How Does MLB Free Agency Work? Six Years to the Market
How MLB free agency works for a player with six years of service: the November calendar, non-tenders, opt-outs, the luxury tax and how the market was won.
By CricketTaken EditorialPublished MLB Season & Roster Rules26 min read
- Service needed
- 6 years
- Days in a service year
- 172
- Seitz ruling
- December 23, 1975
- First re-entry draft
- November 1976
Juan Soto reached the open market in November 2024, at 26, with six-plus seasons of major-league service behind him across Washington, San Diego and the Bronx. In December he signed with the New York Mets for 15 years and $765 million. No rule in Major League Baseball capped that figure, limited the length or gave the Yankees, his last club, a right to match it. They could bid. They could not block.
That is the answer to how MLB free agency works. A player with six years of major-league service whose contract has run out becomes a free agent the day after the World Series ends and may sign with any of the 30 clubs. There is no salary cap, no maximum contract and no restricted free agency. The rules sit in the Basic Agreement between MLB and the Major League Baseball Players Association, the MLBPA, and the agreement signed in March 2022 was written to expire on December 1, 2026. Players can also get there earlier, by being released or non-tendered, and those side doors are covered below along with the calendar, the contract clauses and the fight that created the market in the first place.
Six years of service and an expired contract: how MLB free agency works in short
Two conditions, both necessary. The player must have accumulated six years of major-league service, and he must not be under contract for the following season. A player with ten years of service who signed an eight-year deal is not a free agent until it ends, and a player with four years whose club lets him go is a free agent on a different route.
Service time is the unit everything is counted in. A full year is 172 days on a major-league active roster or injured list, out of a regular season that runs about 186 or 187 days. That arithmetic matters: a player does not need six full seasons in the majors, only six counts of 172 days, and days spent on the major-league injured list count exactly like days spent playing. Time in the minors on an optional assignment does not. The mechanics of the count, including the Super Two rule and the Prospect Promotion Incentive, are set out in our explainer on how MLB service time is counted.
Once both conditions are met, nothing has to be filed. Free agency is automatic. The player does not ask permission, the club does not decline an option on him, and no league office approves the change. On the morning after the final out of the World Series, he is free to negotiate with every club in both leagues.
What the market lacks is as important as what it has.
| Feature | MLB | NFL | NBA |
|---|---|---|---|
| Hard or soft salary cap | None | Hard cap | Soft cap with exceptions |
| Maximum individual contract | None | None, but bounded by the cap | Yes, tied to the cap and service |
| Restricted free agency | None | Yes, for players with three accrued seasons | Yes, after rookie-scale deals |
| Former club's right to match | None | Yes, for restricted free agents | Yes, for restricted free agents |
| Spending brake | Competitive balance tax | The cap itself | Luxury tax and aprons |
Baseball's free agent is, in that narrow sense, the freest in American team sports. Any club, any length, any amount, and no matching. The constraints that do exist are economic rather than legal: a tax on high payrolls, and draft-pick compensation attached to some players. Both get their own sections further down.
What six years does not guarantee
Reaching six years makes a player eligible. It says nothing about demand. A 33-year-old reliever with a declining fastball reaches the same legal status as a 26-year-old outfielder with a .400 on-base percentage, and one of them will be signing a minor-league deal in February. Free agency is a right to sell, not a promise of a buyer.
Six years of club control, and why players reach the market near 30
Before those six years, a player belongs to his club in a way that would be illegal in most industries. The reserve system that survives inside the Basic Agreement gives a club exclusive rights to any player on its 40-man roster with fewer than six years of service. He cannot negotiate with anyone else. If the club trades him, his rights go with the trade.
The six years divide into two stages. For roughly the first three, the player is "pre-arbitration" and the club can pay him the league minimum or close to it, renewing his contract each spring whether or not he agrees. From about three years of service (earlier for the top band of two-year players, the Super Two group) through six, he is arbitration-eligible: he and the club exchange salary figures each winter, and if they cannot settle, a panel picks one number or the other. The procedure is described in our page on salary arbitration and Super Two status.
Then the clock runs out. Six years of service, contract expired, free agent.
