November 21, 2005

The BP Guide to Transaction Rules

Trade Demands

by Thomas Gorman

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Today, we launch a new series, the Baseball Prospectus Guide to Transaction Rules. In the coming weeks and months we'll explain some of the more confusing sections of the Major League Rules and the Collective Bargaining Agreement, and we'll put those rules into a context that explains how they impact the way teams are constructed.

Our first entry explains the trade-demand right guaranteed by Article XX(C) of the Collective Bargaining Agreement. This provision was recently invoked by Diamondbacks starter Javier Vazquez.

TRADE DEMAND

If a player with at least five years of major-league service is traded in the middle of a multi-year contract, he has the right to demand a trade after the season. If the player so chooses, he can also identify as many as six teams to which he will not accept a trade. Notice of the trade demand must be given within the 15-day period beginning on October 15 (or the day following the last game of the World Series, whichever is later). Like many other rights secured by the Collective Bargaining Agreement, notice is first communicated by the player to the MLB Players' Association, and then by the Association to Major League Baseball's Labor Relations Department.

The player's club has until March 15 to trade him, and if they fail to do so, the remaining years on the player's multi-year contract are voided and he becomes a free agent. Any club signing such a player does so without regard to either the compensation requirement of the CBA (which requires draft pick compensation to clubs that lose Type A, B or C free agents) or the quota provisions (which limits the number of Type A and B free-agent signings allowed to each club in years with few free agents).

A player making this sort of trade demand can retract it without consequences by March 15 if his club hasn't yet traded him.

A player who is traded under this rule is prohibited from becoming a free agent again (or demanding a subsequent trade) for three years, even if his contract expires before three years are up. For example, Vazquez's current contract expires after the 2007 season, but if he is traded under this rule he is generally prohibited from becoming a free agent until after the 2008 season. The club that takes on Vazquez's contract will have "Repeater Rights" to him for the 2008 season, so if they choose to they can take him to salary arbitration for that year.

The club must notify the player of its intention to offer arbitration within five days of the free-agency election period, which is a much earlier requirement that the one to which clubs are held for arbitration offers to other players. If they choose not to offer him arbitration, the player could then elect free agency, and he would once again become a free agent for whom the compensation and quota provisions do not apply.

The trade-demand right is not inalienable. A player can waive this right at the time he signs his multi-year contract as long as the contract also contains a partial no-trade provision. The no-trade provision must allow for the club to trade the player to no more than 16 possible teams, as designated by the player. For example, if Vazquez's original contract with the Yankees had a no-trade provision that allowed for the assignment of his contract to the Diamondbacks, and if they had also written in a waiver of this trade-demand right, then he would be barred from his current trade demand.

A player with a multi-year contract is unlikely to demand a trade, as the consequences can be severe. If the team fails to trade him, he loses what is likely a friendly and lucrative multi-year deal. If he is traded successfully he loses his rights to enter free agency for three years, regardless of the duration of his current contract

It should be noted that in the history of this provision players have occasionally demanded trades but those demands have never resulted in free agency. Either the player was traded by March 15 or he retracted his demand.

Due to this winter's thin market in free-agent starters, Vazquez would probably do very well as a free agent. The lack of quality free-agent starters also gives GM Josh Byrnes a lot of trade options, though, so it's hard to imagine Vazquez becoming the first player in history to become a free agent as a result of this provision.

Jamey Newberg's Transactions Hornbook from the 2006 Bound Edition of the Newberg Report was a source for this article.