Waiver Trading: Everything You Need to Know

Mandatory Credit: Tom Szczerbowski-USA TODAY Sports

It’s Over!  No, Not Really.

While July 31st marked the end of the unrestricted trading deadline for Major League baseball, there is still a window of opportunity for contenders to continue to beef up their rosters for the stretch run. There are various explanations of this out there, but frankly, I didn’t like like how they were structured/explained, so I have put together this version in the hopes of answering all of the inevitable questions. I do like, however, this definition of “waivers” from baseball-reference.com that I will start off with:

"Waivers are a [request for] permission granted by the other teams in Major League Baseball to allow a team to do a player move which would not normally be allowed by the rules. In other words, opposing teams waive their objection to the move."

A “Waiver Claim,“ therefore, is a team’s statement of objection to a request to waive the player-movement rules. Such a claim has numerous implications, and that’s the subject of this post.

How Waiver Claim Trading works from August to the end of the Season

1. Players made eligible for trade are placed on “revocable waivers“. This is pretty much routinely done for most of the 40-man roster of most teams.  Teams may place as many as 7 active players (not on DL) per day on waivers. Why?

• The rules require waiver requests to be done for individual players – cannot be done as a blanket request for the whole team.
• It provides maximum flexibility for their GMs; it tends to mask whatever their true intentions might be;
• It also doesn’t single out individual players as possible targets — which would tend to get players bent out of shape (witness Andruw Jones‘ complaints from several years ago when the Braves put him on waivers).

2. Once placed on the Waiver list, there is a 48-hour claiming period, during which any team may put in an objection claim…that’s the ‘waiver claim’.  To prevent every team from claiming every player out there and causing utter chaos, there is a token price ($20,000) attached to waiver claims. If a team fails to make a claim, it is effectively saying “we have no objection to you moving this player to another team”, and thus they render themselves powerless in whatever happens after that point. In other words, they give up their right to complain later.

There are several “gotchas” to the claiming process.  The obvious one is that you gotta have both 40-man and 25-man roster spots available – or at least planned for – just in case you win the claim and the player.  But we’ll get to the other ‘gotchas’ as we go along.

3. Let’s do the simple case first:  if all 30 teams choose not to put in an objection claim for a given player after the 48-hour window, that player may then be freely traded to any other team — just like the rules allowed before August, as the restrictions are removed… except for a little detail that I’ll cover in Item #6 below.

4. Now the fun part: a waiver claim is made. Let’s use an example of Cliff Lee, since he could be an interesting case. His contract requires another $8-ish million payment this year, but is $25 million for each of the next 2 years with possibly more in 2016. It is exactly for that financial reason he will probably clear waivers unclaimed. But for the sake of argument, let’s suppose that the Texas Rangers put in a claim. What happens then? Here are the options:

• a. Revocation of Waivers. The Phillies can choose to pull Lee back to their side of the void… that’s the “revocable” part of revocable waivers. This is effectively a team saying “PSYCH – I wasn’t really trying to trade this guy.” He still belongs to the original squad…. but of course they still gotta pay him, too.
• b. A Trade. The Phillies can try to negotiate a trade…. exclusively with the Rangers, since they were the claimants (they asserted their right to object — and are rewarded with this right of exclusivity). That trading opportunity window is limited — 48 more hours. If they cannot get together on a deal in that time frame, then the Phils can still pull Lee back… OR they can…
• c. Give the Player away. At the Phillies option, the claimed player can simply be given away — entire salary and all — to the claiming team. This is why the higher-salaried players will often clear waivers:  because of the risk that it’s simply a salary dump ploy. So while the initial dinner date (the waiver claim) might be relatively cheap, you might regret it in the morning. We’ll get to that more later.

5. Waiver Claims, part 2. If a player is pulled back to his original team (the waiver request is revoked), the original team CAN place the same player on waivers again in August. However, during that second time, the Right to Revoke is lost: any team making the claim has effectively bought the player without the need to negotiate anything.  This is rare, but it happens.

6. Part 3, or ‘a Trade is Bourn’: Let’s say that a bona fide trade deal is worked out. Waived Player A traded for a Player B. If Player B is on the 40-man roster of his club, then he must also have already passed through waivers successfully (i.e., his own 48-hour waiver period is done) before being trade-eligible.

