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Qualifying offer system is a mess

4/11/2014 - MLB

It's the second week of April. Anyone seen Stephen Drew or Kendrys Morales out there anywhere?

At the mall maybe? Or the movies? Or taking on odd jobs at the supermarket?

It's the second week of April, and two of the best free-agent position players on what used to be "the market" are still unemployed. So first off, can we all agree that's ridiculous? Excellent. Now let's get to the point.

For weeks now, the absurd state these men find themselves in has been mostly chalked up to some sort of disastrous, unforeseen glitch in the new system of qualifying offers for "premier" free agents. Just the other day, Brewers pitcher Kyle Lohse, told ESPN.com this system is flat out "just not fair," along with several other pithy expressions along those lines. And since he's a guy who took five months to find a job last winter after rejecting a qualifying offer of his own, who could blame him?

But now, here's an alternative view:

"I think the system is functioning more or less as it was intended to function," said one AL executive this week. "The market just hasn't quite adjusted yet."

Wait. What? That kind of talk doesn't fit the usual narrative here at all. But hold on. There's more.

"

Kyle LohseIt was kind of a strange route to get [to Milwaukee]. But when you're a guy who's put in six, or in my case I think it was 10 years, to become a free agent, you want that opportunity to go make the most of your opportunity and profit from all your hard work.

"-- Brewers pitcher Kyle Lohse

To all those who are screaming that this system is broken, dysfunctional and in need of a trip to the labor-deal emergency room, the same AL exec said this:

"I think the system will clean itself up."

Hmmm. Never thought of that. But this AL executive isn't alone.

"Until somebody accepts a qualifying offer," said Brewers general manager Doug Melvin, "how can we tell whether it's working or not?"

Hey, good point. And that leads us to the scenario painted by numerous executives in baseball management:

For two consecutive offseasons, we've seen a situation in which none of the 19 free agents who received a qualifying offer under this system -- which was created by the November 2011 labor deal -- actually accepted it. But what happens if a bunch of free agents next winter suddenly say: "Thanks for the offer. We'll take it?" Then what?

Well, guess what? If more "borderline" players take those offers, here's exactly what will happen: Fewer teams will then take the gamble and make those offers. That's what. And then the system won't be so broken anymore. Now will it?

So there ya go. Problem solved, in a mere 15 paragraphs. ... Or is it?

Uh, not in Lohse's eyes, it isn't.

It's easy, the Brewers right-hander said, for people like us to tell future free agents they should gobble up those one-year qualifying offers -- which are expected to be in the range of $15 million next winter, by the way. But if you're a player who has waited his whole life to be a free agent? Then it's not so easy.

Listen to him explain why not, from the perspective of a fellow who is now 35, has played 14 big league seasons and is only a year removed from seeing his long-awaited road to free-agent riches turn into a surreal, seemingly interminable journey that didn't lead him to his current home in Milwaukee until the last week of spring training. ...

All because his old team, the Cardinals, dared to fire one of those dreaded qualifying offers at him.

"First of all," Lohse made sure to report, "I'm happy with where I'm at. It was kind of a strange route to get here. But when you're a guy who's put in six, or in my case I think it was 10 years, to become a free agent, you want that opportunity to go make the most of your opportunity and profit from all your hard work. And to have something that penalizes someone who's not a superstar, when your best and almost only option is a one-year deal, that's just not fair."

What players work their whole careers for, Lohse said, is the opportunity to use free agency to scarf up a long-term deal that offers them the kind of security many players never attain. But while a player who takes a qualifying offer may guarantee himself a whole lot of cash, he gets none of that security he's looking for -- because all he gets out of accepting is a contract for one year.

So Lohse finds it hard to believe future free agents will be lining up to take the qualifying offer, no matter how large it may grow.

"If you only have a one-year deal, it's still a lot of money," he said. "And I don't want to sound like I'm complaining about that. And I know we're fortunate to be making the money we're making. But when you get that option where you only have a one-year deal, you don't have any security. To penalize guys who, in my case last time, have put in 10 or 11 years, and to lock me into a situation where I only have the opportunity to get a one-year deal ... it puts guys in a totally different situation that have worked so hard to get to where they want to be."

And also remember, Lohse said, that if a player takes that qualifying offer, he's putting himself in position to go through the same torturous ordeal the following winter. And the winter after that. And the winter after that.

