Understanding The MLB Draft and Qualifying Offer

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The game of baseball can be confusing for the average fan, hell it can be confusing for even the most avid and knowledgeable of fans. When it comes to rules and interpretations of certain rules, the game takes on a whole new level of disorientation, so much so that even the umpires and coaches on the field can be disoriented. Over the next few weeks, I would like to help you understand some of the things that are so often talked about, but so many of us don’t quite understand fully.

Over the offseason, I plan on doing my best to break down some of the things that some fans have questions about.

What’s the difference between the 25 man and 40 man roster?

What does it mean to “non-tender” a player?

When does a player become arbitration eligible?

What is salary arbitration?

What makes a player a “super two”?

These are just some of the things that I have received questions on and some people attempt to discuss on twitter. It’s hard to explain some of these in 140 characters or even in multiple tweets. Some of these are very simple and will not need an entire article dedicated to them so I will have multiple explanations in one article. Some of these go hand in hand and should be included together as well. I will try to go in an order that will explain everything from start to finish.

Draft Eligibility

What determines a player’s eligibility for the big leagues?

Well, this may be the only part of the draft that isn’t that complicated. A player will be eligible for the draft if they meet the following criteria:

·         They have graduated from High School AND have not attended a college or junior college,

·         They have started a four year college and are currently a junior or a senior

·         They are a sophomore at a four year college, and are at least 21 years of age

·         Or are attending a junior college – and have completed one year (Chris Davis)

It is important to know that in order to be eligible for the First Year Player Draft, you not only have to meet the requirements above, but you also must be a citizen of the United States, its territories, Canada or Puerto Rico. International free agents are signed an entirely different way, and we are still a few years away from an International Free Agent Draft.

So now that eligibility has been determined for the (Rule 4) First Year Player Draft, it is important to know that teams are only allowed to spend so much money based on several contributing factors. This is often referred to as slot money. I don’t think it’s wise of me to try to explain how the bonus pool, money allotment, and slot values work, however Baseball America has a pretty nice explanation here based on the 2014 draft order.

The Draft

The draft order is always determined in reverse order of the previous year’s standings. The top 10 picks are protected picks, meaning that the team cannot lose that pick if they sign a free agent who was presented with a qualifying offer the season before. (That is something we will talk about a little later).

In order to better understand this explanation, I will use the Orioles signing of Nelson Cruz from Texas in the 2013 offseason.

If a team has a pick outside of the top 10 (Orioles) and they sign a free agent that has a qualifying offer attached to them (Cruz), then the team that issued the QO (Rangers) will receive that signing team’s (Orioles) first round pick. If a team within the top 10 signs a free agent that was given a QO, they will still give draft compensation to the team that issued the QO but in a later round (typically the second round). Here is an example:

The Rangers offered Nelson Cruz a qualifying offer following the 2013 season. The Orioles ended up signing Cruz and did NOT have a top 10 pick in the 2014 draft, so their 1st round pick went to Texas as compensation. Had the Orioles had a top 10 pick this year, than the Rangers would have received the Orioles 2nd round pick as compensation because the top 10 picks are protected.

The team that receives the compensation pick (Rangers) does not get that other team’s (Orioles) exact pick. That pick essentially disappears, all other teams below that pick move up one spot, and the Rangers will get a supplemental pick at the end of the 1st round (or 2nd round as applicable).

Now if a player is traded in the final year of this contract, his new team is not eligible to receive any compensation for losing him as a free agent, and neither is the players original team. Basically, if a player is traded, his teams, old and new, get nothing in return.

Still with me? Good, let’s move on.

What happens if a team does not sign their 1st round pick?

Good question. A team failing to sign their first round pick will get a virtually identical pick (+1) in the next year’s draft. So the Houston Astros did not sign their 1st overall pick in 2014 so that means Houston will have the #2 overall pick in 2015. If a team picks at #25 and doesn’t sign their pick, they will pick at #26 the next season.

If a team does not sign their <em “mso-bidi-font-style:=”” normal”=””>second round pick, they too, will get an identical pick regardless of what round that pick falls in. If Texas picks at 60, they will receive 61A (basically 62) even if that pick falls in the supplemental round between the 1st and 2nd rounds or it falls in 2nd round.

If a team fails to sign their third round pick, will receive a sandwich pick between the 3rd and 4th rounds. Any failed signed picks after the 3rd round are simply forfeited.

In an instance where a team fails to sign a player with their replacement pick, they will not be compensated any more picks. The pick is forfeited at that point.

Befuddled? I tried to tell ya! The draft is the most complex part of baseball. Who the hell came up with this nonsense?!

A player that is drafted by a team and fails to sign with that team, cannot be drafted by that team the next year unless the player gives his consent. A team has until 11:59PM (ET) August 15th to sign their draft pick or until that player decides to go back to college on a full time basis.

A player that is drafted cannot be signed to a major league contract right out of the draft. That is a rule that changed with the new Collective Bargaining Agreement (CBA) in 2012. A player will be signed to the standard seven year minor league contract and will report to the minor league club that he is assigned to.

I want to make it clear that this is a very basic explanation of how the MLB Draft works. It is far more complicated when you factor in slot money, supplemental rounds, and bonus pool money. What my goal is with this article is, is to give you an idea of how it works.

So about that qualifying offer stuff –

Qualifying Offer

Don’t worry; this explanation isn’t nearly as convoluted as the draft. In fact, I believe that none of the explanations moving forward are as complicated as the draft.

So you have a good player on your team and he is becoming a free agent. Common sense says that you want to get some sort of compensation in return for him right? That’s when you extend him the qualifying offer.

The QO is only extended to players who played the entire season with their team and are not arbitration eligible (that should go without saying).  That is the reason why Jon Lester is not receiving a QO from the A’s and they will get nothing in return if when he leaves for another team. (HAHA!.. sorry)

The price of the QO is a one year contract and is determined by the average top 125 player’s salaries from the previous season. That happens to be $15.3 million for the 2014 offseason.

If a player denies the QO, which is the most likely scenario, then he becomes a free agent and his previous team will get compensation for him from the team that signs him. The risk here is, is that if the players accepts the offer, you are stuck paying that guy a boat load of money so you better make sure he is worth it. A prime example this year is the New York Yankees offering closer David Robertson the QO. He is likely to accept unless he wants a multi-year deal. If he does, the Yankees will pay him more money than Mariano Rivera ever made in a single season.  Good luck with that.

So far, in two seasons under the new rules, 22 players have been extended a QO, and 22 have turned it down. It’s a gamble for the players too because teams are valuing the draft pick more than ever and are reluctant to give up the compensation. Nelson Cruz, Kendrys Morales, and Ervin Santana all were victimized by holding out and either took the same deal with a new team that they turned down from their old team, or took significantly less money to sign. I fully expect a few players to accept the QO this year –Robertson and Francisco Liriano are two that I think will definitely accept.

I hope that these explanations have given you a better understanding of how this stuff works. I know it can be baffling and overwhelming, and while writing this, I learned a few new things myself. I do want to give a special thanks to Scott Lucas who answered some of the questions that I had. Check his stuff outhere.

In the next installment we will talk about the 25 and 40 man rosters, how player options work and we will dive into the Rule 5 draft (oh boy! Another draft!). That should be a good one. Please feel free to email or comment below with any questions or comments that you have on the draft.

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Billy Casey
Billy is a baseball fanatic and has been around the game since he was four years old. The first ever game he attended was in September of '89 and Pete Incaviglia denied him an autograph after he had a bad batting practice session. Billy has held a grudge since. Billy is also a baseball coach who is known to dance around the dugout like Ron Washington during big plays in the game.

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