MLB Qualifying Offer Explained: Value, Rules and Picks
The MLB qualifying offer explained: how the one-year salary is calculated, who can get one, and the draft picks that change hands when a free agent says no.
By CricketTaken EditorialPublished MLB Season & Roster Rules22 min read
- Salaries averaged
- Top 125
- First winter used
- 2012-13
- First acceptances
- 2015
- Trade bar after accepting
- Until June 15
Hyun-Jin Ryu had a choice in November 2018. The Los Angeles Dodgers offered him one year at $17.9 million, the same figure every player received that winter, or he could test a market in which any club signing him would have to give up a draft pick. He said yes. He went on to lead the majors in earned run average in 2019, and a year later, with no compensation attached because he could never receive the offer again, he signed with Toronto for four years.
That figure was a qualifying offer. In Major League Baseball, a qualifying offer is a one-year contract a club makes to its own departing free agent at a fixed league-wide salary, the average of the 125 highest salaries in the game. If the player accepts, he stays for a year at that price. If he declines and signs elsewhere, the club that loses him receives a compensatory pick in the next draft, and the club that signs him forfeits one or more of its own picks. The rules are in the Basic Agreement between MLB and the Players Association, and they have stood in roughly their current form since 2016.
A one-year offer at one price: the MLB qualifying offer explained
The qualifying offer is a device for compensation, not retention. Few clubs make one expecting it to be accepted. They make it because it is the only way to receive anything when a good player walks away in free agency, and because the price of making it, the chance he accepts, is often one the club is willing to pay.
The design is deliberately blunt. One salary for everyone, recalculated each year. A club cannot make a qualifying offer of $12 million to one player and $25 million to another; it either offers the league figure or nothing. That has two effects. A star earning $35 million will never accept a one-year deal at a much lower salary, so the offer to him is pure compensation. A role player earning $8 million might accept in a heartbeat, so the club only offers to him if it is happy to pay him the full figure for a year.
Between those two lies the player for whom the decision is genuinely hard, and most of the rule's consequences, good and bad, land on him.
| Outcome | Player | Old club | Signing club |
|---|---|---|---|
| No offer made | Free agent with nothing attached | Nothing | Gives up nothing |
| Offer accepted | One year at the qualifying salary | Keeps the player for a year | Not applicable |
| Offer declined, player re-signs with old club | Contract on new terms | Keeps the player, no pick | Not applicable |
| Offer declined, player signs elsewhere before the draft | Contract with new club | Compensatory pick | Forfeits pick or picks |
| Offer declined, player signs after the draft | Contract with new club | Nothing | Gives up nothing |
The last row is the loophole, and a later section is devoted to it. The table also shows what the device is not: there is no right to match, and the old club cannot stop the player leaving. Our guide to how MLB free agency works from six years to the market sets the qualifying offer inside the wider winter.
How the qualifying offer is calculated from the 125 highest salaries
Take the 125 highest salaries in the majors for the season just completed. Average them. That is the qualifying offer.
The league publishes the figure each November, shortly after the World Series, and it is the same for every player offered one that winter. Because it is built from the top of the salary scale, it tracks the market for star players rather than the average major-league salary, which sits far lower.
The amount began at $13.3 million in the 2012-13 offseason, the first under the 2012 Basic Agreement. It has climbed in most winters since and dipped twice: barely for 2019-20, and by half a million dollars for 2021-22.
The league-announced qualifying offer for each winter, in millions of dollars, labeled by the year the offseason began. The 2012 figure was the first under the system.
Show the numbers
| Item | Qualifying offer |
|---|---|
| 2012 | 13.3million |
| 2013 | 14.1million |
| 2014 | 15.3million |
| 2015 | 15.8million |
| 2016 | 17.2million |
| 2017 | 17.4million |
| 2018 | 17.9million |
| 2019 | 17.8million |
| 2020 | 18.9million |
| 2021 | 18.4million |
| 2022 | 19.65million |
| 2023 | 20.33million |
| 2024 | 21.05million |
Why an average of the top 125
The number 125 is not arbitrary in spirit, only in detail. Roughly four players per club, it approximates the salary of a good regular on a team that pays for one, which is the kind of player the system was written for. A narrower group, the top 50, would produce an offer so high that no club would risk making it; a broader one would drag the offer toward the middle of the market and turn it into a bargain that half the free-agent class would accept.