When I mentioned “maximum flexibility” above, this is what I was referring to: getting a large number of your own players through waivers gives your GM more options for possible trades. Now if Player B is not on the 40-man, then there is no issue, as waivers are not required for them. This turns out to be common with “player-for-prospects” kind of trades.

7.  The PTBNL.  Sometimes, these trades are also done on a “Player to be named later” (PTBNL) basis… if you believe you can’t get a guy through waivers to make him tradable, then you could simply wait out the process and “name” the guy after the season when this process is no longer in force. This also happens for draftees ending their first year in which they cannot be traded. So there are ways around it if the two partners are satisfied enough to wait it out… including trading for our buddy Cash.  Two quick rules:

• There is a 6 month window available for trades involving PTBNL.
• If a major leaguer is involved, “the player named later can’t have played in the same league as the team he’s being traded to.” (Rob Neyer’s words).  Don’t ask me why.

8. Part 4: Getting More Complicated. Okay, that’s trading with one claiming partner. But suppose there are multiple teams making claims on the same waived player. What then? Well, there’s a “pecking order” of priority — which prevents the best teams from simply loading up. Let’s go back to Cliff Lee‘s case and suppose that the Dodgers, Blue Jays, Yankees, and Giants ALL claimed him.

Take all of the teams making a claim and arrange them in order of League, and then by current Won-Loss record. In the case of Cliff Lee, he’s in the National League, so the Giants and Dodgers get first crack – and the Giants win out because their record is worse than LA’s.

If no NL team claims him, then the AL squads finally get a chance – with Toronto prevailing over the Yankees because of Toronto’s worse record.

Once again, the rule is this:

• First – look for claims within the same league as the waived player.
• If multiple teams in that league put in a claim, the winner is the one with the worst record on that date in which the 48 hour window expires.
• Next – If no team in the same league put in a claim, repeat the process for the opposing league.
• In case of a tie?… well, I actually don’t know the answer to that one; I would guess we’d use playoff tie-breaker rules… but that’s another class for next month.

9. If the claim-winning team is unable to come to a trade agreement, steps 4A and 4C (above) are still the only other options – you cannot go to the next claiming team in line. The team that wins the claim has the exclusive right to negotiate a trade.  There are some unfair negotiating advantages that this would impose on the process otherwise.

An Aside – it is a little ironic, actually:  the team winning the claim is the one effectively saying “I object to your request to waive the rules by asking for your player to be moved after the trade deadline.”  Yet, they are then the only team that is permitted to facilitate exactly such a move!

10. Finally: Using Waiver Claims as a Weapon. There are numerous famous cases of a team making a claim specifically to block a (better) rival from obtaining a certain player. Do note that this is a two-way weapon… you might also get stuck with somebody that you don’t really want yourself/can’t afford.

Here’s some history:

• The Braves claimed pitcher Dennis Martinez in 1993 to block him from the Giants. We didn’t get him… but then neither did the Giants. There’s also a rumor that the Yankees put in 45 claims that year to try and block “every decent starting pitcher” available!
• The Yankees did get stuck with Jose Canseco in 2000 when he was waived by the (then) Devil Rays in an apparent attempt to trade him to the Blue Jays. He basically sat on the bench for the rest of the year with real no position available to him, but you could argue that the tactic was still successful, because Jose – and his new teammates – ended up with a World Series ring.
• The Braves themselves were blocked from getting closer Randy Myers in 1998 when the Blue Jays waived him and San Diego put in a claim. Oops… the Blue Jays simply gave him to the Padres for nothing, saying “thank you very much for taking his contract”, which was for an additional $12 million over 2 years (think 1998 dollars – that was huge).
• In August 2009, the same thing happened to the Chicago White Sox involving Alex Rios (thanks to XM/MLB Mike Ferrin & Jim Duquette for the reminder).  The Sox may have been trying to block Rios from getting to Detroit, but Toronto stuck them with the $60 million remaining on his contract through 2014.  And as we all know, Rios is still on the White Sox, where he has performed with mixed results since then.

FAQ About the Pesky Little Details

A. Note that waiver claim trades may continue to occur from now until the end of the season — but to be “playoff eligible”, traded players must be on their new team’s 25-man roster before September 1st (*see below). It’s for that reason that the waiver-trade action will be from now until the end of August, as the only practical reason for going past that date is to replace injured players.

