Qualifying Offer Recipients

The qualifying offer value is going to be $20.325MM for this offseason, reports Jon Heyman of The New York Post. It had been previously reported that it would land “around” $20.5MM but it seems the final number will be a smidge lower.

The value of the QO is calculated by averaging the salaries of the 125 highest-paid players in the league each year. As the season ends, a player reaching for free agency is eligible for a qualifying offer if they spent the entire season with just one team and have never received a QO before. If the player declines and signs elsewhere, the signing club is subject to draft pick forfeiture as well as a possible reduction of their international bonus pool. The player’s previous club receives draft pick compensation.

The value of the QO generally goes up as salaries rise. Here are the values of the past dozen QOs:

• 2012-13: $13.3MM
• 2013-14: $14.4MM
• 2014-15: $15.3MM
• 2015-16: $15.8MM
• 2016-17: $17.2MM
• 2017-18: $17.4MM
• 2018-19: $17.9MM
• 2019-20: $17.8MM
• 2020-21: $18.9MM
• 2021-22: $18.4MM
• 2022-23: $19.65MM
• 2023-24: $20.325MM

14 players received qualifying offers last offseason. Joc Pederson and Martín Pérez accepted. The other 12 players declined, though Aaron Judge, Anthony Rizzo and Brandon Nimmo subsequently ended up re-signing with their previous team.

MLBTR recently took a look at the pitchers and position players that could potentially receive QOs this year, though it has since been reported that Lourdes Gurriel Jr. is not eligible to receive one. Clubs have until 4:00 pm Central on November 6 to decide whether or not to extend the QO to eligible players. Players who receive the QO will have until 3:00 pm Central on November 14 to decide whether or not to accept.

This year’s qualifying offer will be set at $19.65MM, according to Joel Sherman of the New York Post. This will set a new record for the QO, which generally trends upward from year to year. The previous high was $18.9MM heading int0 the 2020-21 offseason, and the QO then dropped last winter down to $18.4MM.

The qualifying offer changes on an annual basis because it is an average of the salaries of the 125 highest-paid players in baseball. Naturally, as salaries increase with inflation and increased revenue in the game, the qualifying offer also goes up. Last year’s decline was likely a reflection of the pandemic (i.e. canceled games and diminished attendance led to a decrease in expenditures from some clubs) bu it seems that the spending environment has broadly rebounded. A look at the QO totals since its creation….

• 2012-13: $13.3MM
• 2013-14: $14.4MM
• 2014-15: $15.3MM
• 2015-16: $15.8MM
• 2016-17: $17.2MM
• 2017-18: $17.4MM
• 2018-19: $17.9MM
• 2019-20: $17.8MM
• 2020-21: $18.9MM
• 2021-22: $18.4MM
• 2022-23: $19.65MM

It wasn’t clear whether or not the qualifying offer system would remain in place this winter, as the league offered to scrap the QO if the MLB Players Association agreed to replace the current international signing system with a draft for international players. This issue lingered even beyond the settlement of the new Collective Bargaining Agreement back in March, but when the two sides couldn’t reach an agreement on an int’l draft in July, that ensured the qualifying offer will continue through at least the length of the CBA (through the 2026 season).

The QO has always been an interesting subplot of the free agency, if not necessarily a popular one for players and agents who feel the qualifying offer can act as a limitation on a player’s market. The qualifying offer is a one-year, contract that any team can issue to any free agent who hasn’t already received a QO in the past. If the player accepts, he returns to his team on that $19.65 payday — if he rejects, the team will receive draft pick compensation if the player signs elsewhere, and the player’s new club will also have to give up at least one pick as a penalty for the signing.

Top free agents typically reject the qualifying offer, since they are likelier to land long-term contracts and their suitors usually aren’t bothered too much at the idea of paying an extra QO penalty to sign these stars. However, some players have accepted the QO, opting to take the one-year contract as something of a pillow contract if the player is coming off a bit of a down year production-wise, or perhaps an injury-shortened season. Teams also must make a strategic call about whether or not to issue a QO to some free agents, as clubs may not want to be on the hook for $19.65MM to a particular player (free agents who accept a QO cannot be traded until June), but clubs are also keen to add extra draft picks whenever possible.

This year’s qualifying offer will be worth $18.4MM, ESPN.com’s Buster Olney reports (via Twitter).  This represents a drop from last year’s $18.9MM figure, and the second time in the history of the qualifying offer that the value has declined from the previous season.  The QO was worth $17.8MM in the 2019-20 offseason, slightly below the $17.9MM price tag for the winter of 2018-19.

The qualifying offer is recalculated annually, as it is determined by averaging the salaries of the 125 highest-paid players in baseball.  The $500K drop from last year therefore looks like a reflection of the slower market of the 2020-21 offseason, as several teams spent less in the wake of reported and claimed revenue losses from the pandemic.

Still, the lower figure still counts as a surprise, as the general feeling was that the QO would end up rising to somewhere in the $19-$20MM range for the coming offseason.  Originally instituted for the 2012-13 offseason, the qualifying offer has varied annually but generally increases year-over-year:

• 2012-13: $13.3MM
• 2013-14: $14.4MM
• 2014-15: $15.3MM
• 2015-16: $15.8MM
• 2016-17: $17.2MM
• 2017-18: $17.4MM
• 2018-19: $17.9MM
• 2019-20: $17.8MM
• 2020-21: $18.9MM
• 2021-22: $18.4MM

To recap the QO process, teams can issue a one-year contract to any of their free agents who a) have never received a qualifying offer, and b) have been with the team for the entirety of the previous season.  For instance, impending free agents like Starling Marte, Kris Bryant, Javier Baez, Anthony Rizzo, or Kyle Schwarber can’t receive qualifying offers since they were traded at midseason.  MLBTR’s Tim Dierkes recently compiled a list of every player who has already been issued a qualifying offer in the past, for reference purposes.

Players who receive a qualifying offer have 10 days to make their decision, and if a player accepts a QO this winter, he’ll return to his club on a one-year contract and earn an $18.4MM salary in 2022.  (A player can also work out a longer-term extension with his team after accepting a qualifying offer, as Jose Abreu did with the White Sox in November 2019.)  If the player rejects the QO, his new team will have to give up at least one draft pick and potentially some international spending pool money in order to make the signing, and his former team will receive a compensatory draft pick.

Back in August, MLBTR’s Anthony Franco broke down which of this winter’s free agents are likeliest to receive a qualifying offer, and which players might be more borderline cases.  As we’ve seen in the past, a QO can have a significant impact on a player’s earning potential, if teams are hesitant about surrendering significant draft capital or a hefty one-year salary to a free agent who might be a riskier candidate to provide elite value going forward.

This potential dampening effect of the QO has long been a thorn in the side of agents and the MLB Players Association, and the future of the qualifying offer figures to be a notable topic in negotiations over the new collective bargaining agreement.  It is quite possible that 2021-22 will be the last offseason featuring the qualifying offer in its current form, though it isn’t likely that owners will be keen on removing signing compensation and/or penalties from the free agent process.