MLB Rules and Procedures

Contents 1 Rule 4 Draft 2 Rule 5 Draft 2.1 Minor League Phases 3 Service Time 3.1 Active List 4 Sending Players to the Minors 4.1 Player Options 4.2 Exceptions 4.3 Designation for Assignment (DFA) 5 Free Agency and Arbitration 5.1 "Indentured Servitude" 5.1.1 "Super Two" Players 5.2 Free Agency Arbitration 5.3 The Arbitration Process 5.4 Compensation for Teams Whose Free Agents Sign Elsewhere 5.5 Six-Year Minor League Free Agents 6 Trades 6.1 10-5 Rights (no-trade) 6.2 Player to be Named Later 7 Waivers 7.1 Revocable Waivers 8 Disabled List 9 Bereavement List 10 Competitive Balance Tax (aka Luxury Tax) 10.1 The Basics 10.2 Definitions 10.3 Payment Timetable 10.4 Sale/Trade of Players 10.5 Premature Termination of Multi-Year Contracts 10.6 Player Benefits 11 MLB Contract Agreement with Japanese Professional Baseball 12 Joint Drug Prevention and Treatment Program 13 Gambling 14 Tampering Rule - Rule 3(g)

Rule 4 Draft

The Rule 4 draft is also known as the amateur draft. The system was established in 1965 as a way to organize the selection of baseball talent from a vast national pool. It takes place every June and lasts 50 rounds, with a sandwich round comprised of compensatory picks for losing free agents between the first and second rounds. The order of picks per round is determined by the won-loss record of the major league club. In 2005, it became irrespective of league for the first time (this does not, of course, include the possibility of lost draft picks for free agent compensation, which can bump teams out of certain rounds). Unlike the NBA and NFL drafts, the MLB draft moves at a fairly fast pace, with picks being made within minutes or even seconds of each other.

Players are eligible for the Rule 4 draft if they meet the following criteria:

• They have never signed a major or minor league contract before
• They are a resident of the U.S., Canada, or any U.S. territory
• They have graduated from high school and have not attended college or junior college
• They have attended college but are either juniors, seniors, or age 21

Teams who draft players retain their rights until a week before the draft of the following year. If the player has not signed by then and still retains eligibility, they may reenter the draft, but cannot be selected by the same club without their consent. Any draft-eligible player who is not drafted becomes a free agent and is allowed to sign with the team of their choosing. No players at all may be signed in the week prior to the draft.

Rule 5 Draft

The Rule 5 Draft was created as a way to prevent teams from hoarding minor league talent. Without the Rule 5 draft, teams could hold minor leaguers in their farm system indefinitely, where that player may have a legitimate shot of making the big club with a different organization.

Under the Rule, teams must protect (by adding them to the 40 man roster) minor league players within three or four years of signing them. Three years for players who are 19 on June 5 preceding the signing of their first contract. Four years for players who are 18 at the same time. If a team does not add a player to the 40 man roster within the prescribed time period, that player can be drafted by another team.

There is a catch however. In order to discourage teams from drafting minor leaguers arbitrarily, the drafting team must keep that player on their major league roster for one complete season. If the drafting team does not meet this requirement, then the player must be offered back to their original team at one half of the $50,000 drafting price. Because the minor league players selected in the Rule 5 draft are usually marginal prospects or very raw, relatively few players are selected through the Rule 5 draft each year.

Minor League Phases

There are also two minor league phases to the Rule 5 draft: the AAA and AA phase. In addition to setting a 40-man roster, organizations are required to submit a AAA and AA roster of players eligible for the Rule 5 draft. Note that these rosters are larger than regular-season AAA and AA rosters and their composition during this phase is determined by the organizations evaluation of a player, not the player's current level; the organization will place players they value more highly on the AAA roster.

After the Major League phase, the AAA phase takes place, in which other organizations can pluck players on other teams' AA rosters. During the AA phase, organizations can take Rule 5-eligible players on neither roster. The minor league Rule 5 draft is primarily a roster-filling exercise and players taken rarely reach the major leagues, not to mention establish themselves as big-league players. Unlike the Major League phase, players drafted in the AAA phase are not required to play at AAA, nor are AA draftees required to play in AA. It costs $12,000 to select a player in the AAA phase and $4,000 in the AA phase.

