It’s not the qualifying offer, stupid — it’s the hard cap on bonus pools.
You have to hand it to the owners. The players’ union has had a long history of sticking it to players who are not yet part of the union, so when it came time to negotiate the latest CBA, the owners took advantage of that fact to pump the brakes on what was previously a runaway free-agent market.
How are these two concepts linked? You need to look at the history of the draft and the behaviour of wealthy teams to understand what is going on.
Scott Boras has been doing a lot of whining lately about how free-agent compensation is making it hard for his clients to get paid. The thing is, there has always been free-agent compensation, so this is not the problem. The previous CBA had quite a bit more compensation that the current one — any pending free agent that rejected a team’s offer of salary arbitration would entitle the team to a compensation pick from the team who signed him away from you. The Elias rankings (e.g. A, B) and standings-based pick order dictated the quality if the pick received. For a team losing a Type A player, they would even get a extra “sandwich pick” for their troubles.
The thing is, the rich teams who were losing all those draft picks didn’t really care. Why, you may ask? It’s because they had other ways to sign talent that did not require a high draft pick:
(a) draft a “hard to sign” player and offer them a big, “over slot” bonus.
(b) spend aggressively on international free agents.
The latest CBA has plugged both of those holes. Teams have both an international spending limit and an amateur draft spending limit (based on “hard slots” for each pick they have). Exceed either of those limits, and the penalties are steep.
Suddenly draft picks are a whole lot more valuable, because when you lose a draft pick you cannot replace it with the aforementioned methods.
The owners did concede a minimum “qualifying offer” for pending free agents, which is set based on the salary of the top 125 players in the previous season. As long as salaries continue to rise, then this number will rise as well. However Boras has noticed that the growth of this figure has slowed in the past few years.
Once owners succeed at instituting an “International Draft”, they will plug the remaining source of uncontrolled spending — teams have shown a willingness to sit out a whole year of International signings as long as they can sign enough talent in a given signing period.
The players have struck back by some degree by introducing the “opt-out” concept, to allow them to re-enter the FA market 1-3 years after making a long-term commitment to a team. One wonders if that type of contract will be on the table when the next CBA is negotiated.
It really is a great system for the owners:
And it’s working. The players’ percentage of MLB revenues has been in steady decline. So much so that the players are considering (for the first time) the idea of a salary cap linked to league-wide revenues.
Well played Rob Manfred, well played.