How Do MLB Clubs Acquire Players?
By Drew Balen
Once a week someone will ask me a question regarding player transactions. Recently a friend asked me the difference between waivers and free agency. This got me thinking about the various ways that MLB clubs can add new players to their respective organizations. Here is an overview of the different options that are available to a team.
There are seven ways that an MLB club can acquire talent. Professional talent is acquired via free agency, trades, Rule 5 draft, and waivers while amateur talent is acquired through the first-year player draft, signed as undrafted free agents, or signed as international free agents.
A free agent is a professional baseball player who has no contractual obligation to play for one team and is free to negotiate directly with any team, including the one he was playing for when the contract expired. One can also become a free agent when his club releases him or fails to tender or renew his contract (Dickson, 2009, p. 346).
A trade is an exchange and/or sale of a contract involving one or more players with another club (Dickson, 2009, p. 886). Players are traded for various reasons such as contractual, on-field performance, off-field issues or because a team is dealing from a position of strength (such as having an extra player at one position and looking to fill a void at another position).
The rule 5 draft is a draft of unprotected minor-league players, in which major-league clubs select in reverse order of their winning percentages at the close of the preceding championship season, with teams from each league choosing alternately. A player not on a major-league 40-man roster is eligible to be drafted if a) he was 18 or younger when he first signed a pro contract, and this is the fourth Rule 5 draft since he signed, or b) he was 19 or older when he signed a pro contract, and this is the third Rule 5 draft since he signed. A selected player must remain on the 25-man major-league roster (or disability list) for the entire season or be offered back to the original club for half of the $50,000 draft price (Dickson, 2009, p.724). Note: an additional season until players are eligible currently exists meaning players that sign at 18 or younger can be selected in their fifth season while players signed at 19 or older can be selected in their fourth season.
Waivers are the system whereby a major-league team abandons its right to purchase the contact of another team’s player for a stipulated price. It allows all the teams to have a chance to bid on a player about to be released or to be included in a trade. Before a player can be released, waivers must be granted by all teams in reverse order of their standings. If the rights to that player are claimed (not waived) by one of those teams, his contract must be sold at a standard waiver price (Dickson, 2009, p. 918). There are four different types of waivers: outright waivers, trade assignment waivers, optional assignment waivers, and unconditional release waivers (Wong & Deubert, 2010). The type of waivers that a player is placed on depends on the individual circumstance of each player along with what type of move the club is attempting to make with its roster.
The first-year player draft (or Rule 4 draft) is a draft in which players completing their senior year of high school or junior year of college, and those players currently at a junior or community college are selected by major-league teams in reverse order of their percentages of games won at the close of the previous championship season. There are 50 selection rounds, conducted each year in June. The signing deadline for draftees (other than college seniors) is July 15. A player who is selected but returns to school without signing a contract is subject to selection in the next year’s draft (Dickson, 2009, p.326). A player eligible for selection, but who is not selected, may be signed by any major- or minor-league club (Dickson, 2009, p. 326). A player passed over in the draft who then is signed by a major-league team would be classified as an undrafted free agent. The first-year player draft only includes players from Canada, Puerto Rico, the Virgin Islands, and other U.S. territories, and foreign players attending American schools (Dickson, 2009, p. 326). This means that players from other countries (such as the Dominican Republic or Venezuela) are free to sign with any of the thirty MLB clubs as international free agents. Although players sign throughout the year the beginning of the official signing period is July 1st for a player once he has turned 16 years old. The international market is extremely important and if navigated correctly can provide a club with a competitive advantage (Wong & Deubert, 2010). An exception is Japan where players who are under contract by a Nippon Professional Baseball club (Japanese Pro League) can be posted for sale. There has recently been talk of an international draft or the inclusion of international players in the current first-year player draft, yet nothing has been agreed to between the various organizations. It appears however that some form of an international draft could be in place within a few seasons once all the specific details have been ironed out.
The posting system is an agreement between Major League Baseball and Nippon Professional Baseball under which exclusive negotiating rights for a Japanese player (made available by a Japanese club) can be sold to the major-league team submitting the highest sealed (blind) bid. The team that wins the auction has 30 days to sign the player; otherwise, the player is returned to his Japanese team for a year, after which he automatically becomes a free agent. The posting fee is not paid until the player signs a major-league contract (Dickson, 2009, p. 664). The most notable case of a player joining an MLB team through the posting system occurred in January 2007 when the Boston Red Sox won the rights to negotiate with pitcher Daisuke Matsuzaka by placing a winning bid of $51.11 million to Matsuzaka’s Japanese club the Seibu Lions. Matsuzaka signed a six-year $52 million contract with the Red Sox meaning that it cost the team a total of $103.11 million to obtain the services of Daisuke Matzuzaka. Some other Japanese Players that joined MLB via the posting system include: Ichiro Suzuki (Seattle Mariners), Akinori Iwamura (Tampa Bay Rays), Tsuyoshi Nishioka (Minnesota Twins), Norichika Aoki (Milwaukee Brewers) and Yu Darvish (Texas Ranger).
I hope that gives you a basic idea of the options that are available to an MLB team when adding players to their organization. The system which MLB operates within is defiantly more complex than that of the NFL, NBA, and NHL.
References
Dickson, P. (2009). The Dickson Baseball Dictionary (3rd ed.). New York: W.W. Norton & Company, Inc.
Wong, G., & Deubert, C. (2010). Major League Baseball General Managers: An Analyis of Their Responsibilities, Qualifications, and Characteristics. Nine: A Journal of baseball History and Culture, 18(2), 74-121.
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