Service Time

A player accrues one day of service time for each day he is on a big league club's "active list" during the regular season. A total of 172 days of service time constitutes one full year, which is the maximum any player can be credited with during any single season.

Active List

• For purposes of calculating credited service, a player is considered to be on a club’s active list if he is:

a) on an MLB team's active roster

b) placed on a disciplinary suspension by a club, MLB Vice President, MLB On-Field Operations or MLB Commissioner

c) placed on a club's Disabled List

d) called to active military duty for up to two years, or

e) called to emergency duty by the National Guard for a period of up to 30 days.

• If a player is optioned to the minors for less than 20 days total during a regular season, he is credited with MLB service time for such assignment(s). The date of each assignment counts, while the date of each recall does not -- unless he is recalled AFTER the start of any minor league game he was eligible to play.

Sending Players to the Minors

Player Options

Whether minor-league players are added to the 40-man roster to be protected during the Rule 5 draft or as an injury replacement or callup during the season, they often need to be sent back to the minor leagues. In order send a player back to the minors while retaining him on the 40-man roster, a team can send him down on an optional assignment (option for short). In general, a player has three options - this means he can be optioned down in three different years. If a player is optioned down twice in one year, it only counts for one option. After a player has used up all his options, he must be kept on the 25-man roster or passed through waivers.

Exceptions

• An option is not used when a player spends less than 20 days on an optional assignment in the entire season. So if a player spends only a few days down on the farm, it does not burn one of his three options.

• When a player is optioned down, he can't be recalled until 10 days have passed. However, he can be recalled sooner than that if a player on the major league roster is placed on the disabled list. The major leaguer does not have to correspond positionally to the minor leaguer (for example, if an outfielder was injured, you could call up a recently-optioned pitcher). A player can also be recalled prior to the 10-day minimum if he is traded or if the minor league season ends.

• In certain cases, players are granted four options. This is only the case if a player has (a)used all three options already and (b)does not have five full seasons of professional experience. Note that only full-season leagues count for a "season of professional experience" because short-season leagues aren't 90 days (the minimum) long. Also, DL time does not count. This rule protects players added to the 40-man roster long before they were eligible for the Rule 5 draft - they are not punished with less development time because their organization started their "clock" too soon. This rule applies to Abe Alvarez. A confusing aspect of this rule is that the rules for determining a year of service for a fourth option are different from the rule determining the number of years necessary for Rule 5 eligbility.

• If a player has accrued five years of Major League service time, he has the right to refuse an optional assignment and elect free agency.

Designation for Assignment (DFA)

A major league baseball player is designated for assignment when his team wishes to remove him from the 40 man roster. The player is instantly removed from the 40 man roster and must be traded, waived, or released within 10 days. If the player clears waivers, the team can outright the player to the minor leagues. An outrighted player is no longer on the 40 man roster but still receives all money from a major league contract.

If a player is designated for assignment while in the minor leagues, he is deactivated and removed from the roster of the minor league affiliate pending completion of the assignment process.

Free Agency and Arbitration

MLB players cannot choose their employer until they have reached six full years of Major League service time, at which point they can declare free agency. At that point, they are free to sign with whomever they wish.

"Indentured Servitude"

Prior to accruing six years of service time, players are bound by the reserve clause to whichever team controls their rights. During this period, there is a cutoff date in the winter at which the controlling team can offer or not offer a contract to the player. For the first three years, the team usually offers a contract at or slightly above the major-league minimum (roughly $300,000). However, for those players with two or more years of service time, there is a process built into the six-year period that increases the players' earning potential: Salary arbitration.

Most players become eligible for arbitration after three full years of service time ("Super Two" players, as noted below, are an exception). For each of the next three service years, the player gains additional bargaining leverage. After each successive year of arbitration, players usually get pay raises -- whether their performance improved or not -- simply in recognition of their service time.

If an arbitration-eligible player and his team cannot reach a contract agreement before a scheduled arbitration hearing, the arbitration process (see below) moves forward.

