Qualifying Offers Are Broken

Major League Baseball just updated the 2014 First-Year Player Draft order to reflect the recent qualifying offers.  You can see that list here.  This year 12 players received qualifying offer.  That means there is the potential for 12 compensation picks.  For some reason, MLB has decided those picks should come after the first round of the draft and before the Competitive Balance round.  That seems pretty ironic when you realize that the Red Sox and Yankees each stand to gain 3 picks.  It’s likely that some of those free agents will accept the qualifying offer or resign with their former team, but when two of the wealthiest clubs have a chance to make 4 picks in the draft before teams like the Brewers make 2, it should be quite clear that something is broken.

Currently a qualifying offer is a one year contract worth the average salary of the top 100 players.  Should the player decline, the club receives a compensation pick after the first round, if/when that player signs with another club.  The club that signs that free agent gives up their first round pick.  Supposedly this is designed to make it easier for small market clubs to retain or acquire talent and/or build their farm systems, but it’s not working that way.  Small market teams simply can’t offer up a salary that size for the same types of players that the Red Sox or Yankees can, so they’ll have fewer chances at netting draft picks.  It’s also not fair to mid-tier players whose market gets severely depressed by having draft pick compensation attached.

I’m not sure what the best solution is.  Mostly I think there shouldn’t be any compensation attached to free agents, but the reality is that’s probably not going to happen.  I’ve been wracking my brain for a while to find a better system and I’ve come up with something I think might be.  Instead of just one type of qualifying offer, I think there should be at least two:

                Type A Qualifying Offer: 3 years at the average salary of Top 100 players. (1st Rd Pick)

                Type B Qualifying Offer: 2 years at the average salary of Top 100 players. (2nd Rd Pick)

The parentheses indicate after which round a team would get their compensation pick should a player turn down the qualifying offer and sign elsewhere. 

This isn’t a perfect solution but it does stop teams from abusing the system.  No one is going to offer 3 years at an AAV of $14.1 million if they don’t want or aren’t prepared to take that player back.  In turn, that player is extended a solid multiyear contract.  If he turns it down it’s because he’s truly an elite/high level talent (or views himself as such) and the market will be there for him to get a better deal.  Type B qualifying offers allow teams to offer mid-tier players a contract that is reasonable and won’t depress their market as much since the compensation picks would come after the 2nd round.  To clarify, the type of qualifying offer made would be up to the team.  It’s not like before when MLB assessed free agents as Type A or Type B.  I wonder if maybe there should be a third type at something like half the average salary of Top 100 players, with a potential compensation pick coming after the 3rd round.  That might make things too convoluted.  One could also argue that 3 years is too much or two years is too much for the respective types or that the contract values should be different.  Again, I don’t know what the perfect solution is, but I think mine is better than the current system by a lot.