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Saturday, October 3, 2026 at 5:20 PM ET

MLB Trade Deadline and Free Agency Explained: Service Time to the Hot Stove

How the MLB trade deadline and free agency work, including service time, salary arbitration, the qualifying offer, the Winter Meetings and "pending a physical."

Updated 2026-10-03.

In this guide
  1. The trade deadline
  2. August waiver trades no longer exist
  3. Service time and the path to free agency
  4. Salary arbitration at a high level
  5. The qualifying offer
  6. The hot stove and the Winter Meetings
  7. “Pending a physical” and how deals get reported
  8. Related reading

Baseball has two big transaction seasons. The first is the summer trade deadline, when contenders and sellers reshape rosters for the stretch run. The second is the offseason, known as the hot stove, when free agents sign and teams make their biggest trades. Both run on rules that are worth knowing if you follow the headlines.

The trade deadline

MLB has one trade deadline each season, set by the league and typically falling around the end of July or the first days of August. In the days leading up to it, teams are sorted into buyers and sellers:

  • Buyers are contenders adding a starting pitcher, a reliever or a bat for the postseason push.
  • Sellers are teams out of the race trading veterans, often players with expiring contracts, for prospects.

Most deadline trades involve prospects going to the selling team. Because minor league players are years away from contributing, deadline deals are often judged long after the fact.

August waiver trades no longer exist

For many years, baseball effectively had a second deadline. Players could be placed on revocable waivers in August and, if they cleared or were claimed, traded after the July deadline. Some notable deals happened this way.

That system ended in 2019, when MLB moved to a single trade deadline. After the deadline passes, teams can no longer make trades until the season ends. They can still:

  • Claim players who are placed on waivers by other teams.
  • Sign free agents who are released.
  • Call up players from their own minor league system.

Postseason eligibility rules also matter late in the season. In general, a player has to be in a team’s organization by the end of August to be eligible for its postseason roster, which is why late-August waiver claims and signings still draw attention.

Service time and the path to free agency

In MLB, free agency is earned through service time, which counts the days a player spends on the major league roster or injured list. A full season of service is 172 days, even though the regular season lasts longer.

The general path for a player looks like this:

  1. Pre-arbitration years. For roughly his first three seasons, a player earns close to the league minimum, and the team sets his salary.
  2. Arbitration years. With about three years of service, he becomes eligible for salary arbitration. A group of players with slightly less service, known as Super Two players, also qualify a year early.
  3. Free agency. With six years of service, he can become a free agent and sign with any team.

Because service time decides when a player reaches free agency, the timing of a prospect’s call-up has long been a point of debate between teams and the players’ union. The current labor agreement added incentives meant to discourage teams from holding top prospects in the minors just to delay their clocks.

Salary arbitration at a high level

Salary arbitration sets pay for players who are not yet free agents but have earned more than the minimum. The process works like this:

  • The team and player exchange salary figures for the coming season.
  • Most cases settle somewhere in between before reaching a hearing.
  • If they do not settle, a panel of arbitrators hears both sides and must pick one figure or the other. It cannot choose a number in the middle.

That all-or-nothing format pushes both sides toward reasonable numbers and is why most cases settle. You will often see headlines in winter about players and teams “avoiding arbitration” with a one-year deal or a multiyear extension.

The qualifying offer

When a team is about to lose a star free agent, it can make him a qualifying offer: a one-year contract for a set amount, calculated each year from the average of the highest salaries in the sport.

  • If the player accepts, he returns on that one-year deal.
  • If he declines and signs elsewhere, his former team receives a draft pick as compensation, and the signing team gives up one or more draft picks and sometimes international signing money.

A few rules limit its use. A player can only receive a qualifying offer once in his career, and a player traded during the season cannot receive one from his new team. Because signing a player who declined a qualifying offer costs draft picks, it can cool the market for some mid-level free agents.

The hot stove and the Winter Meetings

Free agency begins shortly after the World Series ends. The offseason that follows is called the hot stove season, from the old image of fans talking baseball around a stove all winter.

The centerpiece is the Winter Meetings, held each December. Executives, agents and reporters gather in one place, and many signings and trades come together during that week or in the days around it. The Rule 5 draft, where teams can select certain unprotected minor league players from other organizations, takes place at the end of the meetings.

Big free agents do not always sign quickly. Some top players wait until January or even later, depending on the market.

“Pending a physical” and how deals get reported

Baseball deals are usually reported well before they are official. The common phrases:

  • “Agreed to terms”: the player and team have a deal, with years and total value usually reported.
  • “Pending a physical”: the agreement is in place but the player still has to pass a medical exam. Physicals occasionally turn up issues that change or kill a deal.
  • “Finalizing”: the sides are close and expect to complete it soon.

Teams usually announce a signing only after the physical is complete and a roster spot has been cleared on the 40-man roster. That gap can be a few hours or several days, so a deal reported by national insiders may not show up on the team’s official channels right away.

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