Better players will often sign multi-year deals, avoiding arbitration. This allows the organization to potentially save money versus the year-by-year increases of arbitration if the player develops into a star, and gives the player security of a several years' salary, even if he flops.

At any winter cutoff date in the six year period, a team can opt not to tender a contract to a player, allowing the player to sign with any team. However, once signed, the player is bound to the same service time/arbitration rules until he reaches six years.

"Super Two" Players

A player is classified as a Super Two and becomes eligible for arbitration provided he:

1) Has at least two but less than three years of Major League service time,

2) Has accumulated at least 86 days of service during the immediately preceding season, and

3) Ranks in the top 17 percent in total service time among all MLB Players who meet the above two criteria.

Super Two players are eligible for arbitration for four years prior to free agency, while all other players are only eligible for arbitration for three years.

Free Agency Arbitration

Free Agency arbitration differs from reserve clause salary arbitration in that the player may ultimately choose which team controls his rights. When a player reaches free agency, there is a cutoff date by which his team can choose whether or not to offer him arbitration. If such an offer is made, it extends the exclusive negotiating window between the player and the team that held his rights. If no such offer is made, or if the player declines an offer of arbitration, the player cannot re-sign with that team until May 31 of the following season. Once a player accepts arbitration, his rights are assigned to that team for the next full season and a hearing is scheduled as part of the arbitration process (see below). As with reserve clause salary arbitration, a player and the offering team can avoid arbitration by agreeing to contract terms prior to the hearing. Otherwise the arbitration process moves forward.

The Arbitration Process

Arbitration involves the appointment of an independent law professional to determine a player's salary when said salary is in dispute. This process is stipulated in the Collective Bargaining Agreement (CBA) between MLB and the MLBPA.

(NOTE: There are a number of arbitrators who may be appointed to hear salary arbitration cases for free agents and team-controlled players. However, Shyam Das is not among them. Das handles only grievances between MLB and the MLBPA, and has been the only arbitrator to handle such cases since 1999.)

Arbitration hearings are scheduled between February 1 and February 20. Prior to a scheduled hearing, the player and his team must each submit a one-year salary figure that each side feels reflects the player's worth. The team and the player (and their legal representatives) must then prepare cases supporting their respective positions.

At the hearing, each party has one hour to present its case to the panel, and then has an additional 30 minutes for rebuttal. The player must attend the hearing, but is usually represented by his agent. A club executive or attorney usually represents the team.

In deciding to award the higher or lower salary, the panel may consider the following criteria:

• The player's contribution to the club in terms of performance and leadership
• The club[s record and its attendance
• Any and all of the player’s "special accomplishments," including All-Star game appearances, awards won, and post-season performance
• The salaries of comparable players in the player’s service-time class and, for players with less than five years of service, the class one year ahead of him

The parties may not refer to:

• Team finances
• Previous offers made during negotiations
• Comments from the press
• Salaries in other sports or occupations

Based on evidence presented at the hearing, the arbitrator must decide which figure best represents the player's worth. The arbitrator is not empowered to negotiate or stipulate any salary figure that represents a compromise between the high and low numbers, and must choose one figure or the other. The arbitration decision is final and not subject to appeal.

The arbitrator, without opinion, awards the player a one-year, non-guaranteed contract. If the player is cut within 16 days before the season begins, he is entitled only to 30 days’ termination pay, or about one-sixth of his awarded salary. If the player is cut during spring training but after the 16th day before the season begins, he is entitled only to 45 days' termination pay.

Compensation for Teams Whose Free Agents Sign Elsewhere

The 2006 CBA changed the draft pick compensation for free agents substantially, including the elimination of "Type C" free agents. The current compensation system is as follows:

If a free agent is offered arbitration by Team 1 and instead signs with Team 2, then Team 1 may receive some form of compensation. The compensation is determined by the player's Elias Ranking, a statistical measure of his value tabulated by the Elias Sports Bureau. Free agents are categorized as Type A, Type B, or unrated, and are then ranked within these three categories.

If the free agent is Type B, Team 1 receives what is known as a "sandwich pick" in the following year's amateur player draft. After round 1 (30 selections) in the draft, Team 1 will receive an extra pick. For more info on sandwich picks, please see the section on the amateur draft.

