Demotion Penalty: There are only 2 instances in which a player can be demoted without being subject to a ratings penalty:
- Player A goes on the DL and player B is promoted to replace him in the same cycle. Then, when player B is demoted (after player A is reinstated from the DL), he won't be subject to a ratings hit;
- Preseason (from the day after budgets are set to roster freeze day).
Minor League Options: All players start with 3 minor-league options. The first time a player is added to the team's 40-man roster, his "option clock" starts. He "burns" an option (and only 1 per season) in any subsequent year in which he spends 20 or more days in the minors. If he stays on the big league club for the whole season, or spends 19 days or less in the minors, he doesn't use up an option for that season. During a season in which a player has options, he may be sent to the minors/recalled an unlimited number of times. Once his 3 options are used, he must go through waivers before he can be demoted or removed from the 40-man roster.
Rule V Draft: Players involved in trades that complete within 24 hours of the roster freeze are not exposed to the Rule 5. If a trade completes more than 24 hours before the roster freeze, the players can be eligible for the Rule V.
- Rule V trumps trades and waiver claims: If a player is selected in the Rule V Draft, any outstanding trade offer involving the player is automatically canceled. If the drafted player is on the waiver wire, any pending claims are canceled and the player is also removed from the waiver wire.
Waivers/Waiver Wire: Players who are out of options must clear waivers before they can be demoted or removed from the 40-man roster. Once a player is waived, his status is evaluated just after midnight on the 2nd day after being waived. For example, if he's waived on Sunday at 1PM, his status is evaluated Monday night just after midnight (actually early Tuesday morning). Prior to the trade deadline, during this evaluation claimed players are awarded to the claiming team with the worst record (after the deadline, the waiving team has the option to pull the player back from waivers). If a player goes through waivers without being claimed, he can then be demoted or removed from the 40-man roster of his original team. Teams that are awarded players on waivers are responsible for paying the pro-rata portion of the player's current salary plus the salary for the remainder of the contract.
- Released players also go to the waiver wire: teams awarded a claim for a released player only pay the prorated amount of the league minimum for the current season and the league minimum for all subsequent seasons under his contract. His previous team is responsible for the balance of his contract.
- Transaction deadline: even if a player has cleared waivers earlier in the season, he must go through waivers again after the trade deadline has passed (in order to be demoted or removed from the 40).