Understanding baseball’s new compensation system
Posted by: Chad Jennings - Posted in Misc on Oct 26, 2012 
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Forget about Type-A and Type-B. Forget about offering arbitration. Forget about first-round picks going from one team to another.
Baseball’s free agent compensation system has been radically changed by the new collective bargaining agreement, and in the next week or so we’re going to hear a lot about qualifying offers and eliminated first-round picks. If you want to have the changes broken down into bullet points, go here to MLB Trade Rumors. If you want to have Jim Callis explain it quickly and easily, go here to Baseball America.
If you don’t want to click a link, here are the basics.
Which free agents are eligible for compensation?
Only players who spent the entire season with one franchise are eligible for compensation. Any mid-season trade addition or waiver claim is ineligible. For the Yankees, that means guys like Ichiro Suzuki and Derek Lowe.
Every other free agent – anyone who did spend the entire season with one team – is eligible, as long as his former team is willing to offer a qualifying contract. This year, a qualifying contract is at least one year, $13.3 million (that number will change year to year based on the average salary of the 125 highest-paid players in the game).
Players who are not given a qualifying offer become free agents with no compensation attached to them.
When do teams have to make a qualifying offer?
Teams have until five days after the World Series to make a qualifying offer. Players have seven days to accept to reject a qualifying offer.
If a player accepts a qualifying offer, he goes back to his former team for $13.3 million (or more, depending on the offer). If the player rejects the qualifying offer, he becomes a free agent, and his former team is eligible for compensation if he signs elsewhere.
What is the compensation for losing a qualified free agent?
There are no more Type-A and Type-B free agents. All compensation free agents are the same.
When player rejects a qualifying offer and signs elsewhere, his former team will receive one draft pick between the first and second rounds.
The player’s new team will lose its first-round pick (the top 10 picks are protected, so if the signing team picks in the top 10, it loses its second-round pick). Those lost picks go nowhere. They are simply lost and everyone else moves up a spot.
How does this affect the Yankees?
It really means they have two choices to make.
With guys like Andy Pettitte and Mariano Rivera, there’s really no risk in them signing elsewhere and nothing to be gained from a qualifying offer. Guys like Raul Ibanez, Freddy Garcia and Russell Martin aren’t $13-million players, so there’s no chance they’ll receive qualifying offers. Even Hiroki Kuroda, who was outstanding, made well below $13.3 million this year.
The two to consider are Nick Swisher and Rafael Soriano. For Swisher, $13.3 million would be a solid raise over what he was making this year, but he’s probably after a multi-year contract this winter (and even if he accepted, it wouldn’t be the worst thing in the world for the Yankees). Soriano is expected to opt out of $14 million, and he too is expected to be after a multi-year contract.
It seems likely that the Yankees will extend a qualifying offer to those two, and receive two additional draft picks when they sign elsewhere.
Associated Press photos
make qualifying offers to Swisher, Soriano, and Kuroda…..and as Ive written before I’d even consider it for Martin if they don’t think they can get anybody better…..
“Blake, was talking more from a production standpoint. With 40 taters, and a few less K’s, you should be driving in 110-115 runs.”
he drove in 106…which is close to that.
They have to make Kuroda a qualifying offer if they want him on the team next year, to make sure they don’t lose him. He was their best pitcher and he made only $10 million in 2012. He’s worth $13 million easily.
I’m hopefully that Kuroda will take the offer if they give it to him….13.3 million for one year would be great.
Adam Kilgore ?@AdamKilgoreWP
Adam LaRoche says there’s been some progress in his ongoing contract talks with the Nats. http://wapo.st/Y4nNge
so if they sign Laroche…..and they have Zimmerman locked up at 3B…..where does that leave Rendon when/if he’s ready?
Martin at $13.3 Mill ??? NOPE
“Martin at $13.3 Mill ??? NOPE”
depends….if they don’t have any other options and he’s demanding a 3 years deal then I’d rather over pay him for 1 year and have him off the books for 2014 than to sign up for 3 years and have to pay that in 2014 and 2015 after the rules change…….it depends on what he’ll sign for and what other options they think they have…..Romine’s back hasn’t held up enough to count on him….
Repost
I mourn Grandy’s swing change at about August of last year. As the pitcher is delivering, his hands are moving backwards – don’t understand.
NO how, NO way, Under ANY circumstances, would I pay Martin $13.3 Mill. Blake, when did you become Martin’s agent? You Gotta be gettin’ a cut of the action.
mick October 26th, 2012 at 2:41 pm
Mike F. is saying NYers who are Cowboy or Steeler fans are so because their parents got them footie pajamas for those teams.