If the free agent is Type A, then:

• If Team 2 has one of the last fifteen draft picks in round 1, Team 1 will receive Team 2's first round draft pick plus a sandwich pick after the first round of the draft.

• If Team 2 has one of the first fifteen draft picks in round 1 (i.e. one of the 15 worst won-loss records during the prior major league season), then that pick is protected. Team 1 would instead receive Team 2's second round pick plus a sandwich pick after the first round of the draft.

• If Team 2 signs two Type A free agents, one from Team 1 and one from another team, the team whose free agent ranks highest by major league baseball would receive Team 2's first round pick (or second round pick if the first round pick is protected), and the other team would receive Team 2's pick for the second round (or third round if the first pick is protected). Both teams would still receive a sandwich pick after the first round.

• Once a team has acquired a draft pick by losing a Type A free agent, it cannot lose said pick by signing other Type A free agents; the only picks a team cam lose are the ones it has before the free agency period begins.

Six-Year Minor League Free Agents

According to MLB Rule 55, a minor leaguer is eligible to become a minor league free agent (MLFA) six years after his first season ends with an organization unless he is added to the club's 40-man roster during that span. For example, if a player was drafted in June of 2002 and signed in July of the same year, then his renewal seasons were 2003, 2004, 2005, 2006, 2007, and 2008 and he would become a minor league free agent after the 2008 season.

An exception is made for any player who was released from his first organization prior to using up all six of his renewal options. When such a player signs with another club, the six-year clock starts from scratch. His new club technically has the option of signing him to as many years as they want up until the expiration of their sixth renewable contract. However, in most cases the new club will opt to sign him to a one-year deal, and even if the player has not had six full seasons he would become a MLFA after that season.

Trades

In general, between the end of the World Series and the trade deadline at 4 p.m. EST on July 31, any players may be traded for one another provided they don't have a no-trade clause (contractually or as a result of being a 10-5 player) and were not drafted in the past year. A player with a no-trade clause may choose to waive said clause and will often be compensated for doing so. After July 31 and before the end of the World Series, players must clear waivers before being traded.

Trades that involve a transfer of more than $1 million must be approved by the commissioner's office, as must any trade which involves a player currently on the disabled list. In general, a commissioner may reject any trade which he feels is not in the "best interests of baseball".

10-5 Rights (no-trade)

If a player has been on an active major league roster for ten full seasons and on one team for the last five, he may not be traded to another team without his consent. Manny Ramirez was an example. He had been on a major league roster since 1995 without interruption, and had been playing with the Red Sox since the begining of the 2001 season. While his contract lacked a no-trade clause, Ramirez had no-trade protection because of his 10-5 status.

Player to be Named Later

In many trades, one or both of the teams may agree to send "a player to be named later". A specific player must be agreed upon within six months of the initial trade; if this does not occur, the two teams may agree upon a cash amount to be sent instead. Often, the teams will agree to a list of players who can be used as the PTBNL; such an agreement would happen before the trade has been announced, and once the trade is final, the team receiving the PTBNL may take any of the players from the list within six months.

If a team receives a PTBNL, the player must not have been playing in the league to which he is being sent at the time of the trade (e.g. if the Red Sox receive a PTBNL, the player may not have been playing in the American League at the time of the trade). This rule was instituted after Harry Chiti was traded for himself in 1962 (he was traded from the Indians to the Mets for a PTBNL, which turned out to be himself). As a result, PTBNL's are usually minor leaguers. Sometimes, teams will use players on the disabled list as players to be named so as to avoid having to get special permission from the commissioner's office.

Waivers

Revocable Waivers

A player placed on waivers is offered to the other teams over a window of 47 hours (starting at 2 p.m. EST and ending at 1 p.m. two days later). After the trading deadline on July 31 and before the end of the World Series, players on the 40 man rosters must pass waivers before being traded.

• If another team makes a claim on the player, the team waiving the player may take him back or give him to the team making the claim.

• If two teams claim him teams in the same league have priority over those in the other league. After this consideration, the team with the worst record upon expiration of the waiver window is the team whose claim is considered valid. For all players waived in the first month of the season, the previous year's team records are used to determine waiver claim priority instead of the current year's records.

