*Free Agency Bidding Procedures*

[Ben (Rays GM)]

Free Agency will begin Wednesday, January 2 at 12:00 pm ET. The starting eight free agents will be announced prior to this time by the commissioners.

New information for this year is in red.

Terms you should know:

Raw annual value: The per-year value of a contract offer before discounts are taken.

Discounts: Discounts are applied after the bidding for a free agent has ended. You do not need to worry about applying discounts when making your bid - just bid using Raw Annual Value and discounts will be applied after. Discounts are given for signing a hometown player, offering more years, and making the playoffs or winning the World Series the previous season.

Bidding:

Free agency will be an auction where you make bids by offering contracts to players. You win a player if nobody beats your offer for 24 hours.

The best offer will always be the one with the higher annual value unless two GMs offer the same annual value but for a different number of years - if raw annual value is equal the player will choose the offer with more years. But remember, longer contracts also receive more discounts.

Each player will have a thread in the free agency section. There will be eight free agents being bid on at a time. Bidding will be done by replying to the thread with your offer. Your offer should include the number of years you are offering, the raw annual value of the offer, and the total value of the contract.

Each offer must be better than the previous offer - you must either offer the same raw annual value but for more years, or you must offer a higher raw annual value - see sample bidding (below). Once the bidding on a player reaches $2 million per year, subsequent bids must be at least $0.5 million per year higher unless they increase the length of the contract. Once the bidding on a player reaches $10 million, subsequent bids must be at least $1 million higher unless they increase the length of the contract.

Minimum and Maximum offers for the primary round:

The minimum salary for a one-year contract is $400,000, or $0.4 million. A one-year contract may not exceed $12 million before discounts are applied (raw annual value) except in two conditions (see below).
The minimum salary for a two-year contract is $2 million per year, and the maximum is $25 million per year before discounts are applied.
These maximums do not apply for players over the age of 35 at the time that they are posted.
Maximums also do not apply if you sign a player using the new 24+ year old rookie rule (see below).

The minimum salary for a three-year contract is $3 million per year, and the minimum salary for a four-year contract is $4 million per year. There is no maximum for three- or four- year contracts.

Discounts:

For each additional year offered you will get to take off a 5% discount from the annual value of the salary after the bidding. Two year contracts will get a 5% discount on the annual value. Three year contracts get a 10% discount. Four year contracts get a 15% discount. So, if you win the bidding on a player by offering 4 years/40 million, or an annual value of $10 million, the player's contract becomes $8.5 million per year (15% off of $10 million). If it's an offer of 3 years/30 million, also an annual value of $10 million per year, then his contract becomes $9 million per year, (10% off of $10 million).

So, even though the winner is always the contract with the highest annual value (or equal annual value but more years), longer contracts do end up being cheaper because of the discounts.

In addition to discounts based on contract length, there are also hometown discounts (10%) given when you sign a player who finished the previous season with your team, and also discounts for offering players a chance to sign with a winning team - you will get a 5% discount the following offseason after making the playoffs and an additional 5% discount if you were the World Series champion.

Opening New Free Agents:

Once a free agent is won, a new one may be opened so that there are eight free agents being bid on at a time.. Anyone can open the bidding on the new free agent. If you notice that a free agent has been won (24 hours have passed since the last bid) but no one has opened a new free agent yet, you can be the one to do it. Create a new thread with the player's name, and post the player's name, position, age, and his most recent team before free agency (see the way Ruth is listed in the sample bidding below). Assuming your thread is posted first, your player will be the new free agent. If someone else posted before you did though, you should delete your post so as to avoid confusion (the commissioners will delete any bidding threads that they notice were opened prematurely. There should never be more than eight free agents being bid on, so if at any point you notice that there are more than eight, please reply to the free agent that was opened last saying that the player was opened in error and should not be bid on). To open a player, you must also bid on him, so please post your bid as well.

Compensation:

You receive compensation if a player who finished the last season with your team (any player on whom you could have received a hometown discount) signs with another team for a raw annual value of $10 million or more. There will be a compensation round in between the first and second rounds of the June Draft, and the order of that round will be determined by the annual value of the contracts, from highest to lowest.

Eligible Players:

Players who are eligible for free agency include all of (and are limited to) the following:

1. Any players who have achieved one year of service time (over 130 ABs for hitters, over 50 IPs or over 25 games for pitchers) who are not on a roster. This includes players who have achieved six-years of service time and thus are no longer cost-controlled, players formerly signed as free agents whose contracts have expired, and cost-controlled players who have been non-tendered.

