Per Ben Nicholson-Smith over at MLB Trade rumours, here is an explanation on the new system:
A few months from now, when the season ends and players file for free agency, teams, agents and players will navigate a new system for determining free agent compensation. Here’s a brief primer on compensation under the sport’s new collective bargaining agreement:
- Type A and Type B designations have been eliminated. Instead, teams will have to make players a qualifying offer to be eligible for draft pick compensation.
- The qualifying offer, which will be determined by averaging the top 125 player salaries from the previous year, is expected to fall in the $12-13MM range for the coming offseason. All qualifying offers are for the same duration (one year) and the same amount ($12-13MM).
- Teams will have until five days after the World Series to make qualifying offers and the players will have seven days to accept.
- Once a team makes a qualifying offer, the player has two choices: he can accept the one-year deal or decline in it search of other offers. If he declines the offer and signs elsewhere, his new team will have to surrender a top draft pick to his former team.
- Teams that sign free agents who turned down qualifying offers will surrender their first round picks. However, the first ten selections in the draft are protected. Teams with protected picks will surrender their second-highest selections. The player’s former team will receive an additional selection at the end of the first round.
- If teams don’t make a qualifying offer, the player can sign uninhibited.
- Only players who have been with their clubs for the entire season will be eligible for compensation.