The Business of Baseball Series: Trades and Other Transactions

This post in the series is about trades and other transactions.  Specifically, who can be traded and who cannot and who has the right to veto a trade.  Other transactions covered are waivers and the Rule 5 draft.  Other methods of acquiring players, the Rule 4 draft and the international market, will not be covered, as they are complicated and if attempted would require their own separate posts.

Jul 31, 2013; Miami, FL, USA; Major league baseball are seen prior to a game against the New York Mets and the Miami Marlins at Marlins Park. Mandatory Credit: Steve Mitchell-USA TODAY Sports

Trading players among major league clubs is as old as baseball itself, and is a relatively straightforward process.  Basically, any major or minor league player can be traded, with some exceptions.  When a player is traded, his existing contract transfers to his new team in its entirety.  In some cases, the actual player traded is not known at the time of the trade, otherwise referred to as “the player to be named later”.  This player is usually a minor leaguer, and such player must be named within six months of the trade.  Major league clubs can make trades between the end of the World Series and July 31st of the following season without restrictions.  After July 31st to the end of the season, players must be placed on waivers first to be eligible to be traded.

There are some exceptions to the ability to trade any player.  For instance, players drafted in the June draft (Rule 4 draft), are not eligible to be traded until one calendar year after they sign.  There is a loophole to get around this, however, the previously mentioned “player to be named later”.  Teams can trade the player by designating him as the player to be named later, as long as the calendar year requirement is passed before the six month deadline for naming the player occurs.  Another exception involves the signing of free agents;  they cannot be traded before June 15 of the subsequent season without their written consent.

There is one additional bar to freely trading any player and that is the player veto power.  Players can obtain veto power over a trade in one of two ways; either contractually or by virtue of service time.  A player can negotiate a no-trade clause into his contract.  Full no trade clauses allow a player to veto a trade to any team.  A limited no trade clause allows a player to veto a trade to a predetermined number of teams.  Such clauses can have a fixed set of teams that can be blocked or can have a list that changes from year to year as the player chooses.  Limited no trade clauses run the gamut from as few as 2 teams blocked (Carl Crawford), to as many as 21 teams blocked (Cliff Lee, Ryan Howard).  There are no Cardinal players with limited no trade clauses, but there are 3 with full no trade clauses; Matt Holliday, Yadier Molina and Adam Wainwright.

Players can also obtain trade veto power by virtue of what are called “10 and 5 rights”.  A player obtains the right to veto any trade if they have accrued 10 years of major league service time, of which the last 5 are with the player’s current team.  There are currently 9 players with 10 and 5 rights with their current club; David Ortiz, Miguel Cabrera, Joe Mauer, CC Sabathia, Mark Teixeira, Derek Jeter, Alex Rodriguez, Chase Utley, and Jimmy Rollins.  There are 3 Cardinals who will obtain 10 and 5 rights before the expiration of their contracts; Matt Holliday (July 2015), Yadier Molina (May 2014) and Adam Wainwright (August 2015).  Interestingly, these are the 3 players who have full no trade clauses in their contracts. Kind of seems redundant, doesn’t it?

Moving on from trades, another method of acquiring a player is through waivers.  A player can be placed on waivers at any time.  There are two types of waivers, revocable and irrevocable.  With revocable waivers, a team may rescind the waivers when a player is claimed; with irrevocable waivers a team cannot.  Irrevocable waivers come into play when a team attempts to assign a player to the minor leagues in one of two scenarios; an assignment of a player who has exhausted all of his allotted option years, or an outright assignment of a player off of the 40 man roster.  Ryan Jackson is an example of this last scenario, he was outrighted in November 2013 and was claimed off waivers by the Houston Astros (then subsequently traded to the San Diego Padres).  Irrevocable waivers are also used to give a player his unconditional release, as was the case with Ty Wigginton, who cleared waivers and became a free agent.  Revocable waivers are used most often for the purpose of trading a player.  Revocable trade waivers are only necessary for the period between the July 31st trade deadline and the end of the season.  If a player is claimed off waivers one of three things can happen:  1) the waiving team can arrange a trade with the claiming team; 2) the waiving team can rescind the waiver and keep the player; or 3) the waiving team can let the claim go through and the claiming team assumes the player’s existing contract and pays the waiving team a $20,000 waiver fee.  Teams in the same league as the waiving team have first priority for claiming, starting with the team with the worst record the previous season and moving up to the best record.  If no one in the waiving team’s league claims, then it moves to the other league, in the same order.

One other use for revocable waivers is the situation where a team wishes to option a player to the minor leagues who has 3 or more years of service time.  The player is put on waivers, and if he clears, he is sent down.  This was the situation in 2013 with Mitchell Boggs and Marc Rzepczynski.  A player with 5 or more years of service time, however, can refuse the assignment and declare free agency.  In both this situation and the trade waiver, a team may only rescind the waiver on a player once in a season.  If the player is placed on waivers the second time, the waiver becomes irrevocable and the claiming team pays no waiver fee.

The final transaction I am going to cover is the Rule 5 draft.  This draft occurs in December during the Winter Meetings and has a major league and a minor league component.   Players eligible for the Rule 5 draft are those players who are not on their team’s 40 man roster and were either 18 years old when they were signed and have been with the club for 5 years, or were 19+ years old when they signed and have been with their club for 4 years.  If a team selects a player in the Rule 5 draft, that team must keep that player on the team’s 25 man roster for an entire season, or place him on waivers and allow another team to claim him.  If no team claims the player, the player must be offered back to the player’s original team.  A Rule 5 draft player may be traded, but carries the same restrictions to his new team.  The last player the Cardinals acquired in the Rule 5 draft was Erik Komatsu, in December of 2011.  Komatsu was placed on waivers in May of 2012 and was claimed by the Twins, then later placed on waivers by the Twins, and then offered back to his original team, the Nationals.

The next post in this series will be about Inactive Lists.