"It locks you into one [year], after one [year], after one [year), because, if you have a good year, they can do it again," he said. "There's no stopping them from continuing to do the one-year thing."

But that's not the only evil Lohse sees in a system he believes is both flawed and "screwy." Here are two more:

It hurts players on good teams and rewards players on bad teams -- Under these rules, a player who gets traded in midseason automatically becomes exempt from any sort of draft-pick compensation. So guys like Scott Feldman and Ricky Nolasco were in a much better bargaining position last winter than the dynamic qualifying-offer duo of Ervin Santana and Ubaldo Jimenez. And that makes no sense. But it wasn't just them.

"You get penalized," Lohse said, "because you're on a good team, and you're contributing to a good team. Whether baseball execs want to say you're penalized or not, I don't really agree with them. ... It's tough. You have a certain shortstop [i.e., Drew] that's hurt because he's on a World Series-winning team. And then you have another one [i.e., Jhonny Peralta] that gets a four-year deal because he didn't get a qualifying offer. That's not right."

The current system hurts players more than the old system did -- Under the previous rules, you had many more free agents (34 in 2011-12, 24 in 2010-11) who required the teams that signed them to give up a draft pick than we've seen under this system (13 this past winter, six the winter before that). That's on purpose, actually. But before, Lohse said, if a team had to lose a pick to sign a player, it at least had a decent chance to recoup that pick if another team signed one of its free agents. Not anymore.

"It went from a common thing to be losing or gaining draft picks," Lohse said, "to a rare thing. ... So it becomes a bigger [obstacle.]"

Plus, he said, there's a second penalty for teams that sign one of these players because they don't just lose a pick. They also have the money which was slotted for that pick subtracted from their total draft-pick signing pool. So when the Braves, for instance, signed Santana, they lost both the 17th pick and $1.8 million in slot money that could have been used to sign other picks.

"And I don't see how that makes any sense, to tie in the amateur draft with free agency," Lohse said. "I understand you should get compensated for losing a free agent. But at the same time, losing money to sign a kid out of college or high school, how does that make any sense? I don't see the correlation."

Well, we understand his frustration. And he tells the other side of this story eloquently. But if he's looking for a radical overhaul of this system, either in the 2016 labor negotiations or before, we've got news for him: There is very little indication that's happening.

Instead, here's where sources on both sides believe this issue is, in fact, heading:

Drew and Morales sign after the June draft -- Makes too much sense at this point. There's no compensation required for players who sign after the draft. And a midseason signing would mean they can't be subject to another qualifying offer next winter. So it seems likely both would sign deals for the rest of this season, then hit the market again, unencumbered, next winter, But in the meantime, both sides will no doubt examine the dubious merits of a system that gives that much incentive for teams to wait until June to sign players of this caliber.

Fewer qualifying offers next winter -- Clubs are already getting the vibe from some agents that player/agent strategy is about to change -- and players will be far more open to taking qualifying offers next winter. How that plays out, on both sides, over the next two winters, will have a major impact on the 2016 labor talks.

Some players who accept will get multiyear deals with their old team: One NL executive predicted this development -- Player X accepts the one-year, $15 million qualifying offer. Then his team says, "We're open to talking about a multiyear deal," to help spread out the money. If those deals begin to sprout, that, too, would have an impact on labor negotiations.

The system gets "tweaked" but not overhauled in the next labor deal -- Union chief Tony Clark used the word "adjustments" this spring when he discussed potential changes to this system. Officials on the other side have dropped words like "tweaked" to describe the types of changes they expect. So does that sound like major restructuring is in store to you? It doesn't to us.

Four areas that could be "tweaked" or "adjusted": 1. Looking for ways to make only "elite" players subject to qualifying offers. 2. Possibly giving players more time to decide whether to accept those offers. 3. Exploring whether it makes sense for all players to receive qualifying offers for the same amount. And 4. Looking for ways to protect small-market teams like the Pirates, who felt they couldn't afford to risk having A.J. Burnett accept a qualifying offer last winter and wound up losing him for nothing.

So sooner or later, the system may, in fact, "clean itself up." And what doesn't get fixed naturally will be addressed some day at a bargaining table near you. But in the meantime, that's not much consolation for Drew and Morales, who are caught in the middle of this mess right now. With no end in immediate sight.

"Obviously, guys like your superstars, it's not going to affect them as much," said Lohse. "But there are a lot of other guys out there besides the superstars. And they're living with this."