You can offer your own free agents arbitration. If they decline, that's where draft pick compensation comes into play and the team who loses that player will get a pick or 2 if the player is rated at a certain level of all MLB players. huh? :? The difference is players under the team's control have two choices: sign or they must go to arby. A potential free agent can: sign, go to arbitration, or decline arbitration, thus becoming a free agent. Teams have choices too. For a guy with more than 3 years service time, but less than 6 years (Carlos Z for example) they can: agree to a deal, mandate arbitration, DFA him if he's out of "options", (I've tried to avoid the word till now). For a potential FA they can: agree to a deal, offer him arby (if he declines, they get compensation) or ignore him (Ala Grace a few years back) basically forcing him into FA.