The age arithmetic
The most common path into the majors runs through the draft and three or four years in the minors. A college player drafted at 21 who debuts at 24 or 25 and stays in the majors does not reach six years until 30 or 31. A high school draftee or an international signing who arrives at 21 or 22 reaches the market at 27 or 28, which is why the largest contracts in the sport so often go to players who were in the majors young: Soto debuted at 19, Bryce Harper at 19, Alex Rodriguez at 18.
That age gap is the whole economic story of free agency in one line. Teams pay for the next ten years. A player who arrives at 31 is selling his decline years, and a player who arrives at 26 is selling his prime.
Why clubs care so much about the start date
A club that waits a few weeks into the season to call up a prospect can push his six years of service back by a full calendar year, because the player finishes his first season a few days short of 172. The practice was the subject of a grievance by Kris Bryant against the Chicago Cubs over his 2015 call-up, which an arbitrator decided in the club's favor in 2020. The 2022 agreement added the Prospect Promotion Incentive, which awards draft picks to a club whose top prospect wins a major award early in his career, as a carrot to replace the stick that never materialized. Whether it has changed behavior is still argued about every April.
- 6Years of service to reach free agency
- 172Days in one year of service
- 30Clubs a free agent may sign with
- 1975Year of the Seitz decision
Fixed counts from the Basic Agreement and baseball's labor history; none of them depend on any one season.
Released, non-tendered or posted: the other doors into free agency
Six years is the main road. Several other routes lead to the same place, and in any given winter more players reach the market by these side doors than by the front one.
Release
A club can release a player at any time, after first placing him on waivers. Once he clears, he is a free agent with no service requirement at all. If he had a guaranteed contract, the releasing club still owes the money; if another club signs him, it pays him at least the prorated league minimum for the time he is on its roster and that sum is offset against what the old club owes. Released veterans sign for the minimum all season long for exactly that reason: the new club takes almost no financial risk.
The process that precedes a release, designation for assignment, waivers and the seven days a club has to resolve it, is laid out in our explainer on waivers, options and the DFA.
Non-tender
The tender deadline falls in the second half of November. By that date a club must offer a contract for the next season to every unsigned player on its 40-man roster who is under its control: pre-arbitration players and arbitration-eligible players alike. A player who is not tendered a contract becomes a free agent immediately.
Clubs non-tender players they do not want to pay. An arbitration-eligible player's salary climbs every year, and a club that projects a $6 million award for a player it values at $2 million will cut him loose rather than risk the hearing. Some of the best signings in the sport have come from this list. The Minnesota Twins non-tendered David Ortiz in December 2002; he signed with Boston weeks later. The Chicago Cubs non-tendered Kyle Schwarber in December 2020, two years before he led the National League in home runs for Philadelphia.
Minor-league free agency
Players outside the 40-man roster have their own route. A player whose first contract was signed as an amateur becomes a minor-league free agent after a set number of minor-league seasons in the organization, a count fixed by the Major League Rules, provided he has not been added to the 40-man roster. These players become free agents shortly after the World Series, and the group is large every year: hundreds of players, most of them depth signings for Triple-A.
Players from leagues overseas
A player under contract in Nippon Professional Baseball or the KBO League in South Korea reaches MLB through a posting system: his club makes him available, every MLB club has a fixed window to negotiate (45 days for NPB players in recent winters), and the signing club pays the Japanese or Korean club a release fee scaled to the size of the contract. Age matters too. A foreign professional under 25, or with fewer than six seasons in a recognized league, is treated as an amateur and signs out of the international bonus pools, which is why Shohei Ohtani in 2017 and Roki Sasaki in January 2025 signed for bonuses of a few million dollars despite their talent.
| Route | Who | When it happens | What the player can do |
|---|---|---|---|
| Six-year free agency | Players with 6+ years of service and no contract | Day after the World Series | Sign anywhere after the quiet period |
| Non-tender | Unsigned players under club control | November tender deadline | Sign anywhere at once |
| Release | Any player who clears waivers | Any time | Sign anywhere at once |
| Minor-league free agency | Long-serving players off the 40-man | Days after the World Series | Sign anywhere, usually a minor-league deal |
| Posting | Players under contract in NPB or the KBO | Winter windows set by each agreement | Negotiate with all 30 clubs inside the window |
When MLB free agency starts: the November calendar
The free agency year begins the day after the last game of the World Series. The old club once enjoyed a longer exclusive window, which successive agreements cut back to the present five days. During them, a free agent can talk to every club but can sign only with his former club. At the end of the fifth day the restriction lifts.