• If no team claims him, the player is said to have cleared waivers for the remainder of the waiver period, and the waiving team may keep, trade, or release the waived player, or they may send to the minors if he doesn't have five full years of service time.

• A team may only post a player and pull him back once during a waiver period, so if a player is posted for waivers twice by the same team in the same waiver period, the team which claims him the second time gets him with no possibility for the initial team to pull back. August is its own waiver period, so a team may only post and pull a player once between the trading deadline and September.

Disabled List

There are two Disabled Lists: the 15-day Disabled List and the 60-day Disabled List. To be put on a Disabled List, a doctor must certify a player as disabled. Players on the 60-day Disabled List do not count towards the 40-man roster. Players may be moved from the 15-day Disabled List to the 60-day Disabled List. Players may be put on either list retroactively up to ten days, beginning the day after they last played.

Bereavement List

Bereavement list

Competitive Balance Tax (aka Luxury Tax)

The Basics

Luxury tax provisions are set forth in Article XXIII of the current CBA, which went into effect in 2007 and lasts through 2011. If the collective Average Annual Value of a team's player contracts exceeds the Tax Threshold during a given Contract Year, that team must pay a tax to the rest of the league. The Tax Rate, and the amount of the tax, depends on (1) the difference between a team's total payroll and the Threshold Level, and (2) whether or not the team has exceeded the Tax Threshold in the past.

Definitions

• Average Annual Value - The total income to be paid to a player over the course of a contract (including base salary, signing bonuses, earned activity level bonuses, earned award bonuses and player benefits) divided by the number of years remaining in the contract.

Activity Level Bonuses involve reaching specified degrees of utility -- games played, plate appearances, innings pitched days on active roster, etc. The CBA prohibits bonuses that are predicated on performance-based statistics.

Award Bonuses may be granted for honors are voted on, such as MVP, Cy Young, Rookie of the Year, Gold Glove, Silver Slugger, and All-Star Team. As above, the CBA does not allow bonuses based on statistically-based achievements, such as batting title, leading a league in home runs, or winning 20+ games.

• Contract Year - Teams must calculate the AAV of their player contracts over the period from December 12 of one year through and including December 11 of the following year.

• Tax Threshold - These increase annually as listed below:

2007 - $148 million

2008 - $155 million

2009 - $162 million

2010 - $170 million

2011 - $178 million

• Tax Rates - There are three rates -- 22.5%, 30% and 40% -- as provided below:

A) In 2007, any team that went over the Tax Threshold in 2006 had to pay at least 22.5%. However, any team that had also exceeded the Tax Threshold in 2006 had to pay 40%.

B) From 2008 through 2011, a team's Tax Rate would jump to the next highest level for each consecutive year it had remained over the Tax Threshold. For example, a team over the threshold for two straight years would pay 22.5% the first year and 30% the next, while a team over the threshold for three straight years must pay successive rates of 22.5%, 30% and 40%.

C) For a team that is over the Tax Threshold in one year but falls below it the next year, the Tax Rate will drop one level. For instance, if the Red Sox are at 40% in 2009 but drop below the threshold in 2010, their tax rate for 2010 will be 30%.

D) There's an exception to rule C. If a team is at 30% one year and drops below the threshold the next year, but GOES BACK OVER the threshold the third year, it will be taxed at 30%. But if there's at least a two-year gap between years in which a team was taxed, the rate will be 22.5% for the year in which it went back over the threshold.

Payment Timetable

Taxes are calculated over a period beginning December 12 of one year and ending December 11 of the following year. The Commissioner's Office will send tax bills to teams on December 12 for the year just concluded, and teams have until January 31 of the following year to pay their taxes. If a team fails to pay on time and in full, they will have their distributions from MLB's Central Fund reduced by up to 50% until all obligations are met, including interest on any unpaid luxury taxes. (The Central Fund consists mainly of national and international broadcasting revenues that are normally split equally between all 30 teams.)

