How Does The MLB Draft Work

by Editorial team June 29, 2021

You’ve seen your favorite players playing for MLB teams but how did they make it there? They each have their own unique journey before getting to play in the MLB and many went through the MLB Draft. We will break down the process of how the different MLB Drafts work and some of the possible journeys players take to make the draft.

Terminology

To start we should break down some of the terms we are going to talk about later in the blog that you might be unfamiliar with:

Draft: The process used to allocate baseball players to Major League teams.
Prospect: A potential baseball player that coaches and scouts are looking to add to their team.
Amateur: A baseball player who is not being paid to play baseball, likely a high school or college baseball player.
Free-Agent: A professional baseball player who is eligible to sign with any team.
Sign: When you sign a contract you remain under the club’s control.
Defer: When a baseball player is selected in the draft but decides to postpone joining the MLB.

The Different MLB Drafts

The MLB Draft can be confusing because of the various terms used to describe the draft. It is also unlike the other major sports drafts that the NFL, NHL, and NBA have.

There are two different MLB drafts where players can be selected:

The most well-known draft is the MLB First-Year Player Draft, which is also called the Rule 4 Draft. This draft is for amateur baseball players to have the opportunity to be selected by an MLB team.
The other draft is called the Rule 5 Draft which is for professional baseball players that have already been signed to a team, but are not a part of the team’s 40-man roster, to be drafted to another team.

We will discuss the two different drafts in more detail below in terms of eligibility and how it all works.

MLB Rule 5 Draft

The MLB Rule 5 Draft is the lesser-known of the two drafts likely because it is a much smaller draft with players who were already drafted by MLB teams during the MLB First-Year Player Draft.

The MLB Rule 5 Draft is held during December of each year. Each MLB team can have a roster of 40 players during their season. An MLB team is eligible to select a baseball player from the Rule 5 Draft only if they have an open spot on their 40 man roster. The order of picking for the Rule 5 Draft is similar to the First-Year Player Draft where the team with the worst regular-season record from the previous season gets to pick first and so on.

Not all professional baseball players are eligible to be selected in the MLB Rule 5 Draft here are the exceptions:

If a player signed at age 18 or younger they are not eligible for the MLB Rule 5 Draft until after they have played 5 seasons and are still not on the 40 man roster.
If a player signed at age 19 or older they are not eligible for the MLB Rule 5 Draft until after they have played 4 seasons and are still not on the 40 man roster.

The baseball players on each MLB team’s 40 man roster are protected from the Rule 5 Draft and other teams are not allowed to pick them. All additional players that are not on the MLB team’s 40 man roster are eligible, unless they are part of the exceptions listed above, for the MLB Rule 5 Draft. This draft can help teams discover the talent that is maybe undervalued on another team, they get the opportunity to bring it to their own team to use.

Some MLB teams might decide to not make any selections if their rosters are full with 40 players. Those MLB teams that do have an opening on their roster and decide to select a player will have to pay a $100,000 draft fee to the team that the player was selected from. In addition to the draft fee, the team also has to carry that player on their 40 man roster for the entire season, they also can not be placed on the Major League injured list.

The MLB Rule 5 Draft has benefited numerous players and MLB teams over the years to find new talented players that weren’t reaching their full potential on the team before. Although, it can be very difficult to get drafted in the MLB Rule 5 Draft. This is because an MLB team will want to be very confident in you as a player that you can benefit their team if they are committing to putting you on their 40 man roster for the entire season.

The rest of this blog will focus on the MLB First-Year Player Draft, also called the Rule 4 Draft, which is the more well-known draft for the MLB.

MLB First-Year Player Draft

The MLB First-Year Player Draft, also referred to as the Rule 4 Draft is much larger and a bit more complex than the MLB Rule 5 Draft. The MLB First-Year Player Draft is usually held in June, which is mid-season for MLB teams. The draft is for first-year amateur players who have not played on any Major League Baseball teams or Minor League Baseball teams.

When Are Players Eligible

To be drafted to the MLB First-Year Player Draft, a player must be from the United States or Canada. Players from other countries are not subject to the draft and can be signed by any team. Below are the different restrictions for when players are eligible to be drafted:

If you are a stellar high school baseball player you could look at entering the MLB draft right after graduation.
If you decide to attend a 4-year college you will not be eligible for the MLB Draft until after your junior year baseball season or when you turn 21 years old, whichever comes first.
If you are attending a junior college or community college, you are eligible for the MLB Draft at any time.

