Free-Agent Five may find difficulty in landing where they want or what they want.
Of the teams with protected draft picks, Houston and Miami aren't likely to go anywhere near the five, the Chicago White Sox and Cubs are very unlikely to do the same, Minnesota is focusing on non-compensation starters, Philadelphia and Colorado may be tapped financially, and the Mets aren't inclined to go after Drew or Morales, even if both are a fit. Which leaves the Mariners, who will almost certainly sign a pitcher – though it could be Tanaka – and the Blue Jays, who aren't the sort to make a huge splash.
The perceived market for Drew is such that many assume he's going to return to Boston, though as one executive said: "What incentive does Ben [Cherington, the Red Sox's GM] have to give him any money?"
Santana is believed to have offers in the two- or three-year range, and while he wants to go back to Kansas City and the Royals would like him to return, they're already about $7 million over budget with nearly a $92 million payroll. One source deemed a return quite unlikely, which leaves him as a possible backup plan for the Mariners or Diamondbacks should Tanaka not happen.
The Angels are in on Tanaka, too, and prefer Garza (who was lucky enough to be traded midseason) as Option B. Maybe Jimenez goes out west. Cleveland, where he resurrected his career under the great Terry Francona and Mickey Callaway, is in the same position as Kansas City, stretched thin and staring at too tough a division this season to do something that may hurt them two or three years down the road.
As for Morales, one GM suggested he's not going to sign until after the June draft. Dramatic? Yes. Possible? Perhaps. Indicative of just how screwed up the system is? Absolutely.
Get used to it. This collective-bargaining agreement expires in December 2016, so at least two more free-agent classes will endure it. Considering its effect, one executive suggested teams should offer even more players next season. Until players accept the one-year deal – all 22 offered have turned it down – teams will be happy to push down the price of their free agency, thank you very much.
Such is life in the qualifying-offer era. Used to be that when teams lost draft picks, they'd just overspend later in the draft and get as much talent as they would've otherwise. That day is gone, and it has cleaved the free-agent market in two. There is the real market in which almost every free agent participates, and there is the free-agent compensation market, where it may well be time to panic.
