Waivers are a permission granted by the other teams in Major League Baseball to allow a team to proceed with a player move which would not normally be allowed by the rules. In other words, opposing teams waive their objection to the move. Waivers are only in use during the season. Currently, the season is divided into three waiver periods: opening day through the fortieth day of the season, the forty-first day through July 31st, and August 1st to the end of the season.
Currently, each team may add up to seven names to waivers on any single business day. The other teams have 48 hours to make a claim. When two teams claim the same player, it is not first come first served. Teams in the same league as the waiving team have precedence over teams from the other league. Precedence for two teams from the same league is by poorer winning percentage.
When a team needs to make room on the 25-man roster and does not wish to move a player with options to the minors, an unwanted player can be designated for assignment. This assignment is irrevocable and frees up a place on both the 25-man and 40-man roster. The team has ten days to trade/sell him (after July 31st he will have to pass through trade waivers), lose him on a waiver claim, release him (if he passes through unconditional release waivers), or outright him to a minor league roster (if he passes through outright waivers). Unlike waivers, a player can be designated for assignment on weekends and holidays.
Types of Waivers
The four types of waivers are as follows:
Until 2019, if two or more teams wished to make a player trade after the Major League trading deadline (set on July 31st at 4 PM Eastern Time) had passed, they had to use the waiver process. Between the end of the trading deadline and the end of the postseason, the teams had to submit the names of the players involved to all other teams, who could decide whether they had use for these players themselves. At this point, the claiming team could either work out a trade with the submitting team or, if the submitting team agreed, obtain the player outright by simply assuming the remainder of his contract. Alternatively, the submitting team could withdraw the player from consideration, and thus the contemplated trade did not take place. In 2019, however, these types of trades using "revocable waivers" were outlawed after July 31st: a team placing a player on waivers can no longer call him back if a trade cannot be worked out; if not, they must release him at the end of the waiver period if he goes unclaimed. Thus trades can still be concluded, but only if they involve players that a team is prepared to lose if things don't work out, meaning that only second-tier players can be moved through such a process.
The purpose of the trade waiver rule is to prevent front-running teams from acquiring a superstar player in the middle of a pennant race simply because they have more resources than their competitors. The rule did not make trades impossible, but prevents some egregious trades from taking place. A specific player passing through trade waivers is often traded for a player to be named later. That is because the player being traded for the specific player who passed through trade waivers is too good and/or cheap to pass through trade waivers himself.
If a team withdrew a player from trade waivers to prevent another team claiming him, the team could again ask trade waivers on that player in the same period BUT this time the waivers were irrevocable. Any team claiming the player could not be stopped from gaining the player by paying the waiver price.
Players on trade waivers did not clear space for another player on their team's 25-man and 40-man rosters.
Waivers for the purpose of granting a player his unconditional release
When a team wishes to release a player, it must first place his name on the waiver list. This allows any other major league team to claim the player's existing contract. The claim prevents the player from bargaining as a free agent for more money or refusing to sign with an unattractive team. It also saves the waiving team from paying any guaranteed money as that is the responsibility of the claiming team. These waivers are irrevocable. Players on these waivers do immediately clear space for another player on both their team's 25-man and 40-man rosters. Every other team for a prescribed period can claim this player's contract for $1 and add him to their 25-man and 40-man rosters.
If no claim is made, the player becomes a free agent. Any guaranteed portion of the player's contract is still paid on each payday by the waiving team. As a free agent, the player can sign with any team, who only needs to pay him the major league minimum salary. If two or more teams are interested in the player, the player can choose with which team to sign. Given each team refused to buy the player's contract for the waiver price, it never happens that either of the two teams offer a higher salary than the old contract. But since the waiving team is still on the hook for the guaranteed contract, that means the player gets paid the same amount no matter which team he signs with. So the new team will always pay him the mandated minimum salary and that amount is offset from the old team's fiscal responsibility. As a result, only players making the minimum or close to it are usually claimed in this manner, as others will be available as cheap free agents in a matter of days.