The same five days carry the first big decision of the winter. A club that wants draft-pick compensation for a departing free agent must make him a qualifying offer, a one-year contract at a fixed league-wide salary, before the quiet period ends. The player then has a short window to accept or decline. How that figure is calculated, who can receive one and what each club gains or loses is the subject of our guide to the qualifying offer and its draft picks.
The same week, clubs decide on options. A club option the club declines turns the player into a free agent, usually with a buyout payment; a player option the player declines does the same. Then the 40-man roster has to be rebuilt, because every player who spent the season on the 60-day injured list must be reinstated to it.
- World Series endsPlayers with six years of service and expiring contracts become free agents the next morning.
- Five-day quiet periodFree agents may talk to all 30 clubs but sign only with their former club. Options are exercised or declined.
- Qualifying offersClubs extend qualifying offers before the quiet period ends; players answer within a short fixed window.
- Open marketAfter the fifth day, any club may sign any free agent.
- Rule 5 protection and tender deadlinesIn November clubs set their 40-man rosters and decide which arbitration players to tender.
- Winter MeetingsExecutives and agents meet in early December; many larger deals and trades cluster around them.
- Spring trainingUnsigned players remain free agents; some sign as camps open in mid-February or later.
The sequence set by the Basic Agreement. Exact dates move each year with the end of the World Series and are published by the league.
The Winter Meetings
The Winter Meetings in early December are the closest thing the sport has to a trading floor: every front office and most agents in one hotel for four days, closing with the Rule 5 draft. Some winters the big contracts land there. Gerrit Cole agreed to his nine-year deal with the Yankees during the 2019 meetings in San Diego. In other winters the meetings come and go with the best players still unsigned.
The 2021-22 freeze
There is one exception to the calendar on record. The 2016 agreement expired on December 1, 2021, the owners locked the players out the next day, and transactions involving 40-man players stopped. Free agency resumed in March 2022 after the new agreement was signed, and dozens of players signed in a frantic two weeks before Opening Day. The 2022 agreement was set to expire on December 1, 2026, and in any winter that opens without a signed agreement, the calendar depends on how that bargaining goes.
What an MLB free agent contract can contain
Baseball contracts are, by default, fully guaranteed. That single fact separates them from the NFL, where guarantees are negotiated piece by piece. A player who signs for $100 million over five years is owed $100 million if he is hurt in his first spring training, released in his second year or simply stops hitting. The club's only escapes are narrow: failing a physical before the deal is official, or a breach by the player serious enough to void the contract under the uniform player contract's terms.
Inside that guarantee, the agreement leaves wide room for structure.
| Clause | What it does | Who holds the choice |
|---|---|---|
| Signing bonus | Lump sum paid on signing or spread over set dates | Fixed in the deal |
| Deferred salary | Part of each year's pay is paid after the contract ends | Fixed in the deal |
| Opt-out | Player may void the remaining years and return to free agency | Player |
| Club option | Club may add a year at a set salary, usually with a buyout if declined | Club |
| Player option | Player may add a year at a set salary | Player |
| Mutual option | Year added only if both sides agree, and rarely exercised | Both |
| No-trade clause | Player must consent to a trade, fully or to listed teams | Player |
Opt-outs
An opt-out clause in an MLB contract lets the player walk away from the remaining years at a set point, usually after the second or third season, and become a free agent again. The clause is pure upside for the player. If he plays well he leaves for a bigger deal; if he struggles or gets hurt, he stays and collects the guarantee. Alex Rodriguez exercised the opt-out in his 10-year Texas contract after the 2007 season, announced during Game 4 of that year's World Series, and then re-signed with the Yankees on a new 10-year deal. Clubs grant opt-outs because they cost nothing in average annual value, and in a tight market they are often the sweetener that closes a deal without raising the headline number.
Deferrals
Deferred money is the clause that has changed most. Shohei Ohtani's 10-year, $700 million contract with the Dodgers, signed in December 2023, deferred $680 million of it until after the deal ends. Because the competitive balance tax charges a contract's present value when money is deferred, the structure lowered the Dodgers' annual tax figure well below $70 million. Rival clubs complained that the structure let one team carry more talent than the tax was designed to allow, and how deferred money is valued is one of the terms any new agreement can revisit.
