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The MLB Draft for Newcomers

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Everything you never wanted to know about the MLB Draft, but can now link to your family and friends who keep asking you to explain it to them.

Sure, there’s a few places for you to learn about the draft. But a lot of them are technical and don’t seem to answer the questions people really have. So, here’s a relatively quick, hopefully easy-to-read and perhaps unintentionally funny bit about the MLB Draft.

How To Watch or Listen To It

The MLB Draft is spread out over three days, beginning with Monday, June 4th.

Day 1 - Monday June 4th, 4 PM PT/7 PM ET. Rounds 1-2 Comp (Picks 1-78). Can be viewed on MLB Network or streamed on MLB.com. Preview Show begins at 3 PT/6 ET.

Day 2 - Tuesday June 5th, 10 AM PT/1 PM ET. Rounds 3-10. Can be streamed on MLB.com. The pre-show starts at 9:30 AM PT.

Day 3 - Wednesday June 6th, 9 AM PT/12 PM ET. Rounds 11-40. Can be streamed on MLB.com. They don’t bother with a pre-show on Day 3.

That’s right, internet streaming only for Days 2-3. If Day 3 seems like a lot to get done, it wasn’t that long ago that the draft was only two days, and went for 50 rounds. Day 3 is essentially just a conference call with different team representatives saying whom they pick. The highlight is waiting to see if Tommy Lasorda gets on the line and butchers someone’s name.

History

The draft exists to try and make acquiring young players fair for all teams, regardless of income. It might not surprise you that MLB was the last of the 4 big American sports leagues to institute the draft, in 1965. That was after the New York Yankees made 15 of 18 straight World Series from 1947 through 1964. So yeah, NBA fans complaining about four years of boredom don’t have anything on 1950’s baseball fans.

What we call “The Draft” is specifically known as the Rule 4 Draft, because the rules for it are listed under Rule 4 of the MLB Rules. The Rule 5 Draft happens at the Winter Meetings, allowing teams to select prospects from other teams that have not been promoted. These might imply there are Rule 1, Rule 2, and Rule 3 drafts, but there are not.

Although you might be surprised to hear this after reading the next couple of sections, the MLB draft has gotten much simpler. There might be as many as 4 different entry drafts in a year, two each in January and June. It started to get slimmed down in the mid-1980’s, but recent CBAs have made some things more complicated…like how picks are subtracted from or added to the Draft Order.

Draft Order

Teams draft in reverse order of the previous year’s standings, as all leagues do. Ties, as with the two worst teams in 2017 (The Tigers and Giants), are broken by the previous year’s records.

The full draft order is here on MLB.com.

Between the first few rounds, there are a number of extra picks for various reasons. This is where it gets weirdly technical after the most recent CBA. To understand this, one must understand that baseball has revenue-sharing, and there is a big difference between those that receive it and those that pay into it. There’s also additional issues if you spend over the luxury tax.

Ready for this? Let’s go:

  • Compensatory Round A, between Rounds 1 & 2 - For Revenue Sharing Recipient teams that lose a qualifying free agent, AND that qualifying free agent gets a contract over $50 million. (This year, only five picks are there, with the Rays and Royals getting two picks each and the Indians getting one.)
  • Competitive Balance Round A, between Rounds 1 & 2, after Compensatory Round A - All teams that have one of the 10 smallest markets or 10 smallest revenue pools get an additional pick. It’s a complicated process to determine who gets what picks; this year, 8 teams are in Round A, and 6 teams are in Round B, flipping who was in what spot from the previous year.
  • Competitive Balance Round B, between Rounds 2 & 3 - The remaining teams from the previous Competitive Balance Round.
  • Compensatory Round B, between Rounds 2 & 3, after Competitive Balance Round B - Okay, ready for this? This includes:
  • If a team that did not receive revenue sharing but was not exceeding the Luxury Tax last a qualifying free agent, they receive their compensation here.
  • If a team that did receive revenue sharing lost a qualifying free agent, but that free agent got a contract under $50 million, this is where the compensation pick is located.
  • Compensatory Round C, between Round 3 & 4 - If a team did not sign a third round pick from the previous draft, they get compensation here. For the 2018 draft, there are no picks in this round.
  • Compensatory Round D, between Rounds 4 & 5 - If a team was in the Luxury Tax loses a qualifying free agent, they get a compensation pick here. For the 2018 draft, there are no picks in this round.

You probably noticed that Compensatory Round C is compensation for an unsigned draft pick from the previous year’s third round. If a team did not sign a 1st or 2nd round player, they get a pick the next year that is one spot higher. For instance, if a team did not sign their #4 overall pick last year, they would have the #5 overall pick this year. For 2018, there were none of these picks.

If you don’t sign a pick from the 4th round or later, too bad for you! No compensation.