———————
Lies.
My cousins gave me those pjs!!
(They were old enough to enjoy their Championships while I’ve wallowed for nearly two decades of AWFUL.)
My dad’s a Giants fan.
blake – The question would be, who else would offer Martin 3 years?
If the answer is no one, let him long for it all he wants….. he couldn’t even bat .200 for most of the season! I gotta think other teams will view his HR totals as being relative to NYS, however true or false that assumption might be. He’s the one guy I wouldn’t extend an offer to.
Rather than 1 year of Martin @ ~$13MM, I think I’d take a shot at Miguel Olivo for 1 or 2 years. IIRC Ms declined option on him. Made $3.5MM in 2012.
Make qualifying offers to Swish, Soriano and Kuroda. Swish and Soriano will more than likely decline, so you get the draft picks.
I think Kuroda either re-ups with NYY or heads back to Japan. I wouldn’t hesitate to keep Kuroda for another year at a 3.3 mil dollar pay raise. He was solid as expected.
However if he is enticed to go back to LA or somewhere else you get a draft pick.
Pretty simple what to do on this front.
With Martin, I have to disagree with Blake, I believe he is over-rated defensively and we all saw how he has hit over most of the last two years. I let him go and move onto another catching option until Romine or somebody else is ready to handle a FT gig.
“blake – The question would be, who else would offer Martin 3 years?”
that is the question…..I don’t really have a feel for his market….the Yankees should though. My point is that they need to avoid a multi-year deal with him if at all possible…..even a deal like the one they proposed last year of 3/21. Consider that deal vs the qualifying offer……
if he signed the 3 year deal then sure it’s cheaper per year…..but you also have 7 million in AAV on the books for the already very tight budgets beyond 2014.
I don’t like the idea of paying Martin like twice what he’s worth…..I also don’t like the idea of having no catcher next year or having Martin on the books for 3 years either.
(They were old enough to enjoy their Championships while I’ve wallowed for nearly two decades of AWFUL.)
===========
Shame, on you…
Martin’s homer totals shouldn’t really be affected by YS because he’s righty…..you hear that YS is a crackerbox all the time….but it’s a big park for RH hitters unless you’re Migueal Cabrera (or Jesus Montero
)
Are the rules different with Kuroda because he is a multi time free agent? They used to be under the old CBA, I believe.
If there’s a way to lose a draft pick and still end up with Soriano on the team, Randy Levine will find it.
By the way, I know I’m in the minority on this but I take the risk with Josh Hamilton, provided I can move Granderson,who I would exhaust any and every avenue to trade off for near major league ready prospects, either a 3B or SS.
With Hamilton, I offer him a 4 year deal, 85 million and see if he bites. He most likely will get better offers elsewhere but I give it a shot. I think he is a difference maker in that line-up and he would put some excitement back in that quiet area also known as YS3.
I dunno what his market is either but he’s definitely not worth the $13 mil for even a one year pact.
I’d not make the qualifying offer and try to get him for 2 years at like $7-9 million. Spending $5 million a year on Martin wouldnt be worth it.
also I didn’t say I would make the qualifying offer to Martin…..I said I’d consider it under certain circumstances…..if the Yankees don’t feel like they can get a better catcher…..and they believe multi year offers are out there for him…..then I’d consider over paying him for one year……would I rather do like a 2 year deal for the same money? sure…..but even there you have money on the books for 2014…..it just all depends on how they see that whole situation……if it’s really close to 189 and they are dead set on not going over on that….then I really don’t want any money attributed to Russell Martin that they have to work around….
“By the way, I know I’m in the minority on this but I take the risk with Josh Hamilton, provided I can move Granderson,who I would exhaust any and every avenue to trade off for near major league ready prospects, either a 3B or SS.
With Hamilton, I offer him a 4 year deal, 85 million and see if he bites. He most likely will get better offers elsewhere but I give it a shot. I think he is a difference maker in that line-up and he would put some excitement back in that quiet area also known as YS3″
I agree…..I think if they could sign Hamilton to a 5 year or less deal and trade Granderson for a young 3B then that would be great. I don’t know if either is possible but I don’t think Hamilton will get more than 5 or 6 years and I do think Granderson has more value to a handful of contending teams than a lot of folks think he does.