No-trade protection
There are two kinds. A full no-trade clause written into the contract, and the "10-and-5" right that the agreement grants every player with ten years of service, the last five with the same club. A player with 10-and-5 rights can veto any trade whether or not his contract says so. Partial clauses list the clubs a player can block, and the list is often renegotiated each winter.
Why there is no salary cap in baseball, and the tax that acts as a brake
MLB owners proposed a salary cap in 1994. The players struck in August, the World Series was canceled for the first time since 1904, and the cap never came. That fight is told in our page on the 1994 strike and the canceled World Series. What came out of the settlement was a tax instead.
The competitive balance tax charges a club a percentage of the amount by which its payroll, measured by the average annual value of every contract on the 40-man roster plus benefits, exceeds a threshold. Under the 2022 agreement, the rate for a first-time payer is 20 percent, rising to 30 percent for a second straight year and 50 percent for a third and beyond. Surcharges stack on top for clubs $20 million, $40 million and $60 million over the line, and a club more than $40 million over has its top draft pick moved back ten places.
How the tax shapes a free-agent offer
The threshold is not a cap, and a handful of clubs exceed it every year. Its effect on free agency comes through three channels. A club near the line knows that the next dollar of salary costs $1.20 or more, so a $25 million player costs it $30 million or more. A club over the line gives up more draft compensation for signing a player who declined a qualifying offer. And because the tax is calculated on average annual value, a club can lower its annual charge by adding years, so tax-conscious offers tend to run longer at a lower yearly figure.
That last point explains a lot of contract shapes. Twelve years at $27 million and ten years at $32 million are nearly the same money; the first fits under a threshold the second does not. The full mechanics of the calculation are in our explainer on how the MLB luxury tax works.
Clubs at the bottom of the revenue table face the opposite incentive. They receive revenue-sharing money and have no tax worries at all, which leaves cash as the only constraint and explains why the top of the free-agent market is usually contested by eight or ten clubs rather than 30.
Draft-pick compensation: the string on some free agents
Most free agents carry nothing. A club that signs one pays him and gives up nothing else. A minority, the ones whose former clubs made a qualifying offer and had it declined, carry a cost: the signing club forfeits one or more of its draft picks and, in some cases, international bonus money, and the old club receives a compensatory pick.
The outline is short. The forfeited pick depends on the signing club's status: a club that paid the competitive balance tax the season before loses more than one that receives revenue sharing. The compensation pick depends on the old club's status and, for revenue-sharing recipients, on whether the player signs for $50 million or more. A player signed after the June draft carries no compensation at all, which is why a few qualifying-offer free agents have sat out into the season.
Our guide to the qualifying offer goes tier by tier through who gives up what. For free agency as a whole, the point is narrower. Compensation attaches to a small number of players each winter, usually good-but-not-great ones, and it changes the arithmetic on those dozen without touching the other several hundred.
It is the closest baseball comes to restricted free agency. It is not very close.
How a free agent's price is set, and why baseball's winter moves slowly
There is no formula. A price emerges from what comparable players received, adjusted for age, for the current state of the market, and for how many clubs are actually bidding.
Comparables
Agents build a case from "comps," players of similar age, position and production who signed in recent winters. A 29-year-old shortstop with three seasons at four wins above replacement is compared with every shortstop near that age who signed in the past five years, and the number is pushed upward for inflation in league revenue. The front office does the same exercise from the other side, usually anchored on projected wins over the length of the deal multiplied by a dollar-per-win estimate. Our explainer on what WAR measures and where it falls short covers the stat both sides argue over.
Average annual value against length
Every offer has two dimensions, and they trade off. A player can take a higher annual salary for fewer years or a lower one for more. Players generally want the length, because the guarantee protects against injury and decline in their mid-30s; clubs generally want the annual value, because the back years of a long contract are the years they expect to regret. Opt-outs and options are the tools both sides use to bridge the gap.
Why the market is slow
Compared with the NBA, where most free agency is done inside a week in early July, baseball's market can take four months. Several things push it that way.
