MLB Transactions Part Three: Waivers and DFA

For part three of my major league transactions series, I'll examine the wide and wonderful world of waivers, which includes the dreaded "designated for assignment". For those of you that missed my previous articles, I wrote about salary arbitration and minor league options. As the season quickly approaches, I'll try my best to deal with some of the decisions that the Rockies will be facing as they construct their roster along the lines of these transaction rules. Once again, Jeff Euston of Cot's Baseball Contracts' work was invaluable in the research and completion of this article. I'll warn you, it's another long one.

Waiver Eligibility

Before I dive headlong into waivers, it's probably a good idea to explain which players are among those likely to be put on waivers. First of all, to be eligible to be placed on waivers, a player must have a major league contract--in other words, he has to be on the 40 man roster. This is why players like Josh Fogg, Matt Belisle, Glendon Rusch, and Scott Podsednik have nothing to fear from waivers--they do not possess a major league contract, only a non-guaranteed minor league deal that they have the option of accepting or not if they don't break camp with the team. Actually, I'm sure that each of these players would like to have to be worried about waivers, because that would mean that they had a guaranteed deal. If one or more of those players does make the club, they would be signed to a major league deal and be eligible for waivers.

Secondly, a player being placed on waivers is usually, but not always, out of minor league options. Options are an easy way for a team to shuttle 40 man roster players from majors to minors and vice versa, and players with them are not usually unnecessarily exposed to waivers. Teams would place a player with options on waivers if, for instance, they wanted to release him or the player requested it.

Cory Sullivan is an example of this. Last year, the Rockies used an option on him, but one time that he was sent down he requested to the team that they expose him to waivers so he could test the market. The Rockies obliged, but with his foolish $1 million guaranteed salary, no team was willing to take him off of our hands. Once he cleared waivers, the Rockies removed him from the 40 man roster and placed him in AAA. He was put back on the roster when Podsednik went down, but after the season, the Rockies put him on waivers again--this time he became a free agent as his contract was up--and the Mets signed him to a major league contract.

In any case, the major league contract and a lack of minor league options are the two factors that most often lead to a player being placed on waivers. This year, the players on the Rockies that have something to fear this spring are relief pitchers Ryan Speier and Juan Morillo. They have no minor league options remaining, as I explored last week, and the Rockies likely has room for only one of them if at all. At least one of them will likely be placed on waivers, or rather designated for assignment, which I will discuss later.

Types of Waivers

So, what exactly is a waiver? A waiver (MLB Rule 9) is a permission from other clubs to trade or assign a Major League player’s contract. Basically, this means that the 29 other MLB clubs will have a crack at a player once a team puts him on waivers--but if none do claim him and put him on their 25 man roster, his team can assign him to the minors, trade him, or release him outright. However, this describes only one of the three types of waiver situations--the irrevocable waiver.

Wait a second--there are three kinds of waivers? Yes sir, there are three kinds of waivers that a MLB player can be subjected to: Unconditional Release, Irrevocable Outright, and Revocable Major League waivers.

I'll discuss each of these waiver transactions after the jump...

Unconditional Release Waivers

This is the most basic of the waiver rules, in which clubs place players on waivers that they intend to release from the organization completely. The player then may be claimed for as little as $1 by any team, but the player may choose to refuse the claim and become a free agent. An example of this is the Astros' release of Shawn Chacon after his shoving match with GM Ed Wade. Houston didn't want the Colorado native in their organization anymore, so they flat out released him.

Irrevocable Outright Waivers

As the title would suggest, once a player is placed on irrevocable outright waivers, his team may not pull him off of them, as is the case for the last set of waivers. This is the most common of waivers situations. As discussed  above, irrevocable outright waivers are the waivers teams use to kick a player off of their 40-man roster while keeping him in the minor league system. They're also the waivers to use when a club wishes to send a player who is out of options to the minors (thereby also removing him from the 40-man roster). Players that are placed on irrevocable outright waivers are usually those that have been designated for assignment by their team, which will be described more fully later on.

In any case, competing teams wishing to claim a player on outright waivers must pay a $20,000 waiver fee to the team owning his rights. The claiming team pays the player the major-league minimum salary for the rest of the season (a pro-rated $400k in 2009), and the original club is responsible for the balance of his contract. Waiver claims are prioritized in reverse order of W-L record as follows:

 

November 11 - April 30 (or the 30th day of the next season): The club with the worst won-loss record in the previous season has priority.

May 1 – July 31 (31st day of the season – July 31): The club with the worst won-loss record in the current season has priority.

August 1 through November 10: The club with the worst won-loss record in the current season has priority, but American League clubs have priority for AL players, and National League clubs have priority for NL players.

From September 1st to the 30th day of the next season, outright waivers are called Special Waivers.

If a player does in fact clear waivers, he is outrighted to the minors. Though he has been removed from the 40-man roster, the player is still paid according to the terms of his guaranteed contract. A player can only be outrighted once in his career without his consent. His options on subsequent outrightings are as follows:

1) Reject the assignment and become a free agent

2) Accept the assignment and become a free agent at the end of the season if he’s not back on the 40-man roster.

