MLB has informed teams today that the “qualifying offer” this winter for the 2022 season is $18.4 million. Free agents extended a QO have until Dec. 1 to decide. (Buster Olney
Analysis: The qualifying offer rule was established in the CBA that started in 2012 and adjusted in the following CBA beginning in 2017. It’s designed to compensate major league organizations that lose players to free agency.
A club that wants to receive that compensation must make that player a 1-year salary offer for the “qualifying” amount. That QO salary is determined this time each year and is based on the average of the top 125 MLB salaries from the previous season. The two cases where QO are not permitted are: (1) if the player has been subject to a qualifying offer previously, or (2) if the player hadn’t played with the team for the entire previous season.
When a team makes a qualifying offer to a departing free agent, that player can accept the offer or decline. If he declines, that team receives a draft pick from the team the player signs with. So the signing team is punished.
There are two tiers to the compensatory draft picks. Tier 1 is for players who end up signing for more than $50 million with their new club. A Tier 1 draft pick comes during Compensatory Round A which is after the first round.
If the player signs for less than $50 million, the team losing out gets a Tier 2 pick, which falls during Compensatory Round B, after the second round and worth less.
Last year, the Reds lost Trevor Bauer to free agency and when he signed a $102 million contract with the Dodgers, the Reds were awarded a Tier 1 compensation pick. They chose 18-year-old OF Jay Allen who played 19 games in rookie ball and hit .328/.440/.557.
(The Reds never intended on re-signing Bauer, given his likely salary range. They went into the deal for Bauer’s acquisition assuming they would get a qualifying offer on the back end.)
In 2014, the Reds lost Shin-Soo Choo to free agency and chose Alex Blandino at #29 with the compensatory pick. In 2012, the Reds got Jesse Winker at #49 as a compensatory pick for losing free agent Ramon Hernandez. Todd Frazier was a compensatory pick for losing Rich Aurelia in 2007. Winker and Frazier were chosen under a different system.
That brings us back to Nick Castellanos.
Castellanos agreed to a four-year contract with the Reds paying him $64 million. As part of the deal, the club gave the outfielder two opt-out clauses, one after the 2020 season and one after 2021.
Castellanos didn’t exercise his opt-out last year but is widely expected (“incredibly surprising if he doesn’t” per MLB Trade Rumors
) to take advantage of it this year, which he’ll announce in the next few days.
If Castellanos opts out, the Reds can make him a qualifying offer in the amount of $18.4 million. That figure is below the $18.9 million QO threshold last offseason.
If Castellanos accepts the QO, he’d then be on a 1-year contract for 2022 only. If Castellanos rejects it, the Reds will receive a draft pick, likely a Tier 1.
Nick Castellanos just had the best baseball summer of his career, putting up a 4.2 WAR (FanGraphs) / 3.3 WAR (Baseball-Reference) season. He batted .309 and hit 34 homers. His wRC+ of 140 means he was 40% better at run creation than the average major league hitter.