There is no cap date forcing decisions, so neither side loses anything by waiting. The best players set the price for the tier below them, so second-tier players and their agents wait for the top contracts to land. Clubs often prefer to make trades before committing money, and trades take time. And the agents representing the biggest clients have shown repeatedly that they will wait. Bryce Harper and Manny Machado, the two best free agents of the 2018-19 winter, did not sign until late February and early March: Machado with San Diego for 10 years and $300 million, Harper with Philadelphia for 13 years and $330 million.
The slow winters of 2017-18 and 2018-19 led players and agents to complain publicly that clubs were valuing free agents alike. No collusion finding came out of those winters, and the gap between suspicion and proof is old ground in baseball, as the history section below shows.
Minor-league deals, split contracts and the late-March opt-out
The other end of the market is where most free agents actually sign. A veteran without a major-league offer takes a minor-league contract with an invitation to spring training, which puts him in big-league camp as a non-roster invitee competing for a place. Our guide to how spring training works and what a non-roster invitee is covers the camp itself.
These contracts have a major-league salary written into them that applies only if the player is added to the 40-man and active roster. Until then he is paid a minor-league salary. Some players sign split contracts that work the same way in reverse: a major-league deal that pays one figure in the majors and a lower one while optioned to the minors.
The Article XX(B) dates
The agreement protects experienced players on minor-league deals. A player with six or more years of service who signed a minor-league contract as a free agent must, five days before Opening Day, be added to the 40-man roster, released, or paid a retention bonus to stay in the minors on condition that he is added by a later date in June. In practice the five-days-before-Opening-Day deadline produces a burst of releases and selections in the last week of March. Agents add further opt-out dates to these contracts, commonly at the end of spring training and again in May or June, so a player stuck in Triple-A can leave if another club needs him.
For a club, these deals cost almost nothing and can be cut at the end of camp. For a 33-year-old reliever, they are often the only way back.
The reserve clause, Curt Flood and the Seitz ruling of December 1975
For nearly a century, none of the above existed. From the 1880s, every player contract contained a reserve clause giving the club the right to renew it for the following season. The clubs read the clause as renewable forever: renew the contract, which renews the clause, which allows the next renewal. A player could negotiate only with the club that held him, accept its terms or not play.
The Supreme Court ruled in Federal Baseball Club v. National League (1922) that baseball was not interstate commerce for the purposes of antitrust law, and reaffirmed the exemption in Toolson v. New York Yankees in 1953. That left the clause beyond the reach of the courts.
Curt Flood
In October 1969 the St. Louis Cardinals traded center fielder Curt Flood, a three-time All-Star with seven Gold Gloves, to the Philadelphia Phillies. Flood refused to report. On December 24, 1969, he wrote to commissioner Bowie Kuhn that after 12 years in the majors he did not regard himself as property to be bought and sold, and asked to be declared free to sign elsewhere. Kuhn refused. Flood sued, with the backing of the MLBPA and its executive director Marvin Miller, and sat out the 1970 season.
He lost. In Flood v. Kuhn, decided in June 1972 by a vote of 5-3, the Supreme Court acknowledged that baseball's exemption was an anomaly and left it to Congress to fix. Flood played 13 games for the Washington Senators in 1971 and retired. Congress eventually passed the Curt Flood Act in 1998, bringing major-league labor relations under antitrust law.
Catfish Hunter, Messersmith and McNally
The clause fell to labor arbitration instead. The 1970 Basic Agreement had created a grievance process with a neutral arbitrator. In December 1974 the arbitrator, Peter Seitz, declared Oakland pitcher Catfish Hunter a free agent because owner Charlie Finley had failed to make payments required by Hunter's contract. Hunter signed with the Yankees on New Year's Eve. The bidding showed what a star was worth on an open market.
The following season, Andy Messersmith of the Dodgers and Dave McNally of the Expos played without signing contracts, their clubs renewing them under the reserve clause. Miller's argument was that the clause allowed one renewal, not perpetual ones, and that after a season played under a renewed contract each man was free. On December 23, 1975, Seitz agreed. The owners fired him and went to federal court, where the ruling was upheld at the district court in Kansas City and on appeal in 1976.
- Flood refuses a tradeOctober 1969: Curt Flood will not report to Philadelphia and sues the commissioner.
- Supreme Court rulesJune 1972: Flood v. Kuhn upholds baseball's antitrust exemption by 5-3.
- Hunter freedDecember 1974: Peter Seitz rules Catfish Hunter's contract breached and frees him.
