I was lazy. I didn’t have work today and so I wanted to write something about beloved sports topics. Unfortunately, nothing jumped out at me. Maybe my brain was frozen from the -17 degree (non-windchill) weather outside. So I tasked my many many (not many) Twitter followers to find a topic for me…now if someone would just write it for me. From the great guys at Ground Rule Single, here was my task.
@frontofficeguy Analysis of how much money the Santana/Jiminez gang are losing compared to similar players under the old CBA?
— Ryan (@GRS_Ryan) January 6, 2014
The first question to ask when trying to determine what is causing something, is to confirm that there IS an actual effect. Is what you’ve noticed real? Or just perceived? To attempt to learn this, I did some research into free agent signings from the previous CBA system and the new system to see if there were differences. Here is my very basic findings on a google doc.
What is potentially wrong with the data though? First, I’m simply averaging a small set of data. Averaging isn’t very complex or reliable in advanced situations, nor is a small data set very useful. However, I didn’t want to go too far back for my information. I started in the 2009 off-season for signings of players and I only used players that fell under Type-A free agents that declined arbitration and then included the deals of all starting pitchers that could be somewhat compared to Ervin Santana and Ubaldo Jimenez. Furthermore, I only used ranks of ESPN in free agency, not a perfect comparison tool as each free agent class is not created equal.
What is the difference between the old CBA and the new CBA that may result in a difference in value? When it comes to free agent compensation and signings, there is only one big difference, the restructuring of the Type-A/B designation to the qualifying offer system. Under the old MLB CBA, Elias Sports Bureau took the list of impending free agents and ranked them in an order based on various stats, not particularly complex or informative ones. This list was then broken down into three parts; Type-A, Type-B and all other players. The non-typified players were simply players that weren’t good enough to allow for teams to receive compensation for that player departing in free agency. Type-B allowed for the team that lost the player to another team to receive a compensatory pick, but did not require the player’s new team to forfeit a pick. Finally, Type-A players require that the player’s new team forfeit a pick to the original team and the original team receive an extra compensatory pick. A rather convoluted system which only has two purposes. Keep player contract values down, as with everything that the MLB does, and to compensate teams that can’t afford to keep their top players from free agency.
The new CBA, signed at the very end of the playoffs in the 2011 season and having taken full effect after the 2012 season, eliminates that system and implements qualifying offer system that resembles some other sports. As long as a player has been on a team’s roster since Opening Day of THAT season (eliminating pending free agents traded for during the season, i.e. Matt Garza and Texas), he can be offered a qualifying offer for the following season. The qualifying offer is a one-year contract with a salary equal to the average of the top 125 player salaries for that season, $14.1 million for the 2014 season. If the player turns the qualifying offer down then any team that signs him must forfeit their first round draft choice in the next amateur draft. If a team has a pick in the top 10, it is required to forfeit its next highest draft choice. Also, for each successive player that has turned down a qualifying offer that another team signs, it must forfeit its next highest draft choice for each one.
Application of Differences
What do these major free agent compensation differences mean for the value of a player that has been offered a qualifying offer? Well, for one, draft pick value is at an all-time high right now and teams are not keen on signing a player and giving up their top draft choice in the upcoming draft for a player that is anything less than stellar and will be there for three years minimum. Hiroki Kuroda has been the only player signed for one year under the new system, but he re-signed with the same team so the compensation is a moot point. Rafael Soriano has the only two year contract for a player that signed with a new team, Washington. Soriano’s circumstances come from the fact that the Nationals pick would be one of the last picks in the first round and that Soriano may be enough to put them into the World Series. The Nationals did not pick until #68 overall in the second round.
There is also added encouragement to avoid signing multiple players that were offered qualifying offers because you must forfeit a pick for each one. That hasn’t quite played out as the New York Yankees have just signed three players who were offered qualifying offers to contracts, forfeiting their top three draft choices. However, they lost two qualified free agents, netting them two picks in the compensatory round.
OK. Ok…ok. How the hell does any of this apply to Ervin Santana and Ubaldo Jimenez. First, I’ve had many disclaimers about not relying on just one stat, despite its ability to be a good baseline. So blah blah, don’t rely on one stat, but feel free to use it as a baseline. So here is WAR. Santana had a WAR of 2.9 and Jimenez a WAR of 2.7 for the 2013 season. The only other starting pitcher that we can compare these two players to that signed a contract with a new team after declining a qualifying offer is Kyle Lohse last year. He had a WAR of 4.3 (a very skeptical WAR based on the quality of the team behind him and some luck) and was not signed until well into March for a three-year, $33 million contract. The qualifying offer for that season was $13.3 million.
