Baseball continues to have labor peace. That’s a major headline from last night’s news that the owners and the MLBPA were able to reach an agreement on a new collective bargaining agreement to keep the game of baseball moving for at least five more years. It’s very good news. But with all CBAs, there’s good and bad for both sides. Well, at least there should be.
We can really break down the CBA as we learn more about it, but there is one piece of the puzzle that is of extra concern to the Royals and Royals fans, and that’s free agent compensation. As you know, a large chunk of the Royals core is scheduled to be eligible for free agency following the 2017 season. Under the current system, I could see a scenario where the Royals offered a qualifying offer to Lorenzo Cain, Wade Davis, Danny Duffy, Eric Hosmer and Mike Moustakas. And, hey, if Ian Kennedy were to opt out, he’d be a big candidate for a qualifying offer as well.
Now, though, things are different, and it could impact the Royals plans this offseason moving forward.
The qualifying offer system will remain in place. The value will be placed as the average of the top 125 salaries around baseball, so that’ll continue to go up and become even more exorbitant. But what teams give up and what teams get when dealing with these free agents will change. To be honest, I’m still not sure if this is good or bad for the Royals. I haven’t been able to really sort that out in my head. I think it’s a little of both.
So the way it works is if a team makes a qualifying offer to a free agent, they still have compensation attached to them for a team signing them away. But now, if a team that is not over the luxury tax signs them, they forfeit a third round pick. If a team is over the luxury tax, they forfeit a second round pick and a fifth round pick. Teams no longer lose first round picks for signing free agents with a qualifying offer attached. That part seems like great news for the Royals of next offseason because it gives even less risk in offering the QO to their players because potential signing teams won’t lose as much for signing them.
But what’s different now is that the club losing the free agents would receive an extra selection after the first round of the next draft if the player signed a deal for $50 million or more. If the player signs for less than $50 million, the extra selection wouldn’t come until after the competitive balance round B in the draft. If the team losing the player pays the luxury tax, the extra pick drops to after the fourth round. I tell you that in the interest of being complete, but that doesn’t impact the Royals, so it doesn’t really matter to this discussion. This is all according to the Associated Press.
Honestly, I don’t really understand why $50 million. I feel like that was a number just hastily thrown out there to get a deal done. It would make more sense to me to tie it to the qualifying offer value (maybe 3x or something), but that’s what the number is, so that’s what we’re dealing with here.
I have to imagine the Royals would have been comfortable losing all five of their big free agents with the knowledge that they’d receive a pick directly after the first round in exchange for them. Obviously you can get more than one draft pick for a good player on the trade market, but going for it in 2017 along with that pick is pretty valuable. So I’m wondering now if that’s changed given the new method for compensation.
If we look at the players above, I think Eric Hosmer is all but guaranteed a $50 million+ contract after the 2017 season. You can joke all you want about him wanting $200 million or whatever it is he’s talking about these days, but no matter what happens, his reputation will get him a deal higher than the threshold. So nothing changes with him. But the rest are interesting. Let’s take them one by one.
Lorenzo Cain – If Cain plays 140 games or more in 2017 and has a good season, he’s getting at least $50 million from some team. I don’t think that’s a question. The issue, though, is he’s far from a guarantee for that given his history. Would the Royals be better off trading Cain now and getting back multiple prospects who are much closer than a player selected long after the first round? They very well might be. The Royals would still offer Cain a QO unless he absolutely tanks in 2017, but with all sorts of outfielders, including center fielders on the big league roster and the 40-man, this is an interesting story to watch.
Wade Davis – I think Davis is even more likely to get traded now than he was before. While this will get broken eventually, the current record for a reliever is $50 million. Davis will be on the wrong side of 30 and will have dealt with a heavy workload and forearm injuries in his past. If he has any signs of arm trouble in 2017, he’ll still get a nice deal as long as he’s healthy enough to pitch, but I don’t think he gets $50 million as a free agent. Trading him now gets back maximum value. To me, it already made sense to deal him. Now it makes more sense.
Danny Duffy – I’d bet just about anything on him getting an extension done this offseason, but if things fall apart and he doesn’t, he’s an interesting one too. He’d almost assuredly get $50 million or more as a free agent as long as he continues to be even a slightly above average starter, but there’s risk with Duffy too. All that said, I don’t think anything changes with Duffy anyway.
Mike Moustakas – Moose is no guarantee for $50 million either. If he’s healthy, I think he is, but we don’t know until we see him in action. I could actually see a Moustakas trade now given the new CBA and the uncertainty over whether he’ll command a deal for as much as would require to get that pick directly after the first round. I highly doubt anything changes with Moose this offseason given that his trade value is also low, but he’s no longer a certainty to bring back the pick the Royals had expected with him.
So yeah, I think this does potentially change the Royals offseason plans. Maybe they hasten the trading off of some core pieces like Cain and Davis in order to get back more value for them than they were going to get back in the first place. It’ll be interesting to see how the Royals react to this, and I think we’ll know soon with the winter meetings getting started next week.
Some other changes to the CBA that I think will impact the Royals are not nearly as big. The international draft cap of $5 million likely doesn’t hurt the team much as they tend to stay under that anyway. The extra days off are good for a team led by Ned Yost who doesn’t like to use his bench all that much, though Yost may be retired by the time that goes into effect in 2018. The minimum DL stint dropping to 10 days is noteworthy given the Royals slow reactions to injuries. Now instead of losing a player for more than two weeks when he’s only going to need six or seven days, they can actually put the player on the disabled list and get some bench help.
There are other changes to revenue sharing that could impact the club in the long-term, but I haven’t had the opportunity to dig into those yet, so those thoughts will have to come at a later date.
In all, I maintain the good news is there’s labor peace. There will be no work stoppage. The meetings will still happen. The Royals final push will go on as scheduled. Now we wait for the impact it makes.