In addition, a player with 3 years of major league service may refuse an outright assignment and choose to become a free agent, regardless of whether he has been sent outright to the minors previously. A player with five or more years of ML service time, as with minor league options, is given even more rights. The player cannot be outrighted even once without Veteran's Consent, even if he clears waivers. If the player refuses his assignment to the minors, the team must either release him, making him a free agent, or keep him on the major league roster.

Regardless, in the case of the five-year service player, the team is obligated to pay the player  under the terms of his guaranteed contract. If he is released and signs with a new team, his previous team must pay the difference in salary between the two contracts if the previous contract called for a greater salary.

Furthermore, a club may not request outright waivers on a player with a complete no-trade clause or on a player ten-and-five rights (10 years of ML service, the last 5 with his current team). The player can, however, waive those rights and accept the trade if it is to his liking. So for instance, the Rockies could only trade Todd Helton were he to accept the trade. 

Designated for Assignment

Since it is usually the precursor for a player being placed on outright waivers, let's discuss being designated for assignment. A player that is designated for assignment is removed from his club’s 40-man roster and, within the next 10 days, traded, released or, if he clears outright waivers, assigned to the minor leagues. A club may not designate a player for assignment if the corresponding transaction is to recall a player on optional assignment. Here are the options a club has in some more detail:

  • Trade: A club interested in acquiring a player who has been designated for assignment may try to work out a trade before the player is placed on waivers, eliminating the possibility he might be claimed by a club with a higher waiver claim priority. Players with "10 and 5 rights" may not be traded without their consent.
  • Release: The player then becomes a free agent. He may sign with any club, including the team that released him.
  • Waivers: A club wishing to send a player designated for assignment to the minor leagues must first place him on irrevocable outright waivers, making him available to the other 29 clubs in reverse order of won-lost record.
  • In other words, a club DFA's a player to give themselves some options. The biggest benefit to a team when a player is DFA'd, the club gets to fill his 40 man roster slot while not committing yet to a formal course of action with the player. Note that of the ten day period, the player must be placed on waivers before seven days have passed if the team wishes to go that route.

    Revocable Major League Waivers

    This final set of waivers is perhaps the most difficult for fans to understand. However, the purpose is clear. Revocable major league waivers are utilized in August as a means to gauge trade interest in certain players. After all, in MLB between August 1 and the end of the season, a player may not be traded without first clearing major league waivers--making these waivers (August 1-August 31) the only way for a team to fill a late season hole in their roster.

    From a team's standpoint, they have nothing to lose by placing a player on ML waivers, as the waivers are revocable. If another team puts in a claim on a player, the original club can simply pull their player off waivers. Here's basically how it works, largely courtesy of Jayson Stark:

  • Virtually every player in the major leagues will be placed on ML waivers this month, whether a team intends to trade that player or not. If nothing else, the sheer volume of names can at least disguise players whom clubs do want to sneak through so they can be dealt.
  • If a player isn't claimed by any team in either league within 47 business-day hours of being placed on waivers, he can be traded until the end of the month to any team.
  • If a player is claimed, but only by one team, the player can be traded only to the team that claims him. Teams must work out a trade with the claiming club within 48 ½ business-day hours, pull the player off waivers, or give him to the other team (see below).
  • Like outright waivers, a player with a no-trade clause who is claimed must be pulled back if the player’s no-trade clause allows him to block a deal to the claiming club. However, the player may waive the no-trade clause and join the claiming club.
  • If a player is claimed by more than one team, the club with the worst record in that player's league gets priority -- and the player can be traded only to that team.
  • If a player is claimed only by teams in the other league, the club with the worst record in the other league gets priority -- and the player can be traded just to that team.
  • If a deal can't be worked out or the team doesn't want to trade that player, he can be pulled back off waivers once in August. If he is placed on waivers again before September, he can't be recalled a second time--in other words, the waivers become irrevocable.
  • Or, if a team is just hoping to dump a player's salary, it can simply allow a team which claimed that player to have him for a small waiver fee (again, $20,000). If that happens, the team that gets the player has to pay his entire salary, assuming responsibility for his current contract.
  • A common ploy in past years has been for lower-record teams to block the waiver claims of contenders, but in these economic times, those teams can't risk being saddled with an unwieldy contract.

    Finally, for those of you that read last week's options column, there is an exception to the options rules that involves waivers. Major League (revocable) waivers are required when optioning a player who has options remaining but who is more than three calendar years removed from his first appearance on a Major League roster (like Huston Street and Brad Hawpe, for instance). Because major league waivers are revocable, players usually clear them in this scenario. Sorry for steering you a little off course last week by not mentioning that exception.

    So there you have it. Maybe the next time that you see that someone has been put on waivers, you'll remember my column and understand why the club making that particular transaction. Thanks for reading!

    Sources and Additional Reading

    Highly suggested for those that are interested in learning more about waivers.

    Waivers Primer

    Designated for Assignment

    ML (August) Waivers

    Death, Taxes, and Waivers

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