- Messersmith and McNallyDecember 23, 1975: Seitz rules the reserve clause allows only one renewal.
- Courts uphold SeitzEarly 1976: federal courts refuse to overturn the ruling.
- Six-year rule bargained1976: the new Basic Agreement sets free agency after six years of service.
The legal and arbitration steps between Flood's refusal and the first free-agent class; dates are those of the decisions.
The 1976 re-entry draft and the collusion cases of the 1980s
Having lost the clause, the owners bargained for structure. The 1976 Basic Agreement, reached that summer after a spring training lockout, created free agency for players with six years of service. Marvin Miller accepted the limit for a reason he later explained repeatedly: unlimited free agency would flood the market, and scarcity would keep prices high.
The first class did not go to an open market. In November 1976, the clubs held a re-entry draft in New York, in which each club could select the negotiating rights to free agents, and each player could be drafted by a limited number of clubs; only those clubs could negotiate with him. Reggie Jackson, the best-known name in the class, signed with the Yankees before the month was out. Others in the class included Rollie Fingers, Don Gullett, Joe Rudi and Bobby Grich. The re-entry draft was later dropped, and the owners' demand to be compensated when they lost a free agent to another club was the issue behind the 1981 strike.
Collusion
Free agency's next crisis came from the owners agreeing not to use it. After the 1985 season, top free agents such as Kirk Gibson received no offers from clubs other than their own. The same thing happened after 1986, when Andre Dawson famously gave the Chicago Cubs a signed contract with the salary left blank, took the $500,000 they filled in, and won the 1987 National League MVP. After 1987, clubs shared information about offers through a central "information bank."
The union filed three grievances. Arbitrators Thomas Roberts and George Nicolau found that clubs had colluded in all three winters, in violation of the Basic Agreement's ban on acting in concert. Several players, Gibson among them, were declared "new look" free agents and allowed to sign anywhere. The cases were settled in 1990 for $280 million in damages paid to players.
The collusion cases are why every slow winter since has been viewed with suspicion. The agreement still bars clubs and players from acting in concert, and the burden of proving it is high.
Contracts that reset the free-agent market, as of early 2025
Records move, and this list states each contract as of the winter it was signed. A contract larger than these may have been signed since; the figures below were the reference points for the market at the time each was agreed.
| Player | Club | Signed | Terms |
|---|---|---|---|
| Kevin Brown | Los Angeles Dodgers | December 1998 | 7 years, $105 million, the first $100 million contract |
| Alex Rodriguez | Texas Rangers | December 2000 | 10 years, $252 million |
| Bryce Harper | Philadelphia Phillies | March 2019 | 13 years, $330 million, no opt-out |
| Gerrit Cole | New York Yankees | December 2019 | 9 years, $324 million, then a record for a pitcher |
| Shohei Ohtani | Los Angeles Dodgers | December 2023 | 10 years, $700 million, $680 million deferred |
| Juan Soto | New York Mets | December 2024 | 15 years, $765 million |
Kevin Brown's deal made headlines because of the round number and because he was a pitcher in his mid-30s. Rodriguez's was far beyond any contract the sport had seen when he signed it, and for years it was used as shorthand for a club overpaying. Harper's contract deliberately carried no opt-out, a choice he presented as a commitment to Philadelphia; it also meant one of the two best-known free agents of that winter signed a deal whose annual value, around $25.4 million, was lower than many expected, to make room for the length.
What the headline numbers hide
Total value is a bad way to compare these deals and a good way to write headlines. Ohtani's $700 million, discounted for the deferrals, was valued for tax purposes at roughly $46 million a year, which is less than a contract with no deferrals at the same annual value would suggest; Soto's had no deferrals, which made it the larger commitment in present-day dollars. Rodriguez's average annual value of $25.2 million was enormous in 2000 and is ordinary for a top free agent now. League revenue has grown faster than the contracts.
The lasting change across these deals is length rather than size. Brown signed for seven years at 33. Soto signed for 15 at 26. Clubs now pay for a player's age-26 to age-40 seasons because the tax rewards length, because the sport's revenue keeps climbing, and because the best players reach the market younger than they used to. For the year-round context of roster limits, the playoff format and the rest of the major-league calendar, start from our baseball section or the United States hub.