Because the formula is mechanical, the figure is never negotiated player by player and there is no appeal. A player whose agent believes he is worth $30 million and a player whose agent believes he is worth $14 million receive the same number in the same letter. The arithmetic of salaries, guarantees and average annual value that feeds it is the same arithmetic that drives the competitive balance tax and why MLB has no cap.
Who can receive a qualifying offer, and who cannot
The eligibility rule is short and has three parts.
The player must be a free agent, which in practice means he has six years of major-league service and his contract has run out, or he has become a free agent after an option was declined. Players released or non-tendered are not in this group.
He must have been with the club making the offer for the entire season, on its major-league roster or injured list continuously from Opening Day. A player acquired in a trade at any point during the season is ineligible, and so is a player signed after Opening Day.
He must never have received a qualifying offer before. That is the 2016 change. Under the original system a club could make the offer to the same player in successive years, and a player who accepted one year could be given another the next. Since the 2016 agreement it happens once in a career, regardless of whether he accepted or declined and regardless of which club made it.
The consequences of the one-time rule
The one-time rule matters most to players who accept. Ryu, Kevin Gausman and Marcus Stroman each accepted, played a year, and reached the next free agency clean, with no compensation tied to them. For a player coming off a poor season or an injury, accepting has become a way of buying a year to rebuild his value and then entering the market with nothing attached.
For players who decline and sign a short deal, the rule works the same way. Their next trip to the market carries no pick, and some agents now favor one- and two-year contracts after a declined offer partly for that reason.
Five days to make it, a short window to answer
The timeline is compressed into the first two weeks or so of the offseason.
- World Series endsEligible players become free agents the next day, and the five-day period begins.
- League figure announcedMLB tells clubs the qualifying offer amount, the average of the 125 highest salaries.
- Offers dueA club must make its qualifying offers by the end of the fifth day after the World Series.
- Player decidesEach player has a short fixed window, measured in days, to accept or decline.
- AcceptanceHe signs a one-year deal at the qualifying salary and cannot be traded without consent before June 15.
- DecliningHe enters the open market, and compensation attaches to his signing until the next draft.
The order of steps under the 2022-26 Basic Agreement. The league fixes and announces the exact dates each year from the end of the World Series.
The club's deadline falls at the end of the same five-day quiet period in which free agents may talk to every club but sign only with their own. So the club decides whether to make an offer without knowing what the market will pay, and the player decides whether to take it after only a few days of conversations with other clubs. Both sides are guessing.
What the player knows when he answers
By the time he must answer, a player's agent has usually spoken to most interested clubs and has a rough sense of whether multi-year offers exist. A player who hears nothing encouraging is the one who accepts. Most players who decline already have reason to believe they will beat the one-year figure in total value, and a decline is in that sense a signal to the market as well as a decision.
The window has varied across agreements; the league announces the exact deadline each winter alongside the qualifying offer amount, and the figure is reported widely the same day.
How a front office decides inside five days
The decision is made in a room with three numbers on the whiteboard. The first is the qualifying salary. The second is the front office's own estimate of what the player would earn per year on the open market. The third is the value the club puts on the compensatory pick it would receive, which depends on where that pick would fall and therefore on the club's own revenue status.
If the market estimate sits comfortably above the qualifying salary, the offer is close to free: the player will decline and the club collects a pick. If it sits well below, the offer is a gift the player will take, and the club makes it only if it wants him back at that price. The hard cases are the ones where the two numbers are within a few million dollars of each other. There, an acceptance costs the difference for one season, and the club is effectively buying a lottery ticket on a draft pick with that difference.
Medical information matters as much as statistics. A pitcher who finished the season healthy but with a worrying elbow report is a player the club may be glad to lose for a pick and frightened to keep for a year. Clubs rarely say why they declined to make an offer, and the reasons are often in a file no one outside the building sees.
Accepting: one year at the qualifying salary, and no trade before June 15
A player who accepts signs a one-year contract for the full qualifying offer amount. Nothing about it is negotiable. It is guaranteed like any other major-league contract, and he is back on the 40-man roster of the club that made the offer.