How Does it Work

There are 30 Major League Baseball teams that will be vying for the new players in the MLB First-Year Player Draft in June. Usually, the draft is broken down into 40 selection rounds where each team takes a turn selecting a player.

The 2021 draft will look a bit different this year with only 20 selection rounds and it has been pushed back to July. Since this year's draft has been shortened to only 20 selection rounds, many baseball players will not be selected to be affiliated with an MLB team. This leaves a lot of extra talented baseball players with the decision on where they will continue to play. Whether that means more players at 4-year universities, junior colleges, independent leagues, and even international leagues.

Order of MLB Draft Picks

During the MLB Draft, the teams are put into an order to decide when each team gets to pick a player. The team that gets the first pick of the draft is the team with the worst record from the previous season, the second pick is from the team with the next worst record from the previous season, and so on. This is done to try to even out the field as much as possible so that all the top picks are not all going to one team.

2021 MLB Draft Pick Order

This year's MLB First-Year Player Draft is set to be an exciting and competitive one with fewer selection rounds than usual. The draft order for 2021 has been released and will follow this order:

Pittsburgh Pirates
Texas Rangers
Detroit Tigers
Boston Red Sox
Baltimore Orioles
Arizona Diamondbacks
Kansas City Royals
Colorado Rockies
Los Angeles Angels
New York Mets
Washington Nationals
Seattle Mariners
Philadelphia Phillies
San Francisco Giants
Milwaukee Brewers
Houston Astros
Miami Marlins
Cincinnati Reds
St.Louis Cardinals
Toronto Blue Jays
New York Yankees
Chicago Cubs
Chicago White Sox
Cleveland Indians
Atlanta Braves
Oakland Athletics
Minnesota Twins
San Diego Padres
Tampa Bay Rays
Los Angeles Dodgers

The Houston Astros have forfeited their first and second-round picks due to the illegal sign stealing. For each of the remaining rounds of the draft, the MLB teams will pick in this same order, other than the first two rounds where the Houston Astros will not get a pick. Teams are allowed to not pick during any round if they choose to do so as well.

The Different Rounds

Now, this is where the MLB Draft gets tricky. It would make sense that with 40 selection rounds, it would start with round 1, then round 2, then round 3, and so on. This is not quite how the different rounds for the MLB Draft work. Instead, there are “extra rounds” between the first round and third round, which are there to try to keep each MLB team at an equal level playing field. Here is the order of the MLB Draft rounds:

First Round
Compensation Picks
Competitive Balance Round A
Second Round
Competitive Balance Round B
Compensation Picks
Remaining Rounds 3-40

Free Agent

Before we dive into the various rounds of the MLB Draft we need to understand how baseball players who were previously drafted during the MLB First-Year Player Draft become free agents. A player becomes a free agent when one of two things happens either

The baseball player has contributed their 6 years of Major League service time
The baseball player is released from the MLB teams organization

If one of these two possibilities happens the player is now a free agent and eligible to sign with any MLB team under any terms they can both agree upon.

Compensation Draft Picks

The compensation round draft picks are used as a way to attempt to keep the playing fields even for all MLB teams. There are two separate compensation rounds in the MLB Draft, which can be referred to as compensatory picks. For an MLB team to be awarded a compensatory pick, a free agent had to leave their team and decline a qualifying offer.

To be considered a qualifying offer this means the MLB team had to offer the free agent a one-year contract worth the mean salary of the MLB’s 125 highest-paid players. The free agent then has 10 days to decide whether they want to accept or decline the offer. During this time they can negotiate a deal with other MLB teams to determine the best possible deal they can get.

If the free agent ultimately decides to decline the qualifying offer, the MLB team that lost that free agent will be awarded a compensatory pick in one of the compensation rounds. The MLB that signs the free agent will then have to forfeit one of their draft-round picks. It can vary based on circumstances which round pick the MLB team will have to forfeit.

Competitive Balance Draft Picks

The competitive balance draft picks are similar to the compensation draft picks in the way that it is another way to even the playing fields for MLB teams as best as possible.

For a team to be eligible for a competitive balance draft pick it is based on the MLB team having low revenue or the smallest market in the league. There is a formula used to determine which teams are selected based on their winning percentage and revenue.

There are two separate competitive balance rounds, Competitive Balance Round A and Competitive Balance Round B. This year in 2021 there will be 8 teams that get a pick in Competitive Balance Round A and there will be 6 teams that get a pick in Competitive Balance Round B. Each year it alternates, so next year there will be 6 teams that get a pick in Competitive Balance Round A and 8 teams that get a pick in Competitive Balance Round B.