Sale/Trade of Players

• The team losing a player is responsible for that player's costs through the day he is traded or sold. The acquiring team becomes responsible for his costs the day after he's traded or sold -- regardless of the player's reporting date to his new team. The team receiving the player is responsible for any salary increases triggered by the player's contract.
• Cash considerations paid by one team to another as part of a trade or sale must be added to its calculated payroll for the year in which the cash is transferred. An exception is that for any sales or trades made in 2011 that involve cash payments deferred until 2012, those payments must be included in the 2011 payroll calculations for the team that makes the payment.
• If a player's contract calls for any salary increases when traded or sold, the player's new team must include those increases in its payroll calculations.

Premature Termination of Multi-Year Contracts

Let's say the Sox release Joe Blow, who still has three seasons left on a contract, and let's say the salaries for those remaining years were $3 million, $4 million and $5 million respectively. Even if the Sox pay off his contract in full before December 11 of the year they release him, those salaries must be attributed to their payroll during each of the years in which they actually would have been paid to Joe Blow. In other words, teams can't buy down their future luxury tax figures by paying off obligations in advance.

Player Benefits

A team's calculated payroll includes:

• Contributions to the MLB Benefit Plan (mainly family health insurance and pensions).
• Workers' Compensation insurance premiums.
• Payroll, unemployment and social security taxes.
• Spring Training allowances.
• Meal and Tip allowances.
• All-Star Game expenses.
• Moving and Traveling expenses for reassigned players.
• Contributions to the players' postseason pool.
• Payments to the college scholarship plan.
• Medical costs such as fees to doctors, hospitals, and other health care providers, and any drugs or supplies used to treat player injuries.

The team's calculated payroll DOES NOT include:

• Salaries of trainers or other club medical personnel.
• Costs of club medical or training equipment.
• Any health or medical costs reimbursed or paid for through workers’ compensation or any other medical insurance.

A team's medical costs (specifically, those that are part of the payroll calculation) cannot increase by more than 10% from any one year to the next. In addition, the rate of increase of a team's total paid benefits from one year to the next cannot exceed the rate of increase of total player salaries over that same period.

MLB Contract Agreement with Japanese Professional Baseball

(1) If a Japanese Professional Baseball Club (hereinafter referred to as a “Japanese Club”) wishes to contact and engage a baseball player, professional or amateur, who is currently playing or has played baseball in the United States or Canada, and/or is under contract with a Club that is a member ofthe National League or American League of Professional Baseball Clubs (hereinafter referred to as an “American Player”), the Japanese Club shall first request that the Office ofthe Commissioner of Japanese Professional Baseball (hereinafter referred to as the “Japanese Commissioner”) determine the status and availability of the American Player as hereinafter provided by communicating with the Major League Baseball Office of the Commissioner (hereinafter referred to as the “U.S. Commissioner”). The U.S. Commissioner shall respond to a request from the Japanese Commissioner within four (4) business days. The Japanese Commissioner shall keep the identity of any Japanese Club(s) inquiring as to the status of an American Player confidential in his communications with the U.S. Commissioner.

(2) If the American player is on the Reserve, Military, Voluntarily Retired, Restricted, Disqualified, Suspended, or Ineligible List of any Club that is a member of the National League or American League of Professional Baseball Clubs (“hereinafter referred to as a “U.S. Major League Club”), as such Lists are described in the Major League Rules adopted January 20, 2000, the Japanese Club shall not contact or engage the American Player unless approval to do so has been given by such U.S. Major League Club through the U.S. Commissioner.

(3) If the American Player is not one concerning whom approval must be obtained under paragraph (2), the U.S. Commissioner shall so notify the Japanese Commissioner and the Japanese Club may then contact and engage the American Player. If approval is required under paragraph (2), the U.S. Commissioner shall transmit to the Japanese Commissioner the approval or disapproval of the U.S. Major League Club.

(4) If a U.S. Major League Club wishes to contact and engage a baseball player, professional or amateur, who is currently playing or who has played baseball in Japan and/or is under contract with a Japanese Club (hereinafter referred to as a “Japanese Player”), the U.S. Major League Club shall first request that the U.S. Commissioner determine the status and availability ofthe Japanese Player in the same manner that the status and availability of an American Player is determined hereunder. The Japanese Commissioner shall respond to the request from the U.S. Commissioner within four (4) business days. The U.S. Commissioner shall keep the identity of any U.S. Major League Club(s) inquiring ofthe status of a Japanese Player confidential in his communications with the Japanese Commissioner.