One protection comes with it. A player who accepts a qualifying offer may not be traded without his consent until June 15 of the following season. The rule stops a club from making the offer, collecting the player and immediately moving him for prospects, which would turn the qualifying offer into a trade device the agreement never intended.
He can also negotiate a longer contract with the same club. José Abreu accepted the Chicago White Sox' offer in November 2019 and soon turned it into a three-year contract. That is permitted, and it is not unusual for a player who accepts to be extended or to sign a longer deal with the same club before the season starts.
Why a club can come to regret an acceptance
From the club's side, an acceptance is a contract it chose to risk. If the player was a mid-level starter who would have signed for $12 million a year elsewhere, the club is paying him well above his market for one season. That premium is the real price of a compensatory pick, and it is why clubs offer only to players they would be at least content to keep at the full figure.
When a club misjudges, the cost is a year, not a decade. A one-year deal limits the damage, which is part of why the system has survived despite complaints from both sides.
Turning it down: free agency with a price tag
A player who declines is a free agent like any other, with one difference. Until the next amateur draft, any club other than his old one that signs him gives up draft picks, and in some tiers international signing bonus money too. He can still re-sign with his former club, in which case nothing changes hands.
That difference is invisible for the best players. No club decided against signing Gerrit Cole, Bryce Harper or Shohei Ohtani because a second-round pick was attached. For the top of every free-agent class, the qualifying offer is a formality: the club makes it, the player declines it, the signing club gives up its pick and moves on.
For the middle of the class, the pick is part of the price. A club weighing a 31-year-old starter worth two or three wins a year will set the forfeited pick, and the bonus pool money that goes with it, against the alternative of signing a similar player who carries no compensation. The effect is to push clubs toward unencumbered free agents and to push the encumbered ones toward one of two outcomes: re-signing with their own club, or a shorter, cheaper deal than they expected.
The spring of the unsigned
Every few winters, a handful of qualifying offer free agents reach spring training unsigned. Ervin Santana did not sign with Atlanta until March 2014, after camps had opened. Others go later still, which is the subject of the draft section below. The pattern is regular enough that agents now advise some clients to accept rather than risk a lost winter.
Going home after saying no
Declining does not end the relationship with the old club. A player who declines remains free to negotiate with it on any terms, and a return carries no compensation in either direction because no pick changes hands when a player re-signs with the club that made the offer. Several players have declined in November and come back in December or January on a multi-year deal that suited both sides better than one year at the league figure. For the club it is often the cleanest result available: it keeps a player it wanted, on a contract shaped to its payroll, and gives up nothing. Drew's return to Boston in May 2014 was the late, unhappy version of the same move.
What the signing club gives up: picks and bonus money by tier
The cost to the signing club depends on its own finances in the previous season. The agreement sorts clubs into three groups.
| Signing club's status | Pick forfeited for the first such signing | International bonus pool lost | For a second signing |
|---|---|---|---|
| Paid the competitive balance tax the previous season | Its second- and fifth-highest picks | $1 million | Its third- and sixth-highest picks |
| Received revenue-sharing money | Its third-highest pick | None | Its fourth-highest pick |
| Neither | Its second-highest pick | $500,000 | Its third-highest pick |
"Second-highest pick" is the important phrase. A club's highest pick is never forfeited under the current rules; what it loses is the next one down, which for most clubs is a second-round selection or a competitive balance pick. That protection was a deliberate change in the 2016 agreement. Under the Type A rankings before 2012, and again under the first version of the qualifying offer from 2012 through 2016, the signing club usually lost its first-round pick unless that pick was protected near the top of the draft.
The international bonus money matters more than its size suggests. Clubs sign 16-year-olds from Latin America each January from fixed pools, and the best of those players are committed to clubs years in advance. Losing $500,000 or $1 million from a pool can mean losing a specific player a scouting department has followed for two years.
The tax payer's double penalty
The structure punishes high payrolls twice. A club over the tax threshold already pays a percentage on every additional dollar; signing a qualifying offer free agent then costs it two picks and the larger slice of bonus money. That is intentional. The agreement uses draft and bonus forfeits as a second brake on the clubs the tax alone does not deter, and how the draft order and slot values work is covered in our explainer on the MLB draft and its bonus pools.
