New Free Agent Compensation System

The new free agent compensation system kicks in after the 2012 season. How will it impact the Braves and the NL East?

I haven't seen a lot written yet about the new free agent compensation system, and how different it will be from what we're used to. It looks like there will be a lot fewer players that will bring compensation to the team that loses them. It also poses some interesting scenarios for several teams in the NL East, including the Braves.

For starters, the old Elias ranking system for free agents is gone. There are no more Type A and Type B free agents. Second, there is no longer any offering of arbitration to potential free agents. What replaces it is the "qualifying offer". Here's the way it works: At the end of a season, a team may make a qualifying offer to any of its players who is eligible for free agency. The qualifying offer is a one-year, guaranteed offer at a salary set by a league formula, which is the the average salary of the top 125 highest paid players from the previous season. (Note that I'm not sure exactly which season this means. For instance, for this upcoming offseason, the qualifying offer amount might be based on 2012 salaries or 2011 -- I've seen it written both ways.) If a team does not make a qualifying offer to a player, they will not receive compensation for that player, period.

The next bit is that the way that compensation draft picks works is changing. If a player to whom a qualifying offer has been made turns down the offer and signs with another team, the team that signed him will forfeit a draft pick. This will be its first-round pick unless that team finished among the bottom 10 (or 15, I've seen both) of all ML teams in the previous season; then the forfeited pick will be its second-round pick. However, that pick does not go to the team that lost the player! Teams receiving compensation picks will receive sandwich picks between the first and second rounds. The order of these picks will depend on a formula involving where the teams receiving compensation finished in the previous season, and team revenue. What about the pick that was forfeited? Apparently, it just disappears; when that pick comes up in the draft, it will be skipped.

MLB hasn't determined yet what the qualifying offer amount will be for the 2012-2013 offseason, but the reports are giving numbers in the neighborhood of $12.5M. Clearly, this means that in most cases, only elite free agents will receive qualifying offers; a team can't risk making a qualifying offer to a player whose value is much less than that. A few odd situations are possible, however; if a team knows that a player won't return for any amount of money, they might make a qualifying offer knowing that it will be turned down, and receive compensation for that player -- even if the player isn't very good.

There are also situations involving options, and there are two of particular interest in the NL East. The Braves hold a $12M option for Brian McCann for 2013, with a $500K buyout. The $12M is not much less then what the amount of the qualifying offer will probably be. If we assume that McCann isn't extended during this season, it might make sense for the Braves to buy out the option year and then make a qualifying offer instead. If McCann accepts, they wind up paing $13M instead of $12M for his 2013 season; if he goes elsewhere, the Braves receive a compensation pick. It's a $1M insurance policy of sorts. Now consider the Mets' situation with David Wright. They have a $16M option for 2013 with a $1M buyout. Assuming that Wright has a decent season this year, it almost certainly makes more sense for the Mets to buy out the option and then make a qualifying offer.

Other 2013 NL East players for whom qualifying offers might be considered:

  • Tim Hudson (Braves): Club has a $9M option with a $1M buyout. The Braves will probably pick up the option. I get the impression Huddy is not interested in shopping, and he may not want to play that much longer anyway.
  • Michael Bourn (Braves): Tough call. He's a Boras client and Boras will probably push him to go elsewhere for more money. If he keeps up his present good work, he will probably receive a qualifying offer from the Braves, and turn it down.
  • Jair Jurrjens (Braves): I'm only including him because someone asked about him in another thread. JJ is the kind of B-grade player who won't be bringing compensation anymore under the new system. The qualifying offer is far above his market value, and the Braves won't offer it because he'd be a fool to turn it down.
  • Carlos Zambrano (Marlins): Currently being paid $18M, so if he keeps up his current good work, he will almost certainly receive a qualifying offer, which he will likely turn down. (Which doesn't mean that he won't stay with the Marlins.) He does have a vesting option for 2013 but he'll have to finish in the top 4 of the NL Cy Young vote for it to vest.
  • Anibal Sanchez (Marlins): Currently being paid $8M, so the qualifying offer would be a big increase. Borderline.
  • Mike Pelfrey (Mets): After his injury this year, he'll probably be signable for a lot less than the qualifying offer.
  • Cole Hamels (Phillies): Almost a lock to get a qualifying offer, assuming that the Phillies don't trade him during the season. He's making $15M this year, so he won't sign for the qualifying offer amount. The Phillies will probably be happy to take the compensation and the relief for their bloated payroll.
  • Joe Blanton ({Phillies): I'm guessing not. Blanton would probably sign a qualifying offer, and there will be a lot of comparable pitchers on the market in 2013 who should be signable for about $3M less than the qualifying offer amount.
  • Hunter Pence (Phillies): Probably. Someone will offer Pence a lot more than the qualifying offer. That somebody may be the Phillies, but they'll make the qualifying offer anyway to cover themselves; it's a no-lose proposition. However...
  • Shane Victorino (Phillies): I'm thinking the Phillies can't afford to re-sign both Pence and Victornio. Do they make qualifying offers to both of them? Quite possibly. They could use the draft picks, if they think it'll work out that way.
  • Edwin Jackson (Nationals): The qualifying offer is not a lot more than he's making this year ($11M). Probably depends on what kind of season he has.
  • Adam LaRoche (Nationals): The club has a $10M option with a $1M buyout. The Nationals will probably buy out the option; I'm thinking they'd like to pay LaRoche less if he stays, so they probably would not make a qualifying offer.

This FanPost does not express the views or opinions of Talking Chop.

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