ESPN New York ?@ESPNNewYork
Matthews: Rivera should retire, for Yanks’ sake http://es.pn/S12Nmc
Retweeted by Andrew Marchand
Wally Wally Wally
my final point on Martin…..how do we know that given the rule changes for 2014 that the Yankees wouldn’t rather pay him 13.3 million dollars in 2013 than to have to pay him at all beyond that? What if they are willing to overpay next year just to stay more flexible for 189?
I just considered making a qualifying offer to Russell Martin.
No.
I also agree that the NYY, somehow, need to get a young SS/3B, near ML ready, especially if they aren’t sold on Nunez/ Adams. The left side is very old.
I’d take any alternative catcher, even if he sucks, rather than paying Martin 13.3 mil for one year. I’d rather have green, 20 year old Sanchez catch than that!
Everyone in the path of Hurrcane Sandy is going to want to take a look at this; she’s making a dangerous progression:
http://twitter.com/wbdnewton/s.....to/1/large
“I just considered making a qualifying offer to Russell Martin.
No.”
If Martin ends up using a pretty dry free agent market to push his value up to say 3/30, then a qualifying offer looks pretty good.
Does it, though?
Does it, really?
Does it, really?
Jerkface October 26th, 2012 at 4:25 pm
If Martin ends up using a pretty dry free agent market to push his value up to say 3/30, then a qualifying offer looks pretty good.
—
No, a bye bye wave looks good. Then sign someone. Give Romine a shot part time. Cervelli. Stewart. Anyone.
everyone thinks of the 13.3 million as their money…..it’s Hals’….if he doesn’t spend it on Martin he’ll just invest it in some Hedge fund and make himself richer…..
.222 .239 .381 .620 That’s what Miguel Olivo hit this year……Martin didn’t have the BA but he did hit 21 homers and got on base at a reasonable clip….plus the pitchers seem to like him.
No, a bye bye wave looks good. Then sign someone. Give Romine a shot part time. Cervelli. Stewart. Anyone.
&
Does it, though?
Does it, really?
Does it, really?
-
Well the point of the qualifying offer is that he declines it
If he can get 3/30 he’ll decline 1/13.
Miguel Olivo is actually bad at defense & hits worse than Martin, he would be a disaster. I’d rather go with a Cervelli/Romine platoon.
“everyone thinks of the 13.3 million as their money…..it’s Hals’”
Good grief.
I think the reward outweighs the risk for a 1 year deal if the FA market is truly dire.
blake October 26th, 2012 at 4:28 pm
everyone thinks of the 13.3 million as their money…..it’s Hals’….if he doesn’t spend it on Martin he’ll just invest it in some Hedge fund and make himself richer…..
—
Not necessarily. They probably have a target number in mind for 2014, and money not overspent on Martin could be used somewhere else. If he just wanted to save as much cash as possible there are many other ways he could do it…
I don’t think anyone is offering Martin 3/30 after this year. So offering him 13.3 for one would be risky.
for 2013*
“Good grief.”
ok Charlie Brown
“Not necessarily. They probably have a target number in mind for 2014, and money not overspent on Martin could be used somewhere else. If he just wanted to save as much cash as possible there are many other ways he could do it…”
but my point is if they have 7ish million for Martin in 2014 then that’s money they can’t spend either….and the budget will be presumably tighter in 2014 than 2013. Again I’m not saying I WOULD do it…..just saying I’d think about it under certain circumstances.
I meant target for 2013. Money not overspent on Martin could be used for something else. I might offer him 2/15, but definitely not the 1/13.3.
I mean, on one hand, could Martin be this bad again next year? On the other hand…..he totally could be.
Just as long as there is money earmarked for Jeff Keppinger – - – -
October 26, 2012 at 4:43 pm
I meant target for 2013. Money not overspent on Martin could be used for something else. I might offer him 2/15, but definitely not the 1/13.3.
Ok….but then you’re committed to another year of a catcher that’s not great ….an you’re on the hook for 7.5 million in 2014 when the payroll may be like 20 million less than it is in 2013…..
blake, I would posit to you that not a single person who has commented on this matter thinks of the 13.3 million as his or her money. Not everyone — no one.
If there’s one lesson I learned when I visited the Charles M. Schultz Musuem and Research Center in Santa Rosa,CA, it’s that cartoons can make us laugh but the big money is in licensing.
I think at the end of the day, Martin will stay a Yankee at least through 2013.
Girardi and Cashman seem to just love the guy. They appear to be obsessed with all things Russell. He can do no wrong in their eyes so I will be surprised if he leaves the Bronx over the winter.
