Today marks the first full day of free agency. The exclusive negotiating window expired at 5 p.m. on Monday, which was the same time teams had to decide on extending qualifying offers to their outgoing free agents. From here on out, anybody can sign anywhere at any time.
The White Sox aren’t likely to be a popular landing place, as they’re at least one year away from getting an adequate payoff from the key first couple seasons of a free agent’s contract. It’s probably for the better, because this year’s class isn’t a particularly inspiring one, even if it’s a step up from last year. The top 50 lists, whether by MLB Trade Rumors or Keith Law, start getting iffy after 10 or so.
Regardless, here are some key developments to pay attention to, even from afar.
This is the first year a team will not lose its first unprotected pick for signing a free agent who declines a qualifying offer. Instead, Major League Baseball and the MLBPA implemented a more complicated compensation system based on team revenue.
Teams that receive revenue: Receive a draft pick after the first round if a qualified free agent signs elsewhere for $50 million or more, forfeit their third-highest pick if they sign a free agent for $50 million or more.
Teams include: Arizona, Atlanta, Baltimore, Cincinnati, Cleveland, Colorado, Houston, Kansas City, Miami, Milwaukee, Oakland, Pittsburgh, San Diego, Seattle and Tampa Bay.
Teams that exceed the luxury tax: Receive a draft pick after the fourth round if a qualified free agent signs elsewhere for $50 million or more, forfeit their second- and fifth-highest pick and $1 million of their international signing pool if they sign a free agent for $50 million or more.
Teams in between: Receive a draft pick after the Competitive Balance B round if a qualified free agent signs elsewhere for $50 million or more, forfeit their second-highest pick and $500,000 of their international signing pool if they sign a free agent for $50 million or more.
If a player signs for less than $50 million, teams under the luxury tax receive a pick after the Competitive Balance B round. Teams paying the luxury tax get one after the fourth round.
The revised compensation system should restore some normalcy to free agency, as teams’ unwillingness to part with draft picks led to more players accepting the qualifying offer. Jeremy Hellickson came back to the Phillies for $17.2 million last year, and Colby Rasmus (Astros), Brett Anderson (Dodgers) and Matt Wieters (Orioles) all returned for $15.4 million in 2015.
The reduced compensation might eventually make teams a little more generous with the qualifying offer, but this year’s class isn’t a great litmus test. This year’s qualifying offer is for $17.4 million, and only nine players will get to weigh it between now and Nov. 16.
- Jake Arrieta
- Lorenzo Cain
- Alex Cobb
- Wade Davis
- Eric Hosmer
- Greg Holland
- Lance Lynn
- Mike Moustakas
- Carlos Santana
The Royals could gain three draft picks after the first round depending on whether they re-sign Cain, Hosmer and/or Moustakas.
A few notable players who didn’t receive a qualifying offer: Zack Cozart, Andrew Cashner and Logan Morrison.
Opting in, not opting out
The depth of this year’s free agent class was heavily contingent on players opting out from their nine-figure signings. Instead, five players decided to stay put.
- Wei-Yin Chen: Three years, $52 million
- Johnny Cueto: Four years, $84 million
- Ian Kennedy: Three years, $49 million
- Masahiro Tanaka: Three years, $67 million
Effectively opted in:
- Justin Upton: Five years, $106 million
Upton was traded from Detroit to the Angels with an opt-out looming, and he seemed to appreciate both the change of scenery and the bargaining position. That deal above represents the opt-in value plus one year and $17.5 million for 2022.
There’s a very narrow range of outcomes that make an opt-out work for a team. Basically, it requires a team to gamble that they can pull off a two-year deal for a top free agent, after which they’ll sign a blood oath to let him go no matter what. The Yankees could have quit after two top-five Cy Young finishes from CC Sabathia, but extended him after 2011 for six years of diminishing returns.
Even then, the player has all the power, which these cases illustrate. On one extreme, Upton was able to turn a six-year deal into a seven-year contract, and the opt-out killed any leverage Detroit might’ve had in trading him to LA since he was planning on leaving a rebuilding situation. On the other, Chen has thrown only 156 innings over the last two seasons due to elbow problems.
In between, Cueto, Kennedy and Tanaka all looked like potential opt-outs after 2016, but disappointing 2017s kept them in the fold. The Yankees are probably fine with Tanaka’s decision, because he looked like his old self in the second half and they’d have to replace that production regardless. The same can’t be said for the others. Kennedy’s contract makes it hard for the Royals to extend the Hosmer-Cain-Moustakas window, and Cueto brings back memories of Barry Zito for San Francisco.
The White Sox likely won’t be big players in this year’s free agent class, but the low success rate with opt-outs is worth keeping in mind for the megawinter of 2018-19 (and Jason Heyward should provide a fresh reminder if anybody forgets). We can watch from afar to see if teams find a different way to land top talent this time around, but if opt-outs remain a fixture in the landscape, this gives us an idea of how we should mentally account for them.