(5) If the Japanese Player is on the Reserve, Military, Voluntarily Retired, Restricted, Disqualified, Suspended, or Ineligible List of any Japanese Club, as such Lists are described in the Japanese Professional Baseball Rules as of February 1, 2000, the U.S. Major League Club shall not contact or engage the Japanese Player unless approval to do so has been given by the Japanese Club through the Japanese Commissioner and then only pursuant to the procedures set forth in paragraphs (8) through (12) below.

(6) If the Japanese Player is not one concerning whom approval must be obtained under paragraph (5), the Japanese Commissioner shall so notify the U.S. Commissioner and the U.S. Major League Club may then contact and engage the Japanese Player. If approval is required under paragraph (5), the Japanese Commissioner shall transmit to the U.S. Commissioner the approval or disapproval ofthe Japanese Club. If approval is granted, the procedures set forth in paragraphs (8) through (12) below shall apply.

(7) If, in response to an inquiry by a U.S. Major League Club or on its own initiative, a Japanese Club wishes to make a Japanese Player concerning whom approval must be obtained under paragraph (5) available to U.S. Major League Clubs, such Japanese Club may make such Japanese Player available to U.S. Major League Clubs only pursuant to the procedures set forth in paragraphs (8) through (12) below.

(8) With respect to a player covered by paragraph (5) whom a Japanese Club wishes to make available to the U.S. Major League Clubs, the Japanese Club shall request that the Japanese Commissioner notify the U.S. Commissioner of the Japanese Club’s desire to make the Japanese Player available. The U.S. Commissioner then shall post the Japanese Player’s availability by notifying all U.S. Major League Clubs of the intention ofthe Japanese Club to make the player available.

(9) All requests by Japanese Clubs for postings must be made during the period commencing on November 1 of a given year and ending on March 1 of the following year and must be accompanied by the Japanese Club’s medical records, i.e., trainers’ reports and doctors’ reports in the possession of the Japanese Club for the Japanese Player in question, which will be made available to the U.S. Major League Clubs. Within four (4) business days ofthe posting ofthe availability of the Japanese Player by the U.S. Commissioner, any interested U.S. Major League Club must submit to the U.S. Commissioner a bid, composed of monetary consideration only, to be paid to the Japanese Club as consideration for the Japanese Club relinquishing its rights to the player in the event that the U.S. Major League Club reaches an agreement with the Japanese Player. No direct or indirect contact may be made between a U.S. Major League Club and the Japanese Club concerning a posted player and/or the amount ofthe bid to be submitted by a U.S. Major League Club. The U.S. Commissioner shall have the authority, pursuant to paragraph (13) below, to take action that he deems appropriate in the event he concludes that a contact prohibited by the preceding sentence has been made concerning a posted player.

(10) At the conclusion ofthe bidding period, the U.S. Commissioner shall determine the highest bidder among the U.S. Major League Clubs and that determination of the highest bidder shall be conclusive and binding on all parties. The U.S. Commissioner then shall notify the Japanese Commissioner of the amount ofthe bid submitted by the successful bidder, and the Japanese Commissioner will have four (4) business days to notify the U.S. Commissioner of whether that bid is acceptable to the Japanese Club involved.

(11) Ifthe highest bid is not acceptable to the Japanese Club making the Japanese Player available, the Japanese Player’s posting will be withdrawn and another request for posting with respect to that Japanese Player shall be prohibited until the following November 1. If the highest bid is acceptable to the Japanese Club, the U.S. Commissioner shall award the sole, exclusive, and non-assignable right to negotiate with and sign the posted Japanese Player to the U.S. Major League Club that submitted the highest bid. That U.S. Major League Club then shall have 30 days from the date of the notice by the U.S. Commissioner that the bid is acceptable to the Japanese Player’s Japanese Club in which to sign the Japanese Player. If the Japanese Player signs a contract with the U.S. Major League Club within 30-day period, the U.S. Major League Club shall pay the Japanese Club the amount of its successful bid within five (5) business days ofthe confirmation ofterms with the Major League Baseball Players Association in the case of a Major League Contract or within five (5) business days ofthe reporting ofterms to the U.S. Commissioner’s Office in the case of minor league contract.