Unlike other draft picks, the players picked during the competitive balance round draft can be traded. Another difference is that the MLB teams awarded competitive balance draft picks are also allocated a slightly larger sum of international bonus pool money than the other MLB teams.

Top Draft Prospects For 2021

This year's MLB First-Year Player Draft is sure to be a competitive one with fewer rounds for players to be selected. Here are the top 10 draft prospects for the 2021 MLB Draft:

Marcelo Mayer
Jordan Lawlar
Jack Leiter
Kahlil Watson
Henry Davis
Kumar Rocker
Brady House
Jackson Jobe
Ty Madden
Colton Cowser

You may have heard some of these names if you follow college baseball. Some of the unfamiliar names are likely the players who recently graduated high school and are looking to go straight to the MLB.

MLB Draft Bonus Pools

Each team in the MLB is allocated a certain amount of money for their bonus pool. This money is for each team to distribute to the players they draft during the MLB First-Year Player Draft.

The amount of each MLB team’s bonus pool will be determined based on their draft position, the number of picks, and how much they spend the previous year. Teams with a higher draft position, meaning they had a worse record from the previous season, will likely have a high bonus pool. Teams with a lower draft position, meaning they had a very good record from the previous season, will have a lower bonus pool.

Teams are not required to only use the money from their bonus pools for the players they draft, they can go over that amount but they will then face some penalties. These include;

Exceeding the bonus pool by 0-5%, the MLB team will have to pay a 75% tax on the overage amount.
Exceeding the bonus pool by 5-10%, the MLB team will have to pay a 75% tax on the overage amount and will lose their first-round pick.
Exceeding the bonus pool by 10-15%, the MLB team will have to pay a 100% tax on the overage amount and will lose their first-round pick and a second-round pick.
Exceeding the bonus pool by more than 15%, the MLB team will lose two first-round picks.

2021 MLB Draft Bonus Pools

This year’s MLB First-Year Player Draft bonus pools for the 30 MLB teams totals $265,769,400, which is divided up between the 30 MLB teams.

Teams with higher draft-round picks, meaning they had a worse regular season the past year will receive more money. The teams with lower draft-round picks, meaning they had a good regular season the past year will receive less money. This year the top 5 bonus pools include:

Pittsburgh Pirates with $14,394,000
Detroit Tigers with $14,253,800
Texas Rangers with $12,641,000
Boston Red Sox with $11,905,700
Baltimore Orioles with $11,829,300

The order of draft-round picks and the amount of bonus pool money each MLB team will get do not line up perfectly but coincide very similarly. For example, the Detroit Tigers have the second-highest bonus pool but they get the third draft pick.

Being Drafted

Now that we understand how the different rounds of the draft work, what happens once a player is drafted to an MLB team? Well for starters you are no longer an amateur baseball player and you can call yourself a professional!

Once you are selected from the draft you are put onto that team’s negotiation list. This is when you and the team will negotiate your contract and signing bonus which comes from the bonus pool we talked about earlier.

Negotiating a Contract

You might think that since you have been drafted to an MLB team you will be playing on that team but this is not always the case. Most players drafted to MLB teams will negotiate a contract and play on a minor league team. This way players can continue to work on their skills and hopefully eventually move up to play on a team in the major leagues.

International Signings

Like we mentioned before, baseball players from any country outside the United States or Canada are not part of the MLB First-Year Player Draft. These international baseball players have different standards to follow in order to be eligible to play in the MLB.

International baseball players are eligible to be signed by an MLB team from July 2nd to June 15th. The only age requirement is that they are 16 years old before they sign. In addition, much like the MLB First-Year Player Draft, each MLB team is allotted a specific pool of money they are allowed to use to spend on international prospects.

Due to the Covid pandemic and an unusual season last year, this year's MLB First-Year Player Draft has been pushed back to July 2021. In addition, the time period for international signings has been moved from January 15th to December 15th, 2021.

Differences From Other Sports Drafts

You may also follow the NFL Draft or the NHL Draft or maybe the NBA Draft, the MLB Draft as you can see is slightly different. Many players drafted in the NFL Draft are expected to make potentially big impacts for each of their respective teams in the coming season. In the MLB things are different and many players drafted won’t see playing time in the major leagues for years. It is exceptionally difficult in many sports to play professionally but when you get the chance to play the sport you love as a career it can be extremely rewarding.

Summary

The MLB draft is the beginning of many amateur baseball player’s professional careers. It can be one of the most exciting times for baseball players to see their dream of playing professionally turn into a reality. The MLB draft is the start of it all and hopefully, after reading this blog you understand the process more than before.

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