A trade, essentially, is the movement between 2 or more teams of player contracts. Teams can make trades with any team they choose, involving any players that they choose, but there are some limitations:
- Teams cannot trade players drafted in the Rule 4 draft for 1 year from the date of the draft.
- Players can have no-trade clauses added to their contracts, generally only as a part of a new contract.
- Players can earn no-trade rights by having 10 years of service time in the major leagues, and having 5 years of service time with their current team.
- Players can waive their no-trade rights to facilitate a trade if they so desire.
- Teams can send monetary considerations as a part of the trade. Any amount of $1 million in cash must be approved by the commissioner’s office.
- Teams can also include a “Player to be Named Later”. Generally, this is a player who has already been determined by the teams involved, but cannot be included for various reasons.
- Free agents who sign a contract cannot be traded until after May 1st of the first season of the contract.
The Trade Deadlines
There are 2 trade deadlines:
- July 31st: The Non-Waiver Trade Deadline
- August 31st: The Postseason Roster Trade Deadline
After the July 31st trade deadline, a player must be placed on waivers and clear waivers before they can be traded to any team. Teams have until August 31st to trade for a player if they want to have them on their postseason roster.
Players are placed on waivers in the period between July 31st and August 31st, with very few exceptions. Teams are allowed to make a claim to any player placed on waivers, and based on how many teams claim the player will determine how the claim is rewarded:
- If no one claims a player, they are said to have “cleared waivers”, and can be traded to any team
- If only one team claims the player, that team is awarded the claim.
- If more than one team claims the player, the team with the worst record in their own league is offered the claim.
If a player is claimed, they can only be traded to the team that was awarded the claim. If they choose not to trade the player to this team, they can pull him back off of waivers. What this does is make the player essentially untradeable during this period. A team can only pull a player back from waivers once in this time period. If they place the player on waivers again, they cannot pull him back again.
Once a waiver claim has been awarded, the team with the player can try to negotiate a trade with the team that was awarded the claim.
Alex Rios was placed on waivers last season during the month of August. A claim was placed on him, and this gave the Blue Jays three choices:
- Pull him back off of waivers, and not allow him to be traded without exposing him to waivers a second time.
- Negotiate with the team that won the claim (The White Sox) to try and get something in return for him via trade
- Simply allow the other team to have the player, without any return. The new team would be responsible for the entirety of their contract, and the old team would be off the hook for any of it.
In this particular example, the Blue Jays chose option #3, and were free of the rather large contract of Rios.
ESPN.Com article – Waiver Rules