(12) If the U.S. Major League Club, for any reason, fails to sign the Japanese Player within the 30-day period, the U.S. Major League Club’s negotiation rights shall lapse and the U.S. Major League Clubs shall have no obligation to pay the Japanese Player’s Japanese Club the amount of its successful bid (or any other obligation whatsoever). Further, another request for posting with respect to that Japanese Player shall be prohibited until the following November 1.

(13) The U.S. Commissioner shall have the authority to oversee the bidding procedures set forth in paragraphs (8) through (12) above to ensure that they not been undermined in any manner. Among other actions that he may deem appropriate and in the best interests of baseball, the U.S. Commissioner shall have the authority to revoke a U.S. Major League Club’s exclusive negotiation rights with respect to a Japanese Player (and, subject to the Japanese Club’s approval pursuant to paragraph (11) above, to award such rights to the next highest bidder, if any) and to declare null and void any contract between a Japanese Player and a U.S major League Club that the U.S. Commissioner deems was the result of conduct that was inconsistent with this Agreement or otherwise not in the best interests ofprofessional baseball.

(14) U.S. Major League Clubs and Japanese Clubs are free to enter into working agreements. Such working agreements, however, cannot provide a U.S. Club with exclusive or preferential rights to contract with Players on the Reserve, Military, Voluntarily Retired, Restricted, Disqualified, Suspended, or Ineligible Lists of a Japanese Club. All working agreements must be filed with the U.S. and Japanese Commissioners, and either Commissioner may take action to require modifications ofterms deemed to be inconsistent with this Agreement or otherwise not in the best interests of professional baseball in that country. The U.S. Commissioner shall be advised immediately of any negotiations or transactions between Clubs and/or Players of the United States and Japan.

(15) This Agreement is subject to current and future legal restrictions in the United States and Japan.

(16) If either party to this Agreement has a material change in its reserve rules or any other rule identified in paragraph (2) or (5) herein, that party shall have an obligation immediately to notify the other party of the change, and the other party shall have the right to seek renegotiation of and/or void this Agreement upon ten (10) days’ written notice.

(17) Subject to paragraph 16 above, this Agreement shall have a term of two (2) years commencing on December 15, 2000, and ending on December 15, 2002 (“the Initial Termination Date”). One hundred and eighty (180) days prior to the Initial Termination Date, either the U.S. Commissioner or the Japanese Commissioner shall have the right to give notice of his intention to modify or terminate this Agreement and, promptly after the issuance of such notice, the parties shall commence discussions concerning the extension or amendment of this Agreement. If neither the U.S. Commissioner nor the Japanese Commissioner gives notices of his intention to modify or terminate this Agreement 180 days prior to the Initial Termination Date, this Agreement shall continue, from year-to-year until either the Japanese Commissioner or the U.S. Commissioner gives notice of his intention to modify or terminate this Agreement one hundred and eighty (180) days prior to any anniversary of the Initial Termination Date.

Joint Drug Prevention and Treatment Program

This is a 2006 attachment to the Collective Bargaining Agreement that includes regulations on different types of drugs, including performance enhancers and drugs of abuse.

Suspensions are as follows:

• 1st violation results in a 50-game suspension
• 2nd violation results in a 100-game suspension
• 3rd violation results in lifetime banishment

List of Banned Substances

MLB Players Suspended for Performance Enhancing Drugs

Gambling

Gambling will result in lifetime banishment. This includes association with gamblers and betting on games of which the player is not a participant.

Lifetime Baseball Bans

Tampering Rule - Rule 3(g)

Rule 3 (g) TAMPERING. To preserve discipline and competition, and to prevent the enticement of players, coaches, managers and umpires, there shall be no negotiations or dealings respecting employment, either present or prospective, between any player, coach or manager and any club other than the club with which he is under contract or acceptance of terms, or by which he is reserved, or which has the player on its Negotiation List, or between any umpire and any league other than the league with which he is under contract or acceptance of terms, unless the club or league with which he is connected shall have, in writing, expressly authorized such negotiations or dealings prior to their commencement.

Source: [1].