I’m resigned to seeing him flail away awhile longer with Stewart or some generic no-nothing, no name back-up available to give him a break a couple games a week. Maybe Romine will get a 24 year old back during the winter instead of the current 60 year old back he seems to have.
Anyway, is there someone else that we can bash instead?
How many catchers hit more than 21 homers in 2012 ?
Nick in SF October 26th, 2012 at 4:46 pm
blake, I would posit to you that not a single person who has commented on this matter thinks of the 13.3 million as his or her money. Not everyone — no one.
If there’s one lesson I learned when I visited the Charles M. Schultz Musuem and Research Center in Santa Rosa,CA, it’s that cartoons can make us laugh but the big money is in licensing.
****
It is Schulz
“blake, I would posit to you that not a single person who has commented on this matter thinks of the 13.3 million as his or her money. Not everyone — no one.”
Ok….
blake October 26th, 2012 at 4:47 pm
How many catchers hit more than 21 homers in 2012 ?
******
In alternate universe issue #31 of DC Comics – Jesus Montero apparently mashed 39 homers for the Yanks in 2012 – - – -65% of them to RF in YS – - – -
I’m glad we settled that….
“In alternate universe issue #31 of DC Comics – Jesus Montero apparently mashed 39 homers for the Yanks in 2012 – – – -65% of them to RF in YS – – – -
”
2012 was only his origins story….he hasn’t refined his super powers yet
“I’m glad we settled that….”
Fair enough
blake October 26th, 2012 at 4:51 pm
“In alternate universe issue #31 of DC Comics – Jesus Montero apparently mashed 39 homers for the Yanks in 2012 – – – -65% of them to RF in YS – – – -
”
2012 was only his origins story….he hasn’t refined his super powers yet
******
Very true – in 2013 he will venture even further north and find his new fortress of solitude – the Safeco field with new dimensions. But Lex Luthor Girardi will continue to cause many troubles for our young superhero – - – -
And Brainiac Cashman!
That’s it, no cajun filet biscuit for you.
lol you guys are hilarious
“That’s it, no cajun filet biscuit for you.”
I surrender then!
blake October 26th, 2012 at 4:55 pm
And Brainiac Cashman!
********
That’s right – Brainiac Cashman hails from Super Montero’s home planet of player development. But nothing will compare to Hal’s Doomsday 189 million budget – a force so powerful that not even the Man of Opposite RF power can withstand – - – -
Well I guess this fan fiction is better than Randy’s take on ‘The Demise of Cash Man’
Ok, you can have the cajun filet biscuit after all. Sorry, I went overboard there. It’s just baseball chat.
Against All Odds, why do you think Bret The Hitman will be back?
It feels like a Bizarro world when the Yankees can’t hit…..Braniac really wen over to the Darkseid when he traded our young hero!
Faster than a Molina brother…..More powerful than a Russell Martin…..able to leap at least 2 inches off the ground…..it’s Super Montero!!!
blake October 26th, 2012 at 5:04 pm
It feels like a Bizarro world when the Yankees can’t hit…..Braniac really wen over to the Darkseid when he traded our young hero!
******
Darn! You beat me to Darkseid – I had him lined up as Martin. I guess you Zod me to it!!
Hm, no, now this is awful.
Ok I’ll stop now….I could probably think of more though
Soriano will opt out, especially if he believes NY will make a qualifying offer. If he wants to stay in NY he should opt out and take the qualifying offer. He would get a raise. He gets the compensation when he opts out (I think it is $1.5million) and the $13.3m from the new one year deal, coming out with a nice raise.
Against All Odds, why do you think Bret The Hitman will be back?
————————
Because no one gets banned forever unless Chad thinks Bret’s act has run it’s course.
Jerkface October 26th, 2012 at 5:08 pm
Hm, no, now this is awful.
—————–
Yes it was going good and then tapered off. C’mon guys get it together
I don’t think Soriano will opt out unless Boras is pretty darn sure a multi year deal is out there for him….. If he does and the Yanks don’t make the qualifying offer and then teams hold him to a year then he could potentially lose millions for 2013……my guess is that if he does opt out he’s gone…..
Darn it. I missed the beating up Blake afternoon.
Forever is a long time, but I’m guessing that there have been people banned who have not yet been reinstated… and not just you-know-who.
Is this the end of Bret The Hitman?
Only time will tell.
“Darn it. I missed the beating up Blake afternoon.”
