Nicholson-Smith: Explaining MLB draft basics

June 3, 2013, 10:59 AM

Amidst the mock drafts, highlight reels and scouting reports it’s easy to overlook some fundamental questions about the MLB draft. Such as: why does it exist?

With mere days remaining before the 2013 draft this is one of many questions worth asking. Baseball’s amateur draft has two primary purposes: to increase competitive balance and to control expenses for MLB owners.

The draft accomplishes the first of those goals by ensuring that the sport’s weakest teams have ample opportunities and resources to select and sign the best amateur players. Furthermore, the draft now provides additional early picks for teams with the lowest revenues and in the smallest markets.

The draft also caps costs for owners by limiting the leverage that top prospects have. Under the sport’s previous collective bargaining agreement, international prospects such as Aroldis Chapman and Yasiel Puig signed contracts worth tens of millions of dollars, proving that general managers are eager to spend for impact amateur players.

Yet domestic players such as Bryce Harper and Manny Machado don’t get to leverage their value because of spending restrictions. Teams face strict penalties for exceeding their allotted bonus pools, which range from $2.7 to $11.7 million per organization in 2013.

It’s a clear win for the owners — they are now protected from themselves — but it’s not exactly a loss for the MLB Players Association. Amateur players aren’t unionized, so the MLBPA isn’t going to prioritize draft bonuses in bargaining sessions.

Known as the Rule 4 draft, the amateur draft, or the first-year player draft, the event pales in comparison to other sports’ drafts even after some successful recent efforts to reach a mainstream audience.

While players like Andrew Wiggins, Nathan MacKinnon and Robert Griffin III can contribute at the highest level soon after being selected, baseball’s top prospects almost always require extended time at the minor league level.

Without further delay, here are the answers to some essential draft-themed questions:

1. How is the draft order determined?

The selection order is determined by the reverse order of the standings at the end of the previous year. The Houston Astros will select first overall for the second consecutive time after finishing with a 55-107 record in 2012.

This marks the fourth time the Astros have had the first overall selection. They chose Floyd Bannister in 1976, Phil Nevin in 1992, and Carlos Correa in 2012.

College right-handers Mark Appel and Jonathan Gray are viewed as the top prospects in 2013, though Houston could select a position player instead.

2. When does the draft take place?

The draft takes place over the course of three days, starting on June 6. The first round, competitive balance round A, second round and competitive balance round B take place on day one.

The draft resumes the following day with rounds three-10 and concludes on day three with rounds 11-40.

3. How many rounds are there?

The draft now lasts 40 rounds, though it extended to 50 rounds in previous years. Teams can pass on making a selection at any point. If they decline to stop making picks at any time their draft ends.

While drafted players can only sign with the teams that select them, undrafted players are not bound to any one team.

4. What draft spending restrictions exist?

Baseball’s collective bargaining agreement limits how much money teams can spend on draftees. Each pick comes with a recommended bonus, and teams’ draft bonus pools are determined by adding the recommended bonuses for the picks a team has within the first 10 rounds.

The Astros lead the way with a draft bonus pool of $11.7 million. The Chicago Cubs and Colorado Rockies can both spend $10 million-plus on draftees without being penalized, but teams such as the Los Angeles Angels and Washington Nationals have less than $3 million to spend.

Teams that exceed their draft bonus pools face strict penalties put in place to encourage compliance with the rules. Teams can spend up to $100,000 on picks from rounds 11-40 without violating spending limits.

The Toronto Blue jays have $6,398,200 to spend on players selected within the first 10 rounds.

5. What are the competitive balance rounds?

The 2013 draft will include two competitive balance rounds for the first time. There’s now an annual competitive balance lottery designed to provide additional selections for teams with the lowest revenues and in the smallest markets.

The first competitive balance lottery took place last July and awarded 11 additional picks.

Teams in the 10 smallest markets and with the 10 lowest revenues were eligible for one of six selections immediately following the first round (picks 34-39).

Teams that did not obtain one of the initial picks were entered in a second lottery along with other teams that obtain revenue sharing. The winners obtained one of five selections to be made after the second round.

6. Why can’t teams trade draft picks?

Well technically teams can trade picks — at least in some instances. Picks obtained in baseball’s new competitive balance lottery can be traded.

The Marlins acquired a competitive balance selection from the Pirates (35th overall) and the Tigers and Marlins swapped competitive balance picks.

In general, however, picks cannot be traded. Many general managers have expressed support for the possibility, noting that it would provide savvy teams with another way of obtaining an advantage over their competitors.

7. Which teams forfeited picks to sign free agents?

Five teams forfeited draft picks for signing ranked free agents who declined qualifying offers from their former teams last off-season.

The  Milwaukee Brewers (Kyle Lohse), Atlanta Braves (B.J. Upton), Angels (Josh Hamilton), Nationals (Rafael Soriano) and Cleveland Indians (Nick Swisher, Michael Bourn) all lost picks for signing top free agents.

The St. Louis Cardinals, Tampa Bay Rays, Texas Rangers, Braves and New York Yankees obtained compensatory picks for losing the aforementioned free agents after extending them qualifying offers.

Teams obtaining picks select at the end of the first round, instead of obtaining picks directly from the clubs that forfeit them.

8. What leverage do teams have? What leverage do players have?

Teams can offer money — often millions of dollars — and the cachet of big league baseball. For lots of players, that’s more than enough.

But certain players have leverage and use it to their advantage. High school players can threaten to go to college and college juniors can threaten to return to school for a senior year.

Two-sport athletes enjoy additional leverage. They can tell the MLB team that drafts them that they’ll turn to another sport — often football — if their demands aren’t met.

9. What about players from Latin America and elsewhere in the world?

Players who are not residents of the United States, Canada or Puerto Rico are not eligible for the draft. Instead, they sign with teams as amateur free agents and are subject to a different set of international rules and spending limitations.

International players such as Jose Bautista get drafted if they move to the U.S. to attend high schools, junior colleges or colleges.

Different sets of rules apply to experienced free agents from countries such as Korea and Japan.

10. Will a worldwide draft ever happen? Why does commissioner Bud Selig want one?

Expect a worldwide draft to take place soon, possibly in 2015. MLB recently announced that discussions with the MLB Players Association didn’t lead to an agreement for the 2014 season, so a global draft won’t happen next year.

It’s possible that MLB would implement a second draft that applies only to international prospects.

Expanding the draft creates many logistical questions, but would likely limit international spending. That’s why it’s in the best interest of baseball’s owners and their representative, commissioner Bud Selig, to implement a worldwide draft. MLB seems willing to make concessions to put a worldwide draft in place.

Sources: MLB, Sports Business Journal, Baseball America, ESPN.com.

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