2. Any players who have not achieved a year of service who are or will be 24 or older on January 1 of that offseason. These "24+ year old rookies" may be bid on despite not having completed a year of service, and there is no maximum value for one or two year contracts. These are the same group of players as those non-rostered 24 year olds that were eligible to be taken in the Rule V Draft, with one important difference: they also include players who have not spent a year in the minors, including international free agents. However, if the player has not played professionally in USA baseball (majors or minors), then the player must have a professional contract with a US team in order to be bid on (you may not bid on an international free agent who has never played in the US until after he signs a contract officially).

The commissioners reserve the right to veto any player opened in this matter if it seems this rule is being used in an unforeseen way that could have an unintended impact on the game.

THESE PLAYERS MAY NOT BE BID ON DURING SECONDARY FREE AGENCY.

Miscellaneous:

1) If you sign a free agent who has fewer than six years of service time to a one year deal that expires before the player accumulates six years of service time, that player will fall into a cost-controlled, service time salary schedule following the completion of the contract. If you sign a player to a multi-year deal that expires before the player accumulates six years of service time, you can bring the player back until he completes his sixth year of service time, but must do so at the same annual salary as the deal you signed him to.

2) If a player officially retires during the offseason while you have him signed to a long-term veteran contract, you are obligated to pay him for the following year, and nothing more. If the player officially retires during the regular season, you will be obligated to pay him for the remainder of the season and nothing more. You must inform the commissioner if you would like to apply to drop a contract for this reason, and he will use his discretion as to whether the retirement can be deemed official.

3) You may not withdraw bids once they have been made. Please do not delete your bids. Being caught doing this may result in a fine or probation.

4) You may not bid more money than you have available. If you have 50 million available and you have two bids for 20 million each that are still leading, and another player comes up who you want, the most you can bid is 10 million unless one of your other bids gets beaten.

[Ben (Rays GM)]

Sample Bidding:

Subject: Babe Ruth

Babe Ruth, OF
Age 117
2011 team: Yankees

Red Sox bid one year, $0.4 million

The Red Sox did this exactly right. They included the player's full name, position, age, and 2011 team, and they remembered to post their own bid as well (Notice that the previous year's salary and whether the player is a type A free agent is no longer necessary due to the change in compensation policy). The subject line is simply the player's full name.

The next bid must be for higher raw annual value. Two year contracts have a minimum raw annual value of $2 million so unless the next team wants to pay at least $2 million per year, he must make a one year offer

Yankees bid one year, $1.0 million

Same as before. You cannot offer two years at $1 million per year, so either offer more money on a one year deal, or a two year deal worth at least $2 million per year (or a three year deal worth $3 million per year, or a four year deal worth $4 million per year)

Red Sox bid one year, $2.0 million

Now that the player has reached $2 million, all future offers must either be for $0.5 million more per year, or must be for more years. So another team could offer one year at $2.5 million, or they could offer two years at $2 million each (or a three year deal worth $3 million per year, or a four year deal worth $4 million per year)

Yankees bid two years, $2.0 million per year ($4 million total)

Even though the Yankees offered the same amount per year, they offered more years so they currently have the winning offer. And remember that because of the discounts, the Yankees will end up paying a bit less than $2 million per year (it's a two year contract so they'll get to take 5% off per year, making it $1.9 million per year, plus they also get a hometown discount). Three year contracts must be for at least $3 million per year, so the Red Sox have the following options here: either they must offer a one or two year deal worth at least $2.5 million, or they can offer a three year deal worth at least $3 million (or a four year deal worth $4 million per year).

Red Sox bid one year, $2.5 million

The Red Sox made this a one year offer again. The Yankees can offer either one year at $3 million, two years at $2.5 million per year, three years at $3 million per year or four years at $4 million per year.

Yankees bid three years, $3.0 million per year ($9 million total).

Even though the Yankees could have bid two years at $2.5 million per year, they decided to skip right to three years at $3 million per year. The Red Sox can bid one year at $3.5 million, two years at $3.5 million per year, three years at $3.5 million per year, or four years at $4 million per year.

Red Sox bid four years, $4.0 million per year ($16 million total).

There are no five year contracts allowed, so the Yankees must bid at least $4.5 million, regardless of how many years they offer.

Yankees bid three years, $4.5 million per year ($13.5 million total).

The Red Sox must offer at least $5 million per year for one, two, or three years, or $4.5 million per year for four years.

Red Sox bid one year, $8.0 million

Oh look, the Red Sox must be getting impatient. The Yankees can outbid by offering $8.0 million per year for two, three, or four years, or $8.5 million per year for one year.

Yankees bid two years, $9.5 million per year ($19 million total)

Now things are really moving. The Yankees could have offered significantly less on a two year deal, but I guess they figured the Red Sox would have just outbid them, so why not cut to the chase. The Red Sox can offer three or four years for at least $9.5 million per year, or one or two years for at least $10 million per year.