What the old club gets: where its compensation pick lands
The club that made the offer and lost the player receives a single compensatory pick in the next draft. Its position depends on the old club's own finances, and in one tier on the size of the contract the player signs.
| Old club's status | Player's new contract | Where the compensatory pick falls |
|---|---|---|
| Receives revenue sharing | $50 million or more in total | After the first round, before Competitive Balance Round A |
| Receives revenue sharing | Less than $50 million | After Competitive Balance Round B |
| Neither a recipient nor a tax payer | Any | After Competitive Balance Round B |
| Paid the competitive balance tax | Any | After the fourth round |
The design favors small-market clubs, which is the stated aim. A revenue-sharing club that loses a star to a $200 million contract gets a pick a little after the first round; a high-payroll club that loses the same star gets a pick in the fourth round, worth a fraction as much in bonus slot money and in historical value.
- 125Salaries averaged to set the offer
- 5Days after the World Series to make it
- 50Contract value in millions that lifts a recipient's pick
- 1Qualifying offers a player can receive in a career
Counts and thresholds from the 2022-26 Basic Agreement and the league's own definition of the offer amount. They do not change from winter to winter.
The arithmetic a small-market club does
Picture a revenue-sharing club with an outfielder about to leave. If it makes the qualifying offer and he declines and signs for $150 million elsewhere, it receives a pick between the first round and Competitive Balance Round A. If it makes the offer and he accepts, it owes him one year at the qualifying salary, which may be several million more than it wanted to spend. If it makes no offer, it gets nothing. For most such clubs, with most such players, the offer is the right call, and the occasional acceptance is a cost they accept.
Waiting out the June draft: Morales, Keuchel and Kimbrel
The compensation lasts until the next draft. A player who declines a qualifying offer and signs after the draft begins carries no pick at all: the signing club forfeits nothing, and the old club receives nothing.
That creates an odd incentive. For a player whose market is depressed by the pick, waiting until June removes the drag, at the cost of half a season's salary and the risk of arriving out of shape.
Kendrys Morales did it in 2014. He declined Seattle's offer, went unsigned through the winter and spring, and signed with Minnesota in June, just after the draft. Stephen Drew, in the same position that spring, re-signed with the Boston Red Sox, the club that had made the offer, in May. Five years later the pattern repeated on a larger scale: Dallas Keuchel, a former Cy Young Award winner, and Craig Kimbrel, one of the most successful closers of the decade, both declined offers and remained unsigned until the 2019 draft passed. Keuchel signed with Atlanta and Kimbrel with the Chicago Cubs within days of it.
Why the cutoff is the draft and not Opening Day
The agreement could have ended compensation on Opening Day, and the choice of the draft is deliberate. Picks have to be awarded and forfeited before they are made, and the draft is the first moment after which the league can no longer move a selection from one club to another. A player signed in April or May still costs the signing club a pick that has not yet been used. A player signed the day after the draft cannot, because the pick is gone. The rule follows the pick, not the season.
That logic explains the odd timing of the Morales and Keuchel signings. Their agents were not waiting for a date on the baseball calendar. They were waiting for the last day on which compensation could still apply to pass.
Neither was helped much by the wait. Both arrived midseason without a normal spring, and the episode became evidence in the union's argument that compensation suppresses salaries for good players who are not stars. The clubs' answer was that the market, not the pick, had priced both men lower than their agents had hoped. Each side's case contains some truth.
How rarely a qualifying offer is accepted, and who says yes
For the first three winters, nobody accepted. Every one of the dozens of players who received an offer from 2012 through 2014 declined it. The first acceptances came in November 2015, when three players said yes on the same day.
| Offseason | Player | Club | Offer amount |
|---|---|---|---|
| 2015 | Matt Wieters | Baltimore Orioles | $15.8 million |
| 2015 | Colby Rasmus | Houston Astros | $15.8 million |
| 2015 | Brett Anderson | Los Angeles Dodgers | $15.8 million |
| 2016 | Jeremy Hellickson | Philadelphia Phillies | $17.2 million |
| 2016 | Neil Walker | New York Mets | $17.2 million |
| 2018 | Hyun-Jin Ryu | Los Angeles Dodgers | $17.9 million |
| 2019 | Jake Odorizzi | Minnesota Twins | $17.8 million |
| 2019 | José Abreu | Chicago White Sox | $17.8 million |
| 2020 | Kevin Gausman | San Francisco Giants | $18.9 million |
| 2020 | Marcus Stroman | New York Mets | $18.9 million |
| 2022 | Joc Pederson | San Francisco Giants | $19.65 million |
| 2022 | Martín Pérez | Texas Rangers | $19.65 million |
The table runs through the 2022-23 offseason. Abreu turned his acceptance into a three-year deal within days, the route described above. Most winters since 2015 have seen none or a small handful.