Finally, a team can lose picks for signing a qualifying free agent from another team. Which pick(s) they lose depend on whether they paid the Luxury Tax or were a revenue sharing recipient, with higher and more picks given up if you’re the former. A team cannot lose a pick among the first 15 overall picks, and also cannot lose a pick in one of the competitive balance rounds. Picks that are forfeited for signing a qualified free agent disappear, they do not go to another team.

Trades

Unlike other leagues, most draft picks in the MLB Draft can not be traded. The exception are the picks in the Competitive Balance Round. When that rule was put in place in 2015, they became the first time MLB draft picks to be eligible for trades.

This is possibly one reason why the MLB Draft does not have the same drama on TV broadcasts as the other leagues, where trade drama is constant and overblown.

In the 2018 draft, the #74 pick (the last pick in CBR B) was traded to the Padres from the Twins.

Eligibility

The draft is for amateur players who are residents of the United States or Canada. Obviously, the picks are usually made up of student athletes who meet eligibility requirements. These are:

  • High School - Effectively, players who have finished their Senior year of High School. (By definition, those who have exhausted their eligibility for high school athletics.)
  • College - Generally, any student at a 4-year school that has completed at least their Junior year and is at least 21-years old. This rules has too many exceptions that are very rare to list.
  • Junior College - All junior college students are eligible.

Also, I’d like to not have to point out that Puerto Rico is part of the United States. So is D.C. and all other Commonwealths, Territories or Possessions of the United States. Also, players have to be U.S. residents, not just play at U.S. high schools. For Giants fans, this is why Heliot Ramos (from Puerto Rico) was someone who was drafted, but Lucius Fox (a resident of the Bahamas who went to school in Florida) was considered an “International Free Agent”.

Signing Rules

For players who are drafted, there are signing deadlines. The deadlines are different depending on their college eligibility:

  • If a drafted player has not used all of their college eligibility, they have until the second or third Friday of July to sign.
  • If a drafted player has used up all their college eligibility, they can be signed anytime until 7 days before the following year’s draft.

If a player is not drafted (and meets all draft eligibility rules), they may sign at any time until they either begin attending any type of college, or up until 7 days before the following year’s draft. It’s rare, but undrafted players do sometimes sign up against that final deadline.

Draft Pools and Slot Values

Baseball teams hate spending too much money, and in the 2012 CBA, the League and Player’s Association have put complicated rules in place to try and prevent teams from spending too much on signing bonuses for incoming players, but still allowing a “Choice” if a team really wanted to spend more but discouraging it with penalties.

Let’s start with Slot Values. MLB sets a Slot Value for each pick in the first 10 rounds of the draft. These are just guidelines, and there are no rules for a team to meet a slot value nor penalties for exceeding it, individually. There are no Slot Values for rounds 11-40.

A Draft Pool is the value of all the Slot Values added up. This is where penalties come into play if the Pool is exceeded. Teams can spend money in any way they want on their individual picks, as long as they don’t add up too far beyond their Pool.

Big bonuses can be used to try and convince a talented high school player to skip college, and exceeded the slot value for them often does that. On the other hand, a college senior may have little bargaining power and might sign for under a slot value because the threat of spending age 22 or 23 not playing baseball professionally (before they can become a free agent) would extremely affect their development.

Here are the penalties:

  • 0-5% over Pool - Team pays a 75% tax on the overage
  • 5-10% over Pool - Team Pays 75% tax on the overage and lose next year’s first round pick.
  • 10-15% - Team Pays a 100% tax on the overage and lose a first and second round pick in the future.
  • 15%+ - Team pays a 100% tax on the overage, and lose two future first round picks.

Losing first round picks can be poison to a franchise, so this has not yet happened.

Rounds 11 through 40 do not have slot values, and can pay a bonus up to $125,000 to picks in those rounds without it affecting their Draft Pool. Any bonus above $125,000 to those picks will count against the Draft Pool.

This year, the Kansas City Royals have the largest draft pool at $12,781,900, and the Tampa Bay Rays have the second highest at $12,415,600. Both of these teams lost two Qualifying Free Agents and got two extra picks each in the Compensation Round after the first round. Detroit, who holds the first overall pick, has the third highest pool at $12,414,800. The Giants are 4th, at $11,747,500. The Dodgers, who hold the final pick of the first round, have the smallest Draft Pool at $5,288,200.

A full list of the slot values for every pick and the draft pools can be found here.

There you go, now you’re ready to spend three days watching the draft, and be able to explain this madness to all your friends, who wonder why teams go through all this trouble for a lot of guys you may not ever hear of. Unless you read Minor Lines and the Prospect Round-Up here on McCovey Chronicles.

(Please read Minor Lines and the Prospect Round-Up! We’re funny and have cookies!)