Limits on free agent signings
If only 0-14 players in all of Major League Baseball file for free file for free agency, no team may sign more than one "Type A" or "Type B" player (terms defined below).
If 15-38 players file for free agency, no team may sign more than 2 such free agent players.
If 39-62 players file for free agency, no team may sign more than 3 such free agent players.
If 63 or more players file for free agency, then there are no such limits applied. Furthermore, a team may sign as many type A and B free agents as it has lost, regardless of the limits above.
Free Agent Compensation
A club may receive draft-pick compensation if it loses a free agent if:
(1) the player signs with another club before December 2; or
(2) the club offered arbitration to the free agent but failed to re-sign him.
Free agent compensation is based on the free agent’s place in the Elias Sports Bureau’s ranking of all major league players by position based on their performance during the last two seasons. Players are ranked by league in one of five positional groups: 1) 1B/DH/OF, 2) 2B/SS/3B, 3) catchers, 4) starting pitchers or 5) relief pitchers. The statistical criteria vary by position, and are not made available to anyone outsideof Major League Baseball.
Type A players are those who rank statistically in the top 20 percent at their position. Compensation for a Type A player is the signing club’s first-round draft pick and a supplemental pick between the first and second rounds.
Type B players are those who rank between the top 21 and 40 percent. Compensation for a Type B player is a supplemental pick between the first and second rounds.
If a team loses a free agent who is statistically in the bottom 60% of all players at his position, the former team does not get any compensation.