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A few thoughts on MLB's qualifying offer system

The qualifying offer system isn't broken, but it's due for some maintenance. Let's explore some ideas.

Caylor Arnold-USA TODAY Sports

Earlier this month, Russell Carleton of Baseball Prospectus argued that the dollar amount for MLB's qualifying offer process should be adjusted north of its current figure of $15.8 million. There's quite a bit of math in that link, but Carleton makes several compelling points with his numbers.

All of this is a window into a subject that needs further discussion: The qualifying offer in general. My personal feelings on the system are that it's a good idea with a good foundation that needs some tweaks, so I'll offer a few ideas in this piece (feel free to add your own in the comments).

Before we dive into that though, let's quickly review the current situation.

Currently, teams can offer any player who has been with their club for at least one season (one year of MLB service time) and is about a hit free agency a qualifying offer. The qualifying offer is a player option contract for one year that will keep the player with their current club, and the salary amount is calculated by the average of the top 125 salaries in baseball for the previous season -- in 2015 the figure was $15.8 million.

If the player accepts the offer, they come back for $15.8 million for one season. If the player declines the option, however, they hit free agency and the old club gets a draft pick between the first and second round as compensation as long as the player signs elsewhere before the following June's draft. Meanwhile, the new signing club loses their highest available draft pick for inking the player -- unless they have a top ten pick, which is protected. In that case they lose their next highest pick.

This system was put in place to protect small and mid market teams when their star players hit free agency and were gobbled up by the bullies on the block, and in some cases it's worked. However, it's also turned into a massive game of chicken between the clubs and some slightly less than star players as teams try to pawn their way into additional draft picks. Until 2015, no player had ever taken the qualifying offer, and it took 20 players being offered the deal in 2015 for us to finally reach some sort of an equilibrium.

Here's what the current scoreboard looks like:

Looking at that list, there's no way all of those players are the type of names MLB had in mind when they came up with this draft pick compensation system. Guys like Jason Heyward and Jordan Zimmermann? Absolutely. Guys like Ian Kennedy and Dexter Fowler? Not so much.

As a result, you can bet this system is going to be tweaked a year from now when the next collective bargaining agreement window opens. I don't think they need to throw the baby out with the bathwater, but both sides probably want some adjustments now that they've seen how this works in the real world. So here are a few ideas I'd suggest.

1) Change the dollar amount of the qualifying offer to reflect the top 75 salaries in baseball instead of the top 125

Russell makes the case in the link above for the salary of the qualifying offer to go to $21 million. This actually wouldn't push it quite that high, but based on projections it would be close, as the top 75 salaries in baseball in 2016 should average just a tick under $19 million.

The exact dollar amount isn't important, but the general idea which Russell lays out is that the qualifying offer figure needs to go a little higher to prevent so many potential free agents from getting this tag slapped on them. I picked the top 75 salaries because it seemed like a reasonable bump that should get to $20 million with inflation in a few years, but the exact number it should land at is certainly debatable.

2) Protect more draft picks and reorder the bottom of the draft

This is an opportunity for baseball to clean up a couple of issues. Right now, the top ten picks in the draft are protected, meaning that those ten clubs can sign a player who has been given a qualifying offer and and only lose a second round pick which is probably going to end up around no. 50 overall. This means that the dividing line between losing the 11th overall pick for signing one of these players and losing the forty-something overall pick for signing one of these players is a tie breaker between the White Sox and Mariners, who both finished 2015 with a 76-86 record. That seems odd.

At the same time, the system creates a reality where the clubs with the most to lose are the clubs you want adding pieces if you want to create turnover in the divisions each season. If you're MLB, you want clubs like the Angels, Giants, and Nationals to get aggressive and add players this winter so they can make a run at their divisions without having to worry about not having a top 50 draft pick the following June.

So instead of protecting the top ten picks from qualifying offer signings, I would protect the top 20 picks and make the dividing line the playoffs. In other words, the 20 teams to miss the playoffs have the first 20 picks in the following year's draft no matter what happens.

While they're at it, MLB should also reorganize the final spots in the first round of the draft to reflect playoff success. Right now, it's done purely by reverse order of the regular season standings. This means that the Pirates will pick 29th in next year's draft despite only playing one playoff game. Instead, the two Wild Card losers (Yankees and Pirates) should pick 21st and 22nd, the four LDS losers (Astros, Rangers, Dodgers, and Cardinals) should pick 23rd through 26th, the two LCS losers (Blue Jays and Cubs) should pick 27th and 28th, and the two World Series teams (Mets and Royals) should pick 29th and 30th.

This will prevent asinine situations like we saw in last year's draft where a team like the 2014 Giants get hot for three weeks at the end of their season, win the World Series, and then pick 18th in the 2015 draft. Under exactly zero circumstances should the World Series winner pick 18th overall in the following draft. Get on this MLB!

3) Prevent the largest spenders from offering a qualifying offer to free agents at all

The whole idea of draft pick compensation is to help small and mid-market clubs when they lose star players to the teams with the deepest pockets. However, some teams have used this system to bully their way into more draft picks. The Dodgers, for instance, made three qualifying offers to players just one year after having two picks in the top 35 selections in the draft.

However, I question why a team like the Dodgers should be able to offer potential free agents qualifying offers at all. If they don't retain Zack Greinke this winter, it won't be because they couldn't afford him; it will be because they decided they would rather take the extra draft pick and sign another starter like David Price. That's a clear abuse of the intent of the system and needs to be handled immediately.

So to me, the solution is simple: Add a clause in the next collective bargaining agreement that prevents any team who has violated the luxury tax threshold for two or more consecutive seasons from being able to offer a qualifying offer at all. (Once their payroll falls back below that threshold, they're free to make offers again and the clock resets.) Any team who has enough cash to blow past that number year after year after year simply doesn't need any compensation, because if they fail to sign one of their free agents, it's not because they don't have enough money.

Right now the luxury tax threshold is $189 million, but as the popularity and revenue of MLB continue to rise, that figure is due for a bump in the next collective bargaining agreement. Exactly how much is debatable, but I think something in the $210 or $215 million neighborhood sounds about right.

Okay, those are some of the ideas I have, what's yours?