Nicholson-Smith: Explaining MLB draft basics

The Chicago White Sox have reached a deal with left-handed pitcher Carlos Rodon on a minor league contract that includes a nearly $6.6 million signing bonus. (Nati Harnik/AP).

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 hours remaining before the 2014 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 Carlos Rodon and Brady Aiken don’t get to leverage their value because of spending restrictions. Teams face strict penalties for exceeding their allotted bonus pools, which range from $2.2 to $14.2 million per organization in 2014.

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 top hockey, football and basketball prospects contribute at the highest level soon after being selected, baseball’s top draftees 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 third consecutive time after finishing with a 51-111 record in 2013.

This marks the fifth time the Astros have had the first overall selection. They chose Floyd Bannister in 1976, Phil Nevin in 1992, Carlos Correa in 2012 and Mark Appel in 2013.

2. When does the draft take place?

The draft takes place over the course of three days, starting on June 5. 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 Miami Marlins lead the way with a draft bonus pool of $14.2 million. The Astros ($13.3 million), Chicago White Sox ($9.5) million, Toronto Blue Jays ($9.5 million) and Kansas City Royals ($8.6 million) also have generous draft budgets, while The New York Yankees ($3.2 million) and Baltimore Orioles ($2.2 million) can spend the least.

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

5. What are the competitive balance rounds?

The 2013 draft included 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.

Teams in the 10 smallest markets and with the 10 lowest revenues were eligible for one of six selections immediately following the first round. Teams that did not obtain one of the initial picks were entered in a second lottery along with other teams that obtain revenue sharing.

6. Why can’t teams trade draft picks?

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

In general, however, picks cannot be traded. Some 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?

The New York Yankees (Brian McCann, Jacoby Ellsbury, Carlos Beltran), New York Mets (Curtis Granderson), Texas Rangers (Shin-Soo Choo), Baltimore Orioles (Ubaldo Jimenez, Nelson Cruz) and Atlanta Braves (Ervin Santana) all lost picks for signing top free agents.

Teams obtaining compensatory picks for losing qualified free agents 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.

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

Expect a worldwide draft to take place eventually, though it’s not clear when MLB will implement one. 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.

This article was originally published June 3, 2013.

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