For example, Boston player John Doe passes through unconditional release waivers. The Red Sox had a guaranteed $800,000 left for the season and $1 million for the following season on Doe's contract. Both the Yankees and the Rays are interested in Doe (but not for what his contract calls for). Doe will get paid $1.8 million over the next year and a half. Let's say that the major league minimum salary for the rest of this season is $150,000 and for all of next year is $400,000. If Doe signs with the Yankees, the Yankees will pay him $550,000 and the Red Sox $1.25 million through the end of next season. If Doe signs with the Rays, the Rays will pay him $550,000 and the Red Sox $1.25 million through the end of next season. The Rays can't tempt Doe by offering him $950,000. Because Doe will still get paid $1.8 million over the next year and a half - the Rays will pay him $950,000 and the Red Sox $850,000.
When a team needs to make room on the 25-man roster and wishes to move a player without options to the minors, the team places the unwanted player from its 25-man roster on outright waivers.
If no other team wishes to pay the $20,000 outright waiver price by making a claim within 48 hours, his team can assign him to a minor league roster. A veteran player can refuse a minor league assignment. A veteran who does so becomes a free agent but loses any guaranteed money left on his contract with the waiving team.
The purpose of this rule is to prevent organizations from burying players in the minor leagues when they have the talent to play in the Major Leagues.
Option waivers are the rarest method to have a player switch teams. When a team wishes to send a player who has options to the minor leagues, there is a catch if the player's debut date is over two years ago. In those cases, the team needs to place his name on the waiver list and wait 48 hours for a claim. As with a player's first time on trade waivers, the team which claims the player can either work out a trade, or assume the player's contract for the option waiver price, or the submitting team may withdraw his name from the waivers. Since not irrevocable, placing a player on option waivers does not clear space for another player on their team's 25-man and 40-man rosters. Only when the player is claimed and sold or passes through and sent to minors does roster space appear. Teams are reluctant to make option claims since the waiving team can pull the player back - this means the claiming team not only doesn't get the player but has antagonized the waiving team. In the future, their roles will be reversed.
The use of waivers has traditionally been associated with marginal players, or players reaching the end of their major league career. Thus, expressions such as waiver wire fodder describe players who are not quite good enough to hold a job, even as a substitute in the major leagues, and can therefore be had for the price of a waiver claim (i.e. next to nothing). A veteran player who has gone through the waiver process is considered to be washed up, and any contribution he makes after that point is an unexpected bonus.
However, with the evolution of baseball's salary structure, the use of waivers has changed, and players are more often traded or released for financial reasons and not for reasons of production. Thus, some still-productive players, but with expensive contracts, have gone through the waiver process in recent years. Famous cases include Tony Batista, whom the Toronto Blue Jays tried to send to the minor leagues in June 2001, confident that his expensive multi-year contract would scare other teams away from claiming him. However, Batista was claimed by the Baltimore Orioles and spent a number of productive seasons with his new team. Another famous case involved Manny Ramirez, who was placed on waivers by the Boston Red Sox after the 2003 season. In this case, there was no question that Ramirez was still a great hitter, but he had a multi-year contract worth over 100 million dollars, and the Red Sox were looking for some financial flexibility. No team was willing to assume Ramirez' contract and he remained a member of the Red Sox.
There have also been famous instances when a team has claimed a player off waivers to prevent him from being traded to a competitor and later regretted that decision. Most famous is Randy Myers, whom the Blue Jays wanted to trade after the deadline in 1998. The San Diego Padres claimed him to prevent the once-great closer from ending with a competitor, and worked out a deal with the Blue Jays, sending minor league catcher Brian Loyd to them for Myers. Myers had a 6.28 ERA for the Padres over the remainder of the year, was awful in the postseason, and never pitched again in the majors, while the Padres were saddled with his hefty contract for a number of years while receiving no value in return. Caveat emptor.
Not Enough Arms
In recent years teams have found themselves momentarily short of starting pitching. Where in the past a reliever would be used as the extra starter for a doubleheader or the manager (e.g., Mayo Smith in 1968) pitched his starters on short rest, now a minor league pitcher is summoned to make a start and is sent back down after the game. The summoned starter must be placed on the 25-man and 40-man roster to be eligible to pitch. These roster spots often are being opened through one of the irrevocable waivers. Disabled lists are not useful because of the mandatory minimum stays they require. Specifically, clearing a spot on the 40-man roster requires putting a player on the 60-day DL.