After exploring what teams would stand to receive in draft compensation if they lost a free agent who rejected a qualifying offer, it’s now time to delve into what each team would have to give up in order to sign a QO-rejecting free agent.
If a free agent has played the entire 2024 season with a team and has never received a qualifying offer before, they can be issued a QO within five days of the end of the World Series. The qualifying offer is a one-year deal worth the average of the salaries of the top 125 highest-paid players in the majors, and this winter, the QO is worth $21.05MM. If the eligible free agent rejects the QO, their former team is in line to receive draft pick compensation if the free agent signs with another club. This only applies to qualified free agents from other teams, as a team can re-sign its own qualified free agents with no penalty.
Now, let’s take a look at what every team will have to give up if one of their qualified free agents signs with another club:
Revenue Sharing Recipients: Diamondbacks, Rockies, Reds, Brewers, Pirates, Marlins, Athletics, Mariners, Tigers, Royals, Twins, Guardians, Orioles, Rays
If one of these teams signs a qualified free agent, they will have to give up their third-highest pick in the 2025 draft. Since most of these smaller-market teams are part of the Competitive Balance bonus rounds, their third-highest pick may not correspond to their third-round pick, especially if any of the teams trade for Competitive Balance picks. These picks are the only ones eligible to be traded, as seen last winter when the Orioles included their CBR-A pick in a trade with the Brewers.
It’s uncommon for teams in this group to sign a big-ticket free agent, but teams like Baltimore and Detroit could be looking to spend more aggressively this offseason.
Teams Who Don’t Receive Revenue-Sharing Funds, And Who Didn’t Pay The Competitive Balance Tax: Padres, Cardinals, Nationals, Angels, White Sox, Red Sox
For signing a qualified free agent, these teams would have to give up their second-highest pick in the 2025 draft, along with $500K from their bonus pool for the next international signing period.
Teams in this group have varying strategies when it comes to pursuing free agents, with the Angels and Nationals potentially looking to add veteran help while the White Sox and Cardinals focus on rebuilding.
Team In Limbo: Blue Jays, Cubs
The status of these teams regarding the luxury tax threshold won’t be determined until December, but both clubs are hoping for a reset and lesser penalties for signing QO-rejecting free agents.
Competitive Balance Tax Payors: Dodgers, Giants, Mets, Phillies, Braves, Astros, Rangers, Yankees
These teams face the highest penalties for signing QO-rejecting free agents, including giving up international bonus pool money and draft picks. Each of these clubs would have to surrender their second- and fifth-highest picks in the 2025 draft, along with $1MM in international bonus pool money.
The penalties for CBT payors can make signing qualified free agents less appealing, but some teams may still pursue big signings to strengthen their rosters.
If a club signs more than one qualified free agent, they will have to forfeit additional draft picks according to their category.
