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How does the MLB draft work?

As part of the Explainer Series, we have an in-depth look at how the MLB draft works and the upcoming changes to the 2020 and 2021 drafts.

Terminology

Draft: The ordered selection of amateur baseball prospects by major league teams in order to have first rights to sign them as a player.

Sign: The act of a major league organisation offering a contract to a player and the player accepting.

Bonus pool: The portion of a team’s budget allowed to be used as signing bonuses during contract negotiations with drafted players.

Free-agent: Players that have served in the major leagues for a minimum of six years whose contract expires. They are able to shop themselves to other teams and sign with whichever organisation they’d like.

The MLB Draft

Rick Monday was the first overall selection in the inaugural Major League First-Year Player Draft in 1965 by the Kansas City Athletics
Rick Monday was the first overall selection in the inaugural Major League First-Year Player Draft in 1965 by the Kansas City Athletics – Unknown author / Public domain

Clocking in at forty rounds, the MLB draft is the largest in professional sports. Every year in June over 1200 players are drafted and begin entry-level contract negotiations with their new organisation. About 900 will sign and officially become professional baseball players, playing all across North America for their club’s minor league affiliates and trying to work their way up to the majors. About 17% of all drafted players will play in the major leagues.

Generally, the draft order is set based on the previous year’s standings. The team who finishes last is awarded the first draft pick, the second-worst with the next, and so on. If a team does not sign any given draft pick, they are entitled to another pick in the following year’s draft as compensation. If the team had the number 10 draft pick in 2018 and didn’t sign them, the 2019 number 11 pick would be theirs as a compensatory pick. If that player also doesn’t sign, the team doesn’t get an additional pick in 2020. Compensatory picks are also offered to teams whose qualifying offers are rejected by their existing free agents who choose to sign elsewhere as a measure to maintain the team’s talent pool over time.

Eligibility rules

To be eligible for the first-year draft, players must have never signed a major league or minor league contract. High school players are only eligible after graduation, while college and university players must be enrolled for three years before becoming draft-eligible (or turn 21, whichever comes first). For players who play junior college or community college, they are eligible at any time. All players have to live or have attended school in the United States or Canada, otherwise they are considered international and are governed by international signing rules. On rare occasions, more mature players out of independent leagues have been drafted and played in the majors.

Getting drafted, signing, or deferring

If a draftee signs an entry-level contract, they are under that club’s control until they have accumulated six years of service time in the majors. All contracts are guided by the bonus pool, which is the amount of money MLB allots each team to spend on their new players’ signing bonuses, which is an incentive on top of their base salary. The spending limits are based on where their picks fall, standings, and overall team spending and was implemented in 2012 as a way to ensure larger-market teams couldn’t outspend smaller-market teams in an attempt to sign and hoard top prospects. Once the players are signed, they are that club’s to control indefinitely in the minor leagues, and six major league seasons. A smaller-market team who couldn’t meet a draft pick’s demands risk having that player re-drafted the following year by another club.

The Orioles selected Adley Rutschman with the first overall selection in the 2019 MLB draft, and he signed for $8.1 million, at the time the highest MLB draft signing bonus ever
The Orioles selected Adley Rutschman with the first overall selection in the 2019 MLB draft, and he signed for $8.1 million, at the time the highest MLB draft signing bonus ever- Keith Allison: Flickr, e-mail, Twitter, Instagram, website / CC BY-SA (https://creativecommons.org/licenses/by-sa/2.0)

High school players have some leverage to impact their signing bonus as well, since they can threaten to defer their eligibility if they want to play college baseball. A deferral would mean that they could be drafted by a different team and the original team wanting to sign the player would no longer have their rights. The team would have to commit a higher signing bonus to ensure the player stayed in the organisation, and potentially take funds from another draftee to make it happen. “Cheap and controllable talent” is the goal for drafting young prospects, but sometimes the desire to sign top-calibre players outweighs the desire to save money.

Team drafting strategy

Major league teams often have similar goals for every draft: draft and sign players who demonstrate strong baseball fundamentals like running, fielding, and hitting; players who have potential to grow into different positions; and players who demonstrate longevity and resilience. It’s not uncommon for a team to draft someone who they later decide not to sign due to injury concerns. When the league has a system of compensatory picks, it makes sense that a team would opt to re-draft a different player the following year who might have a better physical outlook.

Since the players selected in the first-year draft who make it to the majors are so few and typically take many seasons to arrive, the MLB draft operates as the first of many selection tools for talent vying for big league positions. Teams want to get their prospects into their system to take control of their development as early as possible for the best chance of success.

The Rule 5 draft

 

Rule 5 Draft

 

Another measure to ensure organisations aren’t hoarding talent in their pipeline is the Rule 5 draft, which functions as an internal draft focusing on longtime minor league players. Teams can draft players already in other organisations’ systems who aren’t on the 40-man roster, which includes the major league team, known as the 26-man roster, and fourteen other minor leaguers who can easily be recalled to the majors. Players become eligible for the Rule 5 draft when they surpass their fourth winter signed to a major league affiliate (fifth if they initially signed before their 18th year season).

The catch is that the drafting team must be confident that the player will be successful in the majors. Once the player is drafted, they must be placed on the new team’s 26-man roster, essentially keeping them at the major league level, for the entire season following the draft. If the conditions are not met, the player must be offered back to their original team. The drafting team can still exercise waiving rights and release them back to the other team at any time, but they get nothing in return.

Clubs that sign Rule 5 players take an enormous risk that their player might not live up to Major League Baseball’s level of competition. Some players, though, have shown all-star level play as a Rule 5 pick. Johan Santana in 1999, José Bautista in 2003, R.A. Dickey in 2007, and Odubel Herrera in 2014 are just a few of the players in the last decades that have made enormous contributions to the game since being drafted after long journeys in the minor leagues. Famously, one of MLB’s finest players and personalities, Roberto Clemente, was a Pittsburgh Pirates Rule 5 pick in 1954 and went on to be inducted into the National Baseball Hall of Fame in 1973.

International signings

Mariano Rivera signed as an international signing for the Yankees for $2500 in 1990
Mariano Rivera signed for the Yankees with a signing bonus of $2500 in 1990 – Keith Allison on Flickr / CC BY-SA (https://creativecommons.org/licenses/by-sa/2.0)

Players who live outside the U.S. and Canada are eligible to be signed by any MLB club between July 2nd and June 15th of the following year and enter their organisation at any level, provided they are 16 before they sign and turn 17 before September of the following year. These signings can be lucrative, since there are not governed by the same rules as the amateur draft. Any team can make offers to prospects at any time during the signing period. That being said, there is an international signing bonus pool the limits how much teams can spend, but the competitive nature of international signings can lead to high-profile contracts sometimes worth many times more what drafted players receive.

Changes to the 2020 and 2021 drafts

Due to season postponement in 2020, the upcoming June 2020 and 2021 drafts have been adjusted to reflect the lack of amateur baseball and scouting during the COVID-19 shutdown. The 2020 draft will only have five rounds, leaving 35 rounds’ worth of players unsigned and likely looking to college or junior college for playing time. The 2021 draft will be half the usual size at 20 rounds.

Colleges and universities have not altered their roster sizes to accommodate for the extra talent available to them. Junior colleges offer the most flexibility in terms of when players can be drafted without a waiting period, but no matter where the players go, they will be without MLB affiliation. Maybe the independent and international leagues will see an uptick in interest as a result.

It looks like MLB organisations will face an array of challenges without the usual influx of contracts from the 2020 draft and there will likely be implications well into the decade.

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