Quantifying the pain of the qualifying offer

Should the Braves sign Nick Pivetta despite the fact that he rejected a qualifying offer? It's not so simple.

As we near spring training, the Braves could use another starting pitcher.

I’ve said as much since the start of the offseason. Sure, the Braves had the best rotation in baseball last year, and it should be bolstered by Spencer Strider’s return and Spencer Schwellenbach hopefully getting a full season of starts. But the Braves have lost 339.2 innings from the 2024 rotation between Max Fried and Charlie Morton departing. And even though all pitchers are health risks to some extent, Atlanta’s group - Chris Sale squarely in his mid-thirties, Reynaldo López in his second year back in the rotation, Schwellenbach coming off a career high in innings, Strider returning from UCL surgery - seems particularly volatile.

Personally, I’d take any roughly league-average starting pitcher to add some stability to the rotation (though ZiPS seems to think Bryce Elder is that guy). But Alex Anthopoulos appears to be shooting higher - in recent media appearances, he’s talked about the importance of starting the season with Ian Anderson and Grant Holmes in the rotation, given that neither has minor-league options. His message, paraphrased:“We’ll add a starter if we think he’d start a playoff game for us, but we won’t add a starter just to eat innings.”

Is there a playoff starter left in free agency? Certainly no one with the performance certainty as Blake Snell, Max Fried, or Corbin Burnes. On the other side of the spectrum, Lance Lynn and Kyle Gibson are pure innings eaters at this point in their careers. But how about Nick Pivetta?

In a lot of ways, Pivetta fits the Braves’ free agent pitching acquisition mold. He gets a lot of strikeouts, he avoids walks, and he’s been quite healthy. He’s always struggled with home runs - they’re the only thing keeping him from stardom - but he’s a good bet to pitch a ton of quality innings and it’s not difficult to imagine him having a good enough season to crack a playoff rotation. He’s even pitched successfully out of the bullpen in the playoffs. And he’s not going to command a gaudy long-term deal.

The common response is, “Well, he turned down the qualifying offer.” The qualifying offer is designed not only to give teams compensation for good players leaving, but also to disincentivize rich teams from signing those players. So far, it’s working. As Ken Rosenthal has observed, Pivetta is the type of player whose market is most harmed by the qualifying offer - an interesting, valuable player, but not a bona fide star for whom giving up draft picks is a no-brainer.

Should the Braves sign Nick Pivetta despite the qualifying offer penalty? I think that’s a trick question - or, at least, it way oversimplifies what is not a binary inquiry.

Let’s do the math.

How much does a qualifying offer cost the Braves?

A team that exceeded the luxury tax in the previous season loses its second-round pick, fifth-round pick, and $1 million in international signing space when it signs a free agent with a qualifying offer attached.¹

Luckily, the hard work of valuing these assets has already been done by others, albeit a while ago. In 2019, FanGraphs put out an article on the financial value of draft picks. As you’d expect, there’s a sharp fall-off in draft pick value as the first round proceeds; by the second day of the draft, teams are just picking lottery tickets of varying risk-reward profiles. Per the FanGraphs article, the 61st pick of the draft, the Braves’ second round pick, is worth roughly $4.6 million of present value. A fifth-round pick is worth roughly $2.5 million of present value.

The international money is a bit harder to value since it is sometimes highly dependent on a team’s specific plans. I doubt any team is desperate to hold onto a second-round pick because it has a particular college pitcher it wants to draft, but less than a month ago, we saw Roki Sasaki’s top suitors acquire pool space for the sole purpose of trying to sign him. Most notably, the Blue Jays took on over $15 million of salary for a replacement-level outfielder in order to get $2 million of pool space from the Guardians.

Sasaki was a special case; players like him are almost never available in the international amateur market. FanGraphs says the ROI of an international bonus dollar is closer to 300% normally, meaning that we can value the $1 million of bonus pool space lost at $3 million.

This means that in total, signing Pivetta (or any other player with a qualifying offer attached) would cost the Braves $10.1 million of present value in draft and international free agency capital.

Is that cost worthwhile?

This is where the ‘trick question’ part comes in. The point of signing a player is to try to add value to your baseball team. More specifically, I’d say generating surplus value is a ‘win’ as contracts go - while spending as much as your ownership allows, you want players to overperform their contracts. (The 2023 Braves, for example, were a $230 million team that played like a $330 million team.) The qualifying offer just adds $10.1 million of present value to the cost of the player, making it that much harder to get surplus value on a deal.

I think the only teams that should be categorically opposed to signing players with a qualifying offer are teams that value the quality of their 2030 roster significantly more than they value the quality of their 2025 roster.² The Braves are obviously not such a team. So here’s the question: Can the Braves get Pivetta at $10.1 million in present value cheaper than he’d be without the qualifying offer?

What exactly might that look like? Assuming he doesn’t go back to Boston for a year, I expect that Pivetta will likely sign a three-year deal; that’s what both FanGraphs’ crowdsource and Ben Clemens predicted. Assuming the surplus value is evenly loaded across the three years and accounting for the time value of money, the Braves would need to get a discount of $3.5 million per year relative to what they’d pay Pivetta if he didn’t have the qualifying offer attached.³ So, for example, if the Braves were willing to pay Pivetta an evenly distributed 3 year, $50 million deal without the qualifying offer attached, they should be willing to pay Pivetta an evenly distributed 3 year, $40 million deal with the qualifying offer.

Concluding thoughts

Valuing draft picks and international free agent money is difficult, and the Braves certainly have in-house valuations of those assets. But I think that among fans, there’s a tendency to overvalue draft picks - to see the sacrifice of multiple picks as a wholly unacceptable price, no matter the terms of the contract.

The non-financial cost of signing Nick Pivetta is significant. In my view, though, it’s not some incalculable, sui generis barrier; it’s just another number to consider when determining what contract terms allow the Braves to reap surplus value from a deal.

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1. Note that this system does not work like the NFL’s compensatory pick system, where signing free agents offsets the compensatory picks you are owed from the departure of your own free agents. The Braves will get a compensatory pick for Max Fried’s departure regardless of whether they sign a player with a qualifying offer attached.

2. Ironically, the Athletics are (or should be) one of these teams, and they signed Luis Severino despite the qualifying offer penalty.

3. The math involved: find X where X + ((1-.0433) * X) + ((1-.0433)^2 * X) = 10.1. I use the same 4.33% discount rate as the league uses when calculating AAVs for contracts with deferrals.