This story has been heavily reported in the past few days, more so than I can ever remember, but last night was the deadline for offering arbitration to your own free agents. The result was a total of 24 offers across the industry.
Once upon a time, actually up until just a few years ago, if a Club failed to offer arbitration to one of their free agents then they could basically no longer negotiate with that player. He was essentially cut off from returning. Therefore, this was actually a huge deadline, and you'd often see many deals get done at the 11th hour. Under the new collective bargaining agreement, this is no longer the case. Players who did not receive the offer may still sign with their old organizations.
With the new system, the offer of arbitration has just two components: 1) if the player accepts he is deemed a "signed" player, immediately returns to the 40-man roster, and enters into the arbitration process just as a younger player would, and 2) if the player rejects the offer, is a Type A or Type B free agent, and signs with another Club, then the original Club receives some sort of draft pick compensation. So, basically, Clubs will offer arbitration only if they want draft pick compensation or would be happy with a one year deal that the arbitration process would create (or both, really - they want draft picks but would also be happy with the one year deal).
At the Padres we had one ranked free agent, Trevor Hoffman, and we declined to offer him arbitration. Therefore, we will not receive draft pick compensation should he sign elsewhere.
What yesterday's events also mean for the Padres is that the 2009 Rule IV draft has begun to take shape. We have the #3 pick overall in the amateur draft next summer, and now our second round pick will be no deeper than the mid-50's. If a number of players who were offered arbitration accept the offer or re-sign with their current clubs, our second round pick could end up somewhere in the 40's, which has been the area of many compensation picks in past years.
It will certainly be interesting to see how these 24 players react (they have until Sunday to accept or reject), as this is the most undeveloped market I can remember.