The profile of a player who says yes
The players who accept share a profile. They are good but not certain of a multi-year deal: a starter with an injury history, an outfielder coming off a down year, a veteran in his 30s whose market might be two years at a lower annual figure. For them the qualifying offer is often the largest single-season salary they will ever see, and accepting it trades long-term security for a short-term premium and a clean next trip to the market.
Gausman's case is the model agents cite. He accepted San Francisco's offer for 2021, had the best season of his career, and signed a five-year contract with Toronto that winter. For a player confident in his health, it can be a bet on himself at better odds than the open market offers.
Trades, risk and the decision to make an offer
Two loopholes shape how clubs use the system, and both run through the same eligibility rule.
The first is the trade deadline. Because only a player who spent the whole season with a club can receive an offer, a player traded in July cannot receive one from either club. The selling club gives up any chance of compensation by trading him, and the buying club acquires a rental it can never tie to a pick. That is why players such as Yu Darvish in 2017 and Manny Machado in 2018, both moved to the Dodgers before the deadline, reached the market with nothing attached. It lowers the asking price on deadline rentals: the seller is trading a few months of a player plus a forgone pick, not a pick the buyer will eventually receive. Our guide to MLB trade deadline rules covers the July side of that decision.
The second is risk. A club deciding whether to make an offer is weighing a draft pick, worth a modest amount in expected value, against the chance of being stuck with a one-year salary well above what the player is worth to it. For a star, there is no risk. For a borderline player there is a real one, and clubs have declined to make offers to players they would have liked to keep for that reason.
Why the formula pushes some players into trades
There is a quieter consequence. A club that knows it cannot afford to keep a player, and doubts he would decline an offer, may prefer to trade him in his final season rather than make an offer it might regret. In that sense the qualifying offer and the trade market are one decision viewed from two dates: keep him to make an offer in November, or move him in July and take prospects instead.
The players most likely to be traded before their free agency are therefore the ones in the middle. Stars stay to collect compensation or are extended; marginal players are let go without an offer. The cost falls on the ones in between, and this is where the union's critique has the most force.
Before the qualifying offer: Type A and Type B free agents, and the push to scrap compensation
For roughly three decades before 2012, compensation ran through the Elias Sports Bureau. Each winter, Elias ranked players by position group using statistics from the previous two seasons. The top 20 percent in each group were Type A free agents, the next 20 percent Type B.
A club losing a Type A free agent, after offering him salary arbitration, received the signing club's first-round pick (or its second-round pick if the first fell in the top 15) plus a supplemental "sandwich" pick between the first and second rounds. A club losing a Type B free agent received only a supplemental pick, and the signing club gave up nothing. The system was widely criticized, because the formula mislabeled players: middle relievers with good counting statistics were often ranked Type A, and clubs refused to sign them rather than lose a first-round pick.
The 2012 Basic Agreement, signed in November 2011, replaced the rankings with the qualifying offer. Compensation now depended on what a club offered rather than on a statistical formula. The 2016 agreement added the one-offer-per-career rule and tied forfeits to tax and revenue-sharing status. The 2022 agreement left the structure in place.
The international draft trade that never happened
The closest the system came to ending was in July 2022. As part of the settlement that ended the lockout in March, MLB offered to abolish the qualifying offer and draft-pick compensation entirely if the players agreed to an international amateur draft. The union rejected the international draft, the July 25 deadline passed, and the qualifying offer stayed. The 2022-26 agreement was written to expire on December 1, 2026, and compensation is open to change in any agreement that follows it. Players with six years of service are not the only ones affected by these talks; the union's broader positions on service time and the arbitration years that come before free agency are part of the same negotiation. For the rest of baseball's roster and calendar rules, start at our baseball section, and for what happens to the 40-man roster in the same November weeks, see our guide to the Rule 5 draft and roster protection.