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Trevor Bauer and the Reds lingering Qualifying Offer dilemma

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How exactly will the Reds play their cards this winter?

Pittsburgh Pirates v Cincinnati Reds - Game Two Photo by Justin Berl/Getty Images

There have been hints and glimmers revealed by the new-look Cincinnati Reds front office that suggest their intentions all along were to have Trevor Bauer around for the long haul. That would make their acquisition of him in the summer of 2019 while knowing he only had a season and a half of team control make a lot more sense given the significant package they gave up to acquire him from Cleveland.

The Reds, for what it’s worth, went a combined 57-62 (playoffs included) in games played since picking up their Cy Young winner, who is now a free agent, via trade. More important than that record is the small total number of games played, however, is that the pandemic that reduced the overall number also restricted fans from attending games during the 2020 season, putting a serious dent in the projected finances of all clubs, especially a Reds club that had sunk countless dollars and prospect resources into making the 2020 season a fan-packed playoff run on paper.

The forfeit of that revenue will likely price them out of the Bauer sweepstakes even though countless other franchises will still likely pursue him. Had the Reds not invested some $164 million into other free agents just last winter that story might be a bit different, but it would’ve been hard to envision them truly taking a run at Bauer this winter even if that had not been the case. Frankly, it’s just not something they’ve done a lot of in the history of this ownership group, and pushing payroll into the upper-echelon of the 30 MLB franchises for the first time in decades seems even more unlikely now.

That brings us to the dilemma.

When the Reds acquired Bauer from Cleveland in the three-team deal with San Diego at the 2019 deadline, the prized piece they parted with was top prospect Taylor Trammell, who ended up a Padre (for a time). Plucked out of high school in Georgia back in 2016, the Reds used a pile of their overall bonus pool to sign him to an over-slot deal and keep him from his commitment to play ball at Georgia Tech, and Trammell rewarded them in short order by rocketing up prospect lists with his blend of plate patience, elite speed, and burgeoning power potential.

Trammell was picked 35th overall back in 2016 thanks to the Reds small market, small payroll status doling them a Competitive Balance Round A pick that year. And if you circle back to Bauer’s current status with the Reds, that kind of draft pick becomes pertinent.

When Bauer received, and declined, a Qualifying Offer from the Reds last week, that ensured that the Reds will receive a compensation draft pick in the 2021 MLB Draft as a result. That’s a guarantee should Bauer do roughly anything short of retire. The dilemma begins when you get into the finer details of the post-QO free agency rules, however, as there’s one particular clause that might well be keeping Nick Krall and the entire front office up at night.

In the updated language bargained by both MLB and the MLBPA prior to the 2017-2018 offseason, all teams who have a player who declines a QO don’t end up with the same compensation upon its rejection. As Anthony Castrovince of MLB.com relayed at the time, the location of the team’s draft pick compensation is now directly tied to the size of the contract the post-QO free agent signs. As a team that receives revenue-sharing, that means the Reds would be the recipient of a compensation pick after the end of the 1st Round and directly before the Compensation Round A, at best, should Bauer sign elsewhere.

Since we referenced the 2016 Draft already in/re Trammell, it’s worth pointing out (even if it was prior to the newest CBA) some of the names that were picked thanks to post-QO compensation picks. Dodgers catcher Will Smith, who just shined in this most recent post season for them en route to the World Series title, went 32nd overall thanks to Zack Greinke departing in free agency. Dylan Clarkson and Dakota Hudson, both of whom have already begun carving out big league careers, were plucked 33rd and 34th overall by the Cardinals as compensation for losing both John Lackey and Jason Heyward. Trammell then went 35th to open Comp Round A.

As Castrovince highlighted, however, now the only picks doled out as compensation go to teams who had players decline the Qualifying Offer and then sign for a minimum of $50 million guaranteed. And if one of those players - Bauer, in this instance - signs for less than that, the compensation pick the Reds would then receive gets bumped to after Competitive Balance Round B, which comes after Round 2. That’s a potential drop of some ~45 spots, which not only puts them in a part of the draft that is less likely to yield an obvious stud prospect, but would also reduce their overall draft bonus pool by potentially up to ~$1.5 million, putting that much added pressure on signing their entire class.

When you look at the type of contracts signed by Greinke, by Gerrit Cole, by Clayton Kershaw and the other top arms in the game, it makes the idea of Bauer signing for less than $50 million guaranteed seem a bit less of a problem. However, Bauer has long suggested he’d be interested in signing only 1-year contracts once he reached free agency to maximize both earning potential and flexibility. While his agent began to walk back from that concept during the 2020 season, the combination of Bauer’s original statement with the financial pressures facing baseball at the moment do at least make the concept intriguing in the current climate, intriguing enough to perhaps make the Reds sweat.

A giant $200+ million contract is enticing as hell, obviously, but what if no team out there is willing to go to those lengths in this depressed market? What if, though, a club on the cusp of a World Series push was willing to offer Bauer $35-40 million on a 1-year deal instead?

That kind of short-term contract would be record breaking from an average annual value perspective, the kind of precedent-setting deal that would be long cited in free agency negotiations going forward. It would give Bauer the most 2021 money he could have possibly landed, and would then again give him the opportunity to pitch wherever he so desired a year later, maximizing his flexibility. Heck, if he pitched anywhere close to as well in 2021 on that deal as he did with the Reds in 2020 - and if the financial climate predictably improves as the pandemic gradually gets defeated - he might even be in a better long-term position after 2021 to sign a $200+ million deal then.

For the Reds, however, that would-be record-breaking deal wouldn’t benefit them in the slightest. That scenario might maximize Bauer’s overall earnings, but it wouldn’t meet the specific parameters in the latest Qualifying Offer fine print to net them a compensation pick immediately after the 1st round of the 2021 draft.

That puts the Reds, who pretty clearly want but cannot afford Bauer at his estimated cost, in a pretty prickly pickle.

While the baseball market is premised on free market concepts, it is not a perfectly free market. There are only 30 clubs, after all, many of whom are in the same (or much worse) financial doldrums as are the Reds at the moment. Yet the Reds, who cannot conceivably afford Bauer, will be dependent on some other club to throw money at Bauer in precisely the right amount to benefit most from this entire scenario.

And as is the case in almost every free agency situation, that will require the winning bid, one that tops the offers from all others. In other words, it will behoove the Reds to submit bold offers on Bauer this winter with money they don’t have in this scenario, as that’s the most direct way of pushing the contract he eventually signs elsewhere into the threshold where they get the most compensation in return. Winning bids only get bigger if pressed by other aggressive bids, and the Reds simply must be one of those to walk out of this entire convoluted scene the best off.

The more they are convinced they cannot afford him, the more aggressive they must pursue him. It’s something of a Catch-22, similar to what I wrote about with Bronson Arroyo roughly seven damn years ago. And it will require the Reds to both exhibit precision and get a bit lucky, as presumably other franchises will be operating with similar guise.

Finding the next Taylor Trammell won’t be easy, even if the Reds get the opportunity to again search for him with pick 31, or 32. But, it should be undeniably easier to find him there than at pick 69, or pick 70, and the Reds will have to participate in the process to make that work out in their favor, even if it puts them at risk of being on the hook for money they aren’t sure they can afford. Whether or not they’re willing to take that risk, or merely sit idle and settle for the lesser compensation, will absolutely be a reflection of their commitment to winning in the near future.

(Of course, it’s easy as hell to watch someone else put their money on the line.)