MLB’s new CBA comes with a big change to what some considered “the worst rule in baseball.”
The new CBA has changed the rules to free agent compensation so that teams signing some free agents no longer have to forfeit a first- or second-round pick.
The old rule essentially created a blockage in the middle-class, free-agent market. While teams were willing to give up a first-round pick for a star, and lower free agents were not given qualifying offers by their original teams, second-tier free agents often did not receive big contract offers from other teams who weren’t willing to part with increasingly valuable first-round picks.
This rule was designed to protect small-market teams from being crushed in free agency by big-market teams that could spend frivolously on the biggest free agents. Teams could offer their free agents one-year qualifying offers. If players turned down that contract, they’d hit free agency, but their new team would forfeit a first-round pick to that player’s old team.
The problem was that teams that would have normally been willing to give a large contract to one of these free agents, was scared away by having to give up the draft pick. While the rule was well-intended, it ended up costing some free agents millions.
Now, in the new CBA, teams with payrolls that exceed the luxury tax threshold will surrender second- and fifth-round picks to sign free agents who were given qualifying offers. All other teams will surrender third-round picks.
What this change in the rules could prevent are situations like Ian Desmond, who turned down a seven-year, $107 million contract extension so he could hit free agency. Two years later, after seeing a dip in production, Desmond turned down the qualifying offer and found that teams weren’t willing to part with a first-round pick to sign him. He ended up signing a one-year, $8 million deal with the Nationals that former GM Jim Bowden later called “the worst contract” he’d seen for a player.
The new rule change will still help protect small-market teams and give big-market teams something to think about before handing out big contracts, but it may open up player movement. Now, second-tier free agents looking for a payday are more likely to have more options in free agency if teams are more willing to part with later-round draft picks.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.