Since we just looked at what teams would stand to receive in draft compensation if they lost a free agent who rejected a qualifying offer, now it’s time to explore what each team would have to give up in order to sign a QO-rejecting free agent.
To recap the mechanics: if a free agent has played the entire 2024 season with a team and he has never received a qualifying offer in the past, he is eligible to be issued a QO within five days of the end of the World Series. The qualifying offer is a one-year deal worth the average of the salaries of the top 125 highest-paid players in the majors, and this winter, the QO is worth $21.05MM. An eligible free agent can simply accept the QO and thus avoid free agency entirely, but if he rejects the QO, his former team is now in line to receive some draft-pick compensation if the free agent signs elsewhere. This only relates to qualified free agents from other teams, as a club can re-sign its own qualified free agents with no penalty.
Here is the (mostly set) rundown of what every team will have to give up if they sign qualified free agent.…
Revenue Sharing Recipients: Diamondbacks, Rockies, Reds, Brewers, Pirates, Marlins, Athletics, Mariners, Tigers, Royals, Twins, Guardians, Orioles, Rays
Should one of these clubs sign a qualified free agent, they will have to give up their third-highest selection in the 2025 draft. Since most of these smaller-market teams are part of the Competitive Balance bonus rounds of the draft, their third-highest pick likely won’t mean their third-round pick, and the situation could be further complicated if any of the teams trade from their CBR picks. The Competitive Balance selections are the only draft picks eligible to be traded, as we saw last winter when the Orioles included their CBR-A pick to the Brewers as part of the Corbin Burnes trade package.
It is relatively rare to see teams from this group splurge on a big-ticket free agent, though Baltimore is expected to increase spending under new owner David Rubenstein. The Tigers also have plenty of payroll space and could look to build more aggressively around their young core, after Detroit unexpectedly made a run to the ALDS this season.
Teams Who Don’t Receive Revenue-Sharing Funds, And Who Didn’t Pay The Competitive Balance Tax: Padres, Cardinals, Nationals, Angels, White Sox, Red Sox
For signing a qualified free agent, these teams would have to surrender their second-highest pick of the 2025 draft, and also $500K from their bonus pool during the next international signing period.
The White Sox and now the Cardinals are both rebuilding. The Padres can never be ruled out of making a splashy signing, but that seems unlikely given how the team has a lot of its own impending free agents to address, plus San Diego made a point of getting under the luxury tax threshold last offseason. Angels owner Arte Moreno has said his club plans to contend in 2025 and the payroll will go up, though that might not manifest itself in the form of signing a qualified free agent, given how often the Halos have been burned on such signings in the past.
Washington and Boston are both borderline candidates for a big free agent signing. The Nats are still technically in rebuild mode themselves, but could decide that the time is right to add some major veteran help to an intriguing mix of younger players. The Red Sox have generally eschewed pursuits of pricey free agents in recent years, though since they haven’t had a winning season since 2021, ownership might be again willing to be more aggressive in shopping at the high end of the market.
Team In Limbo: Blue Jays, Cubs
As noted in the last post, it won’t be known until December (when the luxury tax numbers are officially calculated by the league) whether or not the Jays and Cubs managed to sneak under the $237MM tax threshold. Roster Resource has both teams slightly above the threshold while Cot’s Baseball Contracts has the Cubs slightly over and the Blue Jays slightly under, so given how narrow the margins are, we’ll wait until the league issues its numbers before putting the two clubs in either the previous category or the next category.
Needless to say, both clubs are hoping for a reset on their luxury tax status, and lesser penalties for signing QO-rejecting free agents. The Jays and Cubs are also two of the teams facing the most pressure to win in 2025, and thus could be more open to making a big signing to help turn things around. If MLB’s calculations reveal that Toronto and Chicago did exceed the threshold this year, they’ll join the next group of…
Competitive Balance Tax Payors: Dodgers, Giants, Mets, Phillies, Braves, Astros, Rangers, Yankees
As one would expect, these teams face the stiffest penalties. For signing a QO-rejecting free agent, these clubs would have to give up $1MM in international bonus pool money, as well as two draft picks — their second- and fifth-highest selections in the 2025 draft.
Astros GM Dana Brown has said his team “may have to get a little bit creative” with their spending given how many big contracts are already on the books. The same could be said for the Phillies and Braves as well, but it is also easy to see both teams remaining aggressive after falling short in the playoffs. The Rangers have a lot of money coming off the books but, given their uncertain broadcast revenue situation, could spend but still make a point of ducking back under the luxury tax line. San Francisco will be an intriguing team to watch, now that Buster Posey is running the front office and how the Giants already spent big to keep a pending free agent in the fold by extending Matt Chapman.
Since re-signing Juan Soto or re-signing Teoscar Hernandez wouldn’t cost anything in QO penalties, keeping those sluggers is likely the top priority for the Yankees and Dodgers, with other free agents perhaps as backup plans if Soto or Hernandez signed elsewhere. The Mets were relatively quiet in David Stearns’ first winter as president of baseball operations, some more big spending might be in the works if owner Steve Cohen wants to build on the club’s playoff run.
All this being said, the higher penalties for CBT payors can be deterrents to spending on qualified free agents in particular. This doesn’t mean the Yankees wouldn’t look to retain Soto or anything, but teams might prefer to make their big upgrades through trades, or perhaps with free agents who won’t have a QO attached to their services.
Should a club sign more than one qualified free agent, they will have to additionally forfeit their next-highest draft pick. For signing two QO-rejecting free agents, the revenue-sharing group would have to give up their third- and fourth-highest picks in the 2024 draft. The teams who didn’t exceed the CBT or receive revenue-sharing funds would have to give up their second- and third-highest picks, as well as $500K more of their international bonus pool. The luxury tax payors would face the heftier penalty of losing four draft picks — their second, third, fifth, and sixth-highest selections.