As the MLB off-season gets underway, it’s time to review some of the more confusing language and deadlines we’ll encounter over the course of the next few months.
Here’s an explanation of MLB hot-stove terms, followed by a calendar of events:
Qualifying offer: To qualify for a compensatory pick in the following year’s draft, teams must extend qualifying offers to free agents. Valued at $14.1 million, the offers are typically extended to top free agents five days after the World Series. The free agents then have seven days to accept the one-year offer or decline in search of another deal.
Teams must surrender a draft pick to sign players who declined qualifying offers, and this added cost can reduce interest in those free agents. Most teams surrender a first-round pick to sign a free agent linked to draft-pick compensation, but the teams that finished with the worst 10 records in MLB surrender a second-rounder instead.
Last winter nine free agents obtained qualifying offers: Kyle Lohse, Josh Hamilton, B.J. Upton, Nick Swisher, Rafael Soriano, David Ortiz, Adam LaRoche, Hiroki Kuroda and Michael Bourn. With the exception of Kuroda, who signed a one-year deal worth $15 million, each player obtained a multi-year contract worth at least $24 million.
Under MLB’s previous collective bargaining agreement, teams obtained multiple selections for losing Type A free agents. Now the Type A-Type B distinction has been eliminated and teams obtain just one selection for losing a player who declines a qualifying offer.
The value of the offers is calculated annually by averaging the salaries of the 125 best-paid players in the game.
Posting Process: Japanese teams sometimes post their players, allowing MLB teams to place bids on them. MLB teams are allowed to bid for the right to negotiate contracts with posted players and the largest bid goes to the Japanese team. At that point, the player must negotiate a separate deal with the MLB team that won the bidding.
This winter starting pitcher Masahiro Tanaka will draw large bids if the Rakuten Golden Eagles post him. MLB may make changes to its posting system in the near future.
Arbitration: Players with between three and six years of MLB service time are arbitration eligible along with a selection of players with two to three years of service time (called Super Two players). As players gain experience they see their salaries increase through the arbitration system, which was initially established by MLBPA Executive Director Marvin Miller in 1974.
Since the process was established before the rise of sabermetrics, it favours old-school statistics such as wins and RBI. Above all, players are compensated in proportion to their playing time.
Sometimes players become uncomfortably expensive, at which point they can become non-tender candidates. On those occasions, teams will release a player early instead of tendering him a contract offer through the arbitration process and reserving a roster spot for him.
Teams and players exchange filing numbers for unresolved arbitration cases in January, with the player almost always submitting a higher figure than the team. If the sides don’t negotiate an agreement after exchanging figures, they go to an arbitration hearing the following month. A panel of arbitrators (people who aren’t necessarily well-versed in baseball) then hear arguments from both sides before selecting one side’s submission.
After a player accrues six years of MLB service, he’s eligible for free agency, assuming he hasn’t already signed a long-term contract extension.
Non-tender: A non-tender occurs when a team releases a player instead of committing cash and roster space to him through the arbitration process. Non-tenders often occur when under-performing players get expensive through the arbitration process and are no longer worth the salaries they’re projected to earn.
The free-agent market always expands following the non-tender deadline in early December, and there are often bargains to be found among non-tendered players. For example Russell Martin, Joe Saunders and Jose Veras have all been non-tendered in recent years.
Rule 5 draft: The Rule 5 draft takes place on the final day of the Winter Meetings every December. Designed to create opportunities for players who would otherwise remain buried in the minor leagues, the draft features players who are left off of their teams’ 40-man rosters after playing for four to five years as a professional (depending on the date of their signing and their age at the time).
Each Rule 5 draft pick costs $50,000 and must remain on the active 25-man roster for the entirety of the following season, or be offered back to their former organization for $25,000 in return. The teams can also work out a trade.
Roberto Clemente and Johan Santana are among the most successful Rule 5 draft selections of all time, though the rules regarding player eligibility have changed since those players were chosen. George Bell and Kelly Gruber are two key Rule 5 picks by the Toronto Blue Jays.
Roster management: Roster management changes during the off-season, when the distinction between the 25-man and 40-man rosters becomes less significant than it is during the season. Players who sign major-league contracts must be added to the MLB roster, while players who obtain minor-league deals don’t require roster space.
Contract option: Player contracts often include options for future seasons. Sometimes the player controls the option (player option), sometimes the team controls it (team option) and sometimes both sides must exercise the option for it to take effect (mutual option).
Oct. 31: Free agents can discuss general parameters with all 30 teams and can re-sign with their former teams
Nov. 4: Teams have until 5 p.m. EST make decisions on contract options, though many will be resolved by November 2
Nov. 4: Teams have until 5 p.m. EST to extend qualifying offers
Nov. 5: First day free agents can sign with all 30 teams
Nov. 11: Deadline for players to accept qualifying offers
Nov. 11–13: GM Meetings, Orlando, Fla.
Dec. 2: Deadline for teams to tender contracts to arbitration-eligible players
Dec. 9–12: Winter Meetings, Orlando, Fla.
Dec. 12: Rule 5 Draft
Jan. 17: Teams and players exchange arbitration filing numbers