Designated for assignment is a contractual term used in Major League Baseball. When a player is designated for assignment, he is immediately removed from the club's 40-man roster. This gives the club 10 days to decide what to do with the player while freeing up a roster spot for another transaction, if needed. After designating a player for assignment, the club must make one of the following contractual moves.
Place the player on waivers
Typically a player is placed on waivers after being designated for assignment for the purpose of outrighting him to one of the club's minor league teams. However, a player must clear waivers (that is, no other team may place a waiver claim on the player) to be sent to a minor league team. Also, if the player has five or more full years of major league service, he must give consent to be assigned to the minors. If the player withholds consent, the team must either release him or keep him on the major league roster. In either case, the player must continue to be paid under the terms of his contract.
Trade the player
Once a player is designated for assignment, he may be traded. Some teams have been known to designate players for assignment to increase interest in the player, especially among teams that are not at the top of the list for waivers. For example, in May 2006, Rangers reliever Brian Shouse was designated for assignment, and was traded to the Milwaukee Brewers 4 days later. The Brewers could have waited until Shouse was placed on waivers so they would not have had to give up a player in a trade, but according to the waiver rules, the other 13 AL teams would have preference in claiming him. Also, under the "five and ten rule," if a player has ten years of Major League service, the last five of which with his current team, he cannot be traded without his consent.
Release the player
If a player is not traded, and clears waivers, he may be released from the team. The player is then a free agent and is able to sign with any of the 30 Major League teams, including the team that just released him. The team that releases him is responsible for the salary the player is owed, less what he is paid by the team that signs him.