Sox, Yanks Already Winter Winners

It’s still early enough in the offseason that Marlon Byrd landing a two-year deal with thePhiladelphia Phillies is the biggest player movement we’ve seen so far, but that doesn’t mean there aren’t any clear winners yet. There are two, and they’re the same two teams that always seem to fall into that category: the Boston Red Sox and New York Yankees.

What could they possibly have won already, when no games are being played and they have not added any new players (yet)? They’ve won the ability to potentially pick up three additional draft picks apiece, more than any other teams in baseball, because of the “qualifying offer” system that went into place last year in the new collective bargaining agreement.

Rather than the old “Type A” and “Type B” arbitration system, teams may now offer eligible free agents a one-year deal for the average of the top 125 salaries in baseball, which this year comes out to $14.1 million.

If the idea of the draft serving to aid two of the wealthiest teams in the sport, especially when one is the defending champion, seems counterintuitive, it is. Yet that’s exactly what the new CBA has brought, as the fears of many who worried that small-market teams would find themselves further handicapped are being realized.

Under the old system — which, to be completely fair, no one particularly loved — teams could offer arbitration to any of their free agents. The player could decline and sign elsewhere, giving his old team a pick based on his status as a Type A, B or C free agent, as determined by a statistical formula, or he could accept and submit to arbitration. If the player signed elsewhere, his old club could receive up to two compensatory draft picks.

The key there is that there was no artificial dollar figure that served as a “one size fits all” mark, like the current system does. The team and player could submit their figures, and the arbitrator would choose one, giving each side incentive to stick to something realistic for that particular player.

Ironically, part of the reason the system was changed was because big-market teams were exploiting it — remember the Red Sox having five first-round picks in 2005? — but the new rules haven’t changed much. Many teams are bidding farewell to useful free agents because they are afraid of a one year, $14.1 million deal, taking the idea of draft pick compensation completely off the table.

Haves and have-nots

The problem with the new system is demonstrated fairly well by Bartolo Colon and Hiroki Kuroda. Colon, 40, and Kuroda, 38, are coming off very similar seasons and considering their age would almost certainly be valued comparably in a vacuum. However, the A’s are not in a position to risk $14 million on an aging pitcher, which is why Colon did not get a qualifying offer. The Yankees, however, can take that gamble, and made the tender to Kuroda, which means they will get an extra draft pick should he sign elsewhere.

This example isn’t perfect, as $14.1 million would represent a big raise for Colon and a slight pay cut for Kuroda, but their past salary isn’t that relevant to how they should be valued now.

For the Yankees and Red Sox, qualifying offers carry minimal risk. They can afford to carry multiple players who are making close to that level or more anyway, to start with, and even if, say, Kuroda, Jacoby Ellsbury, Mike Napoli, and Stephen Drew had all accepted their offers — which was never going to happen — New York and Boston could have made that work.

A full 10 of the 22 offers came from the Red Sox and Yankees alone, and a huge majority came from other teams that can easily be considered big players, like the Texas Rangers (Nelson Cruz, Josh Hamilton) andSt. Louis Cardinals (Carlos Beltran, Kyle Lohse).

That’s because it’s offered almost exclusively to players who are all but certain to go off and get huge, multi-year contracts, like when the Rays were able to extend an offer to B.J. Upton last season. Upton even reaching that point was something of a rarity, because most smaller teams have either locked up their young stars before free agency hits (see: Evan Longoria) or traded them for huge returns (see: James Shields).

By design, this system is meant to reward wealthier teams who can both hang on to players through free agency and then risk the $14.1 million salary.

Broken system

To its credit, MLB tried to build in some safeguards for this, like protecting the first-round picks of the worst 10 teams, in theory enabling them to sign a qualifying offer player without losing more than a second-round pick, and creating the competitive balance draft. It’s nice, but somewhat without teeth. Many of those teams with protected picks aren’t at the right point in the win cycle to buy expensive free agents — that is, the difference between 67 wins and 71 wins doesn’t mean a whole lot — even if those top players did want to go to losing teams, which many do not.

The competitive balance draft is somewhat better, because it distributes extra picks to the smallest-market and lowest-revenue teams based on a lottery. Still, some of those picks come between the first and second rounds and the rest between the second and third; since they come after the qualifying offer compensation picks, which are at the end of the first round, those teams still get their extra picks behind teams like the Yankees and Red Sox.

In theory, the draft is supposed to help the worst teams while keeping costs down, which is why it is generally seen as the best path to success for small-market clubs. But as we’re seeing with the free-agent compensation system, all that is happening is that the rich are getting richer.