Compensation for Loss of Article XX-B Qualified Player
An Article XX-B free-agent is designated a "Qualified Player" if the player spent the entire immediately-preceding MLB regular season on a club's MLB Active List (25-man roster) and/or on one or more of the club's inactive lists (7-day, 15-day, and/or 60-day Disabled List, Military List, Bereavement List, et al) and/or on the Active List or an inactive list (7-day or 60-day Disabled List, Military List, Bereavement List, et al) of one or more minor league affiliates of that club, and the club offers the player a guaranteed contract (known as a "Qualifying Offer") for the following season.
The Qualifying Offer must include a salary at least equal to the average salary of the 125 highest-paid MLB players from the previous season. The exact amount of the average salary of the 125 highes-paid MLB players from the previous season will be communicated by the MLB Labor Relations Department (LRD) simultaneously to all MLB clubs and the Major League Baseball Player's Association (MLBPA) within ten days after the conclusion of the MLB regular season.
To be valid, a Qualifying Offer must be extended by a club no later than 5 PM (Eastern) on the 5th day following conclusion of the World Series. The LRD then provides the MLBPA with a list of players receiving valid Qualifying Offers and the amount of each offer.
The Qualified Player has until 5 PM (Eastern) on the 7th day after receiving the offer to decide whether to accept or decline. If the Qualified Player accepts the offer, he is considered "signed" and must be immediately added back to his club's MLB Reserve List (40-man roster). If he declines the offer, the player is free to sign with any MLB club, including his former club.
A club receives one compensatory draft pick between the 1st and 2nd rounds in the next MLB Rule 4 Draft (First-Year Player Draft) if the Qualified Player subsequently signs a Major League contract with another MLB club. If more than one club receives this type of compensatory pick, the draft order for the picks is the same as it is for all other rounds in that draft (clubs select in inverse order of league standings from the previous season, and in the case of two clubs finishing with the same record the previous season, league standings from two seasons back will be used to break the tie, and if If the clubs are still tied, league standings from three seasons back, four seasons back, etc, will be used to break the tie).
MLB clubs are not permitted to extend a Qualifying Offer to an Article XX-B MLB free-agent if the player has agreed in advance to decline the offer so that the club will obtain a compensatory draft pick once the player signs with another club.
An MLB club that signs a Qualified Player forfeits its 1st round selection in the Rule 4 Draft, unless the club selects in the Top 10 of the 1st Round, in which case the club would forfeit its next-highest pick. NOTE: In determining whether a club would forfeit its 1st round draft pick, the ten "protected" picks at the top of the 1st round would NOT include any compensation draft pick received by a club for failing to sign a 1st round draft pick from a previous draft.
The next highest draft pick (or draft picks) will be forfeited if the club signs more than one Qualified Player (one draft pick forfeited for each Qualified Player signed). Draft picks subject to forfeiture include the club's own Rule 4 picks, compensatory draft picks awarded to the club after losing an Article XX-B Qualified Player, and draft picks that were awarded as the result of the Competitive Balance Lottery or as the result of the Rule 4 SBP Forfeited Draft Pick lottery (including any lottery draft pick originally awarded to another club and then subsequently acquired in a trade). A compensatory draft pick awarded to a club for failing to sign a pick from a previous Rule 4 Draft is NOT subject to forfeiture. NOTE: A Rule 4 Draft pick forfeited as the result of a club signing a Qualified Player is not transferred to any other club (it just disappears).
A Qualified Player who signs a Major League contract after 11:59 PM (Eastern) on the 5th day following the conclusion of the World Series receives automatic "no trade" rights that extend through June 15th of the following season, even if the player re-signs with his former club. A Qualified Player who receives "no trade" rights this way can waive the right, but if he does, his club can trade the player only for player contracts and/or cash with a maximum aggregate value of $50,000.
If a Qualified Player signs a Major League contract with a new club after the MLB Rule 4 Draft, or if a Qualified Player signs a minor league contract with a new club and either remains in the minor leagues or is later added to the new club's MLB 40-man roster, the player's new club does NOT forfeit a Rule 4 Draft pick, and the player's former club does NOT receive Rule 4 Draft pick compensation. However, MLB clubs are not permitted to sign a Qualified Player to a minor league contract just to avoid losing a draft pick.