B. Can teams talk trade before the waiver claims are made? Sure — if you want to do a trade, it’s a good idea to work out the parameters beforehand… and sometimes the claims process actually works out to let that happen.

C. Let’s suppose the Cards and Brewers both make a waiver claim on the same player. Based on today’s standings, the Brewers would win the claim. Do the Cardinals then get a refund of their $20 grand?  Nope. That’s their ante in the poker game: the non-refundable price of admission.  It is high enough that most teams won’t make claims frivolously (I’m looking at you, Alex Anthopoulos!), but low enough to still allow for meaningful transactions.

D. So where do I (John Q. Baseballfan) go to see the current listing on the waiver wire? Well it turns you can’t, actually. Check this tidbit from Wikipedia:

"The waiver “wire” is a secret within the personnel of the Major League Baseball clubs; no announcement of a waiver is made until a transaction actually occurs."

Bummer. Occasionally some information will be leaked out (we are in a twitter world now), but by-and-large, we simply don’t know until after the fact. Kinda takes all the fun out of it, but overall, that’s probably a good thing.

E. *More About Playoff Eligibility. This is almost as confusing as the waiver process itself, but at least I cab boil it down to a fairly compact list of bullet points. A player is eligible for post-season play if he fits any of the following eligibility rules:

• On the 25-man active roster before September 1st.
• On the Disabled list as of August 31/midnight (but, per usual practice, must be eligible to come off of the list for a given playoff game)
• On the bereavement list as of August 31/midnight.
• On the suspended list as of August 31/midnight.
• He is a member of the team’s organization (at any level) and is approved by the Commissioner’s office to replace an injured player during the playoffs. Such a player must be a direct replacement (position for position: you can’t add a pitcher to replace a catcher). If the player is not currently on the 40-man roster, he must be added. He then must be added to the 25-man active roster, replacing the injured man. Replacement player must have been a member of the organization continuously from at least the period of August 31st onward.

…and there’s a time period in which you can do these replacements — the beginning of a series or something like that. But that’s way deeper than we need to go right now.

A Little Something About the Newest CBA: Qualifying Offers

There is an interesting wrinkle in the newest Collective Bargaining Agreement (CBA) that should be discussed here.  We got to see it play out during its first year of implementation in 2012, but it’s still part of the trade calculus.  During the season, if you trade somebody away, you cannot receive compensation for the loss. Likewise, if you accept a trade and then lose the player to off-season free agency, then you don’t get a compensatory draft pick. Period.

Your team is eligible to compensated for the loss of a player IF all of the above apply:

• You have the guy on your roster during the entire season.
• You offer a contract matching or exceeding the average of the top 125 players (projected at around $14m for 2014). This is called the “Qualifying Offer”.
• The player turns down your offer and signs elsewhere.

When this happens, your team gains ONE sandwich pick after the first round and after the (stupid) ‘competitive balance lottery’ picks. The newly signing team loses their own first round pick…. unless it was a top ten “protected” pick (then they lose a Round 2 pick).

So… if you trade away a guy that is likely to be worthy of a one-year contract offer at the magic $14 million level (say:  Brian McCann, for instance), then your trade compensation should be at least first-round-pick worthy, or else you made a bad deal.

In short: all in-season trades cancel any chance of a compensation pick.

The New CBA and “10-and-5” rights

A “10-and-5” player has 10+ years of major league service time and at least 5 years of time with the same club.  Such players are empowered with an assumed ‘no-trade’ clause, which means they have the right to veto any trade presented to them.  There used to be an additional clause that required a ‘cooling off’ period of 24-hours before a 10-and-5 guy was permitted to approve a trade.  This got in the way of some deadline deals.

Ken Rosenthal of FOX Sports reported via twitter in 2012 that this rule was eliminated from the CBA, so trade discussions about such players can go right down to the wire.  Or they can stretch on indefinitely, as there is also no time limit by which they are required to respond.  You may recall that the widely reported 2012 trade of Ryan Dempster from the Cubs to the Braves (“There is no trade!”) eventually died because Dempster utterly failed to acknowledge it, much less approve anything.

10-and-5 rights cannot be ignored, neither can explicit no-trade clauses in existing contracts: at any point a trade is proposed, players with those rights in place must actually approve the trade in writing.  Without that – the trade doesn’t happen.

Several online sources contributed to this compilation of this information.

Thanks for attending!  Class dismissed.