Under the old CBA, there weren’t many players that were subject to the Type-A free agent compensation that were comparable players. In the last few years of the last CBA, John Lackey (1.8 WAR), Cliff Lee (4.8 WAR) and C.J. Wilson (4.9 WAR) were of such a designation. All three pitchers are viewed much more highly than Santana and Jimenez, despite Lackey having a 1.8 WAR in his final season, he was viewed as an ace potential pitcher, Cliff Lee is undoubtedly an ace and C.J. Wilson was a bit of a skeptical player, but a solid left-handed pitcher. Santana and Jimenez are viewed as players that had bounce back years and so teams may be scared of the possible future these two pitchers hold.
Current Pitching Market
The pitching market is moving slowly. Just slightly over half (9-of-16) starting pitchers available, and worth mentioning, currently have signed with new teams, only one of which being considered near the top in free agency, Ricky Nolasco. Leaving Jimenez, Santana, Burnett and Garza at the “top” of the free agent market being unsigned. Why? The biggest piece yet to fall is Masahiro Tanaka. The Japanese phenom that is coming over this off-season. This has been muddied because there were negotiations to set up a new posting system (teams pay $20 million for the right to negotiate with Tanaka in a free agency style, “losers” get their $20 million back). The deadline for Tanaka to sign with a major league club is 1/24/14. He will return to Japan for the season if he doesn’t agree to a deal by then. This will hold the starting pitcher market hostage until some of the negotiations start happening. Once teams realize that they have been eliminated by Tanaka, they may look to get a jump start on signing someone like Jimenez, Santana, or more likely, Garza (because he lacks the qualifying offer tab).
On top of Tanaka, there are two (at least) very good-to-great starting pitchers that are very available, for a quality, not qualifying, offer. Jeff Samaradzija and David Price are both publicly available in trades and both would far and away be the top free agent pitcher if they were on the open market. Until teams get the vibe that the Cubs and Rays will stand pat (starting to come out) or until trades for those pitchers go through, they will slow the pitching market. They won’t hold it hostage quite like Tanaka, but teams that want impact starting pitching will look to the Cubs and Rays while feeling the free agent waters.
We’ve come all the way back around to the start. Is their an effect of this new CBA on non-elite, but quality starting pitchers that are stuck with the qualifying offer designation? There is not nearly enough data to know. We may not have enough to know until the CBA expires. We may never have enough if this compensation system is renegotiated. Another problem is that many pitchers will likely be of the type that can’t be qualified because they are so often traded mid-season to teams in contention. But let’s take a look and speculate…because it is fun.
Under the old CBA, pitchers like Jimenez and Santana would be near the level of guys like Joel Pineiro, Hiroki Kuroda and Mark Buehrle. Type-B free agents that require no loss of a draft choice to sign. Right now we can’t be sure, but I think we will see a market correction of sorts once teams get used to this new set up. Lohse had to wait until the end of spring training to sign with the Brewers for less per year than his qualifying offer. This correction could take two different shapes. More pitchers may sign their qualifying offers with extremely high salary one-year deals and hope for the best. Others may wind up being signed earlier and earlier each year as teams adjust to this. If the Brewers knew they were going to sign Lohse, there would have been no reason to wait until March. I’m sure they wish they could have brought him in to be ready to start the season. Teams may just accept this and take the hit.
Moral of the story is that this qualifying offer system DOES hurt quality players that aren’t quite top notch because it is very hard to be a baseball player on consecutive one-year contracts, despite their high annual value…unless your name is Hiroki Kuroda of course (going on his fourth season of consecutive one-year contracts). Teams can almost uniformly assume that players offered a qualifying offer will turn it down in search of a multi-year deal, even if it is below the annual value of the qualifying offer. Pitchers are so susceptible to unexpected injuries that one-year deals must be a terrifying prospect for them. But, teams know this and therefore don’t need to offer top dollar unless a bidding war starts, which is unlikely for a player that is seen as desirable, but also replaceable, like Santana and Jimenez.
How much is being left on the table is anyone’s guess, I sure don’t know. But I’m guessing that Jimenez and Santana will end up with deals that have a lower annual value than the $14.1 million qualifying offer.
-Colby Rogers (@FrontOfficeGuy)