I learned my lesson….my only hope is that Yankee fans will be patient with that Olivo/Stewie catching tandem in 2013.
Give Blake a break.
He has a huge new burden on him with Bret gone.
Perhaps Chip will step in to give him a hand on the trade front.
Otherwise I think the pressure will get to him.
It ain’t easy coming up with make believe trade proposals each and every day.
Know that.
Is this the end of Bret The Hitman?
Only time will tell.
————————
Sounds like the end of a wrestling program seconds before they get off the air.
And MTU is always off hiking so he’s no help
Mr. MTU,
Welcome back from Sedona. Always loved that place from my time in Arizona. Feel the spiritual vortex that’s supposed to be there? I never did, but it’s grand country.
Blake-
I always have to be ready for another Yankee tribute.
Tom-
I don’t know if it was the Vortex that caused it but I believe I got some great photos and saw some of the prettiest terrain imaginable.
Almost as good as where I am.
“I’m not going to apologize for it,” Cashman said. “We got there and we are old. If you’re old and still good, then it’s not an issue.”
Tell that to the empty seats.
Hypothetically, if we won 100 games for 162 game season by scoring in only a single inning, sure the W would be great but the other 8 innings in every game would be too painful to watch as religiously as dedicated fans do. Regardless of how we ended the season and what position, this team was extremely boring and uneventful to watch. damn near impossible to watch on tv and forget paying a premium to take someone to the game.
so the question is.. what is worse and exciting team that shows fight and grit all season long but doesnt win 90 games, or a boring unexciting winning team that gets to the post season ?
I dunno Brian but I think its not as simple as you say. One thing is a fact tho, the new Steinbrenner regime is doing a great job in alienating the fan base with your shopping mall stadium and boring unexciting and underperforming players on the field. Again, more complicated than meets the eye.
How bout those Giants kickin’ the Tigers butt ?
Wouldn’t have expected that.
Verlander coughing it up.
And that Panda.
Insane.
“I’m not going to apologize for it,” Cashman said. “We got there and we are old. If you’re old and still good, then it’s not an issue.”
“still good” are the key words there. “STILL GOOD”.
Wouldn’t have expected that.
Verlander coughing it up.
—
Why not he was far from dominant looking against us.. he even laughed about it after saying he thru pitches right down the middle. When any pitcher regardless of skill plays a good team of bats, the results are what the giants did. they are hungry and excited to be there, if we were there, you’d think we were playing any other game. wait we were there and we didnt have any excitment at all even before Jeter went down. What a sad and pathetic story.
BREAKING NEWS:
Yankees trainer realized he was putting the wrong contact lenses in the players locker before games. He said, “It was an accident of course”
Verlander is one of the best Pitchers in baseball.
I’m always surprised when someone of that stature coughs it up.
Then again anyone can have a bad day.
Here’s what I’d do:
Get Mo to accept a year and $5M for a $10M savings.
Use that $10M and the $8M cleared letting go of Garcia and Feliciano ($4M each) to sign Jake Peavy for a year and $18M so he still makes $22M total in 2013 ($18M the Yanks pay him plus the $4M buyout he will receive from the Chi-Sox.)
Re-sign Kuroda for the qualifying offer of one year and $13.3M, a $2.3M raise where $2M of it is offset from letting go of Jones.
Trade Granderson to the Giants for Barry Zito (the Yanks take on $5M) and start Gardner in LF.
Re-sign Ichiro to start in RF for $6M for 2013 only and get him to defer $5M of that like he deferred $5M of his 2012 salary so he costs the Yanks only a mil for 2013.
Re-sign Swisher for the qualifying offer of one year and $13.3M ($3.05M raise) and make him the new DH.
Re-sign Ibanez for another year and $1.1M base.
Re-sign Melky Cabrera for a year and $7M he’ll take because who is giving him, a guy who will miss the first X games to a PED suspension two or more years or more than $7M for a year?
LF – Cabrerra
CF – Gardner
RF – Suzuki
DH – Swisher
OF – Ibanez
2013 Yanks rotation:
Sabathia
Peavy
Kuroda
Zito
Hughes
Nova, Phelps, and Warren et.al. are plenty of rotation insurance.
That’s minimum 1000 IP to me right there which would allow the Yanks to carry just six relievers thus have a five-man bench.
EVERYONE after Sabathia could be traded during or let go after 2013 moreover would be auditioning for new one-year contracts (Kuroda and Zito) and multi-year contracts (Peavy and Hughes.)