Red Sox bid four years, $9.5 million per year ($38 million total)

Hmm, maybe the Red Sox are afraid to go to $10 million because they don't want to give the Yankees a compensation pick, so they went for 9.5 million over four years... The Yankees cannot offer five years, so they must offer at least $10 million now, regardless of the number of years.

Yankees bid four years, $10 million per year ($40 million total)

The Yankees stuck with the four year offer, but upped the annual value. The Red Sox must offer $11 million per year, regardless of the number of years, because once the bidding reaches $10 million increases must be by $1 million or more. Also, since the bidding reached $10 million annual value, the Yankees will now receive a compensation pick if they fail to sign Ruth.

...
...
...

24 hours have passed. The Red Sox didn't top that offer. The Yankees win Ruth with an offer of four years, $10 million per year. But, since they offered four years, they get discounts. They get a 5% discount for each additional year offered, or 15% total for four years. That means they're only paying $8.5 million per year. They also get a 10% hometown discount, making it $7.5 million per year. And, if they had made the playoffs last year or won the league, they'd get even more discounts.

Yankees sign Babe Ruth to a four year, $30 million contract ($7.5 million per year).

[Ben (Rays GM)]

A few reminders:

1) You may not bid more than you have available. Technically, you can consider money tied up in your minor leagues as "available," but just know that if you do manage to win that bid and go over your cap you will immediately have to cut minor leaguers until you are back under. If you win a player despite not having enough minor leaguers to cut, the offer may be considered invalid and you may be fined, or another solution may be found at the commissioners' discretion

2) If somebody bids two years, $10 million you can beat the offer with three years, $10 million. Adding an extra year is enough, you don't also have to add salary.

3) When opening new free agents, you need to be sure the game clock says 24 hours have passed. If the last bid on the free agent coming off the board was at 6:02, you can open a new free agent no earlier than 6:02. If the clock on the board says you opened him at 6:01, it won't count. If you open him at 6:02 but someone else opened one at 6:02 as well, it'll be whichever went up first, assuming both include all of the necessary information. If one goes up missing information and another goes up that same minute with full information, it'll go to the one with full information. If one goes up missing information at 6:02 and another goes up with full information at 6:03, it'll go to the one that went up at 6:02 but the missing information must be added right away.

Make sure to include your own bid when posting a new free agent. Put it in the same post as the opening post. Without a bid, it will be considered to be missing information.

And a little bit of discount math:

A two year contract earns you a 5% discount.
A three year contract earns you a 10% discount.
A four year contract earns you a 15% discount.
Signing a hometown player (who was on your team before becoming a free agent) earns you a 10% discount.
Making the playoffs last year earns you a 5% discount on all free agents.
Winning the Championship last year earns you an additional 5% discount on all free agents.

Add up your discounts. If your discounts add up to:
5%, pull up a calculator and multiply the raw annual value of your offer by 0.95 to get the final value of the contract. A $10 million offer equals $9.5 million, a $20 million offer equals $19 million.
10%, multiply by 0.9. $10 million = $9 million, $20 million = $18 million.
15%, multiply by 0.85. $10 million = $8.5 million, $20 million = $17 million.
20%, multiply by 0.8. $10 million = $8 million, $20 million = $16 million.
25%, multiply by 0.75. $10 million = $7.5 million, $20 million = $15 million.
30%, multiply by 0.7. $10 million = $7 million, $20 million = $14 million.
35%, multiply by 0.65. $10 million = $6.5 million, $20 million = $13 million.

You don't need to apply discounts when bidding. This is simply to figure out how much money you or your opponent is actually committing to the player, if you need to know.

[Ben (Rays GM)]

In the past, starting free agents have been randomly selected from the list of Type A free agents. This year, Type A no longer exists, so we will be selecting randomly from a list of what we deem to be the top free agents at each position category. If there's anybody you want to make sure we include that you think we might not otherwise, please PM me their names by 8:00 ET this evening so that there's a chance they are selected as a starting free agent.

[Ben (Rays GM)]

There have been a few questions about this, so I'll clarify:

You can bid over your cap, but only by the amount of your total minor league payroll. In other words, if my cap is $110, my major league payroll is $70 million, and my minor league payroll is $15 million, I have $25 million available, but I can bid up to $40 million because I have the minor leagues as wiggle room. If I go over $40 million, my bid is invalid. If I win a player at $40 million, I will be forced to cut my minor leaguers in order to make room for him.

Teams can have 48 hours to try to make a trade before they cut minor leaguers, but at the end of 48 hours they will have to cut prospects immediately or face severe penalties to be determined by the commissioners.

[Ben (Rays GM)]

If a player did not complete a year of service last year, there's no maximum salary for a one or two year deal.