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Rule 5 Draft FAQ

December 4, 2010
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The Rule 5 Draft is often a source of much confusion among fans. This FAQ will attempt to consolidate the important points about the Rule 5 Draft and answer any and all questions pertaining to it.

What is the Rule 5 Draft?

The Rule 5 draft is a draft specific to Major League Baseball and is named for its place in the Professional Baseball Agreement. The regular major league baseball draft is defined in the rulebook as Rule 4, and this draft follows it in the rule book, hence the “Rule 5” moniker it is commonly referred.

The draft itself has three phases: a major league phase, a Triple-A phase, and a Double-A phase where teams select players from the levels below them. A player selected in one of these phases must be placed on the reserve list of the selecting club at the same level of that phase (for example, MLB players must be placed on the 40-man roster, AAA players must be placed on the AAA reserved list, etc). Only players left unprotected in each phase can be selected. In the major league phase, any player that is eligible who is not on the major league 40-man roster can be selected. For the Triple-A and Double-A phase any player eligible who is not on the club’s reserve list and is at a level below Triple-A or Double-A can be selected.

Why does the Rule 5 Draft exist?

The intent of the Rule 5 draft is to prevent teams from stockpiling major league potential players in the minor leagues when other teams would be willing to have them play in the majors. The draft also provides an opportunity for a team to take a top prospect from another team who might be blocked from moving up to the major leagues.

What do teams give up to draft a player in the Rule 5 Draft?

To keep teams from taking advantage of the draft, at the major league level there is a $50,000 price tag to select a player and the team must create space on their 40-man roster to take a player at this level. The player must also remain on the active 25-man major league roster for the entire upcoming season and cannot be optioned to the minors without offering the player back to the original team.

The fee to take a player in the Triple-A phase is $12,000 and in the Double-A phase it is $4,000. In the two minor league phases the drafted players do not have to be returned to their original team as once they are selected they are the full property of the selecting team.

When does the Rule 5 Draft take place?

The draft occurs at the annual General Manager Winter Meetings the first week of December. The draft is typically held on the morning of the final day of the meetings. This year’s draft will be held on December 10, 2009 since the Winter Meetings run from December 7th to the 10th.

How is a player protected from the Rule 5 Draft?

Players are protected from the Rule 5 Draft in the major league phase by placing them on the team’s 40-man roster. The deadline for being on the 40-man roster is typically November 20th, about three weeks before the draft.

It should be noted that when the roster deadline is met in mid-November that teams cannot place a player on the disabled list to create room since there is no disabled list in the offseason. Also, since the hot stove season has begun with trades and free agency, teams follow normal guidelines and need to remove players from the 40-man roster to add any new players onto the roster. A player not rostered by the deadline may not be rostered later even if a roster spot opens up because of a trade before the Rule 5 Draft.

Who can be selected?

Blue-chip prospects who have had significant time at the Double-A and Triple-A level are invariably protected, so the players available are not necessarily the cream of the crop; however, some teams do take chances on a blue-chip prospect that may not have played above the Single-A level.

 All players on reserve lists are eligible except players on the retired, disqualified, or ineligible lists shall be subject to Rule 5 Draft selection in accordance with the following:

• If 18 years old or younger on the June 5 preceding the player's original signing date, the player is subject to selection at the fifth Rule 5 Draft following the effective season of the player's original contract;
• If 19 years old or older on the June 5 preceding the player's original signing date, the player is subject to selection at the fourth Rule 5 Draft following the effective season of the player's original contract;
• If a player is released and re-signed by the same club within one year, that player's Rule 5 eligibility is based on his original contract with that club;
• Any player who has previously been subject to a Rule 5 Draft is subject to all subsequent Rule 5 drafts.

The counting begins the day a player signs his first pro contract. Prior to the new CBA signed in October 2006, the counting began the effective date or the contract and not the season it was signed. This all changed with the new CBA as the counting starts the day they sign per the following change in the CBA (this is from a note I received from MLB):

“We have changed MLR 5(c)(1) so that this period begins to run with the applicable season in which the Player signs his first Major League or Minor League Contract, as opposed to the first effective season of the Player’s first contract.”

This applies to International signees as well. Rule 5 eligibility counts the year the player signs up until the end of the International Signing Period on August 31st. These players are not eligible to play in the same year they sign, but nonetheless the year still counts as their first development year. Players signed from September 1st to December 31st start their "count" the following year.

For example, a player signed at 16 years of age on August 5, 2009 would be Rule 5 eligible in 2013 (2009, 2010, 2011, 2012, 2013), whereas a player signed at 16 years of age on November 17th, 2009 would be Rule 5 eligible in 2014 (2010, 2011, 2012, 2013, 2014). Also, as an example, a college draft pick who signed on August 30th, 2006 with a 2007 contract effective date is still Rule 5 eligible in 2009 (2006, 2007, 2008, 2009).

Note, in order to select a player for the Rule 5 Draft, the drafting team must have an opening on their 40-man roster.

What about minor league free agents, can they be selected?

Yes. Any player not on a 40-man roster who is not a major league free agent can be selected in the Rule 5 Draft. This includes minor league free agents who sign a minor league deal with a team before the Rule 5 Draft. Even though a player signed with a specific team, he is not on the 40-man roster so being selected in the Rule 5 Draft trumps their signing since they are being put on a major league 25-man roster. Any player who is still a minor league free agent once the draft is held is not subject to the draft.

Can a player not added to the 40-man by the roster deadline be protected later?

No. The 40-man roster is frozen on November 20th and no more non-rostered players can be added from the minor league system. The team can still add players via trade and free agency after this date, provided they remove a player from the 40-man roster to add the acquired player (if no 40-man spot(s) is open).

During the Rule 5 Draft, teams at any point are not permitted to protect additional players even if one or more players have already been lost.

What happens to the players selected?

If chosen in the Rule 5 Draft, a player must be kept on the selecting team's 25-man major league roster for the entire season following the draft. The player may not be optioned or designated to the minors by the selecting team, although they can be placed on the disabled list.

A selected player must remain on the 25-man roster (or the DL) of the selecting team for a full season, after which the selecting team's obligations to the previous team are fulfilled, and the selecting team may then assign the player to the minors as they see fit. It is possible under the rules for the selecting team to work out a trade with the player’s original club to obtain full rights to the player and get the Rule 5 roster restrictions lifted. Most often the original club will receive a player or other considerations in return.

To prevent abuse of team's selecting high profile players who are left unprotected and will spend most of the following season rehabbing from an injury, rules also state that the draftee must be active an aggregate of 90 for that season, or the Rule 5 restrictions will still continue to apply for the following season until that player has been on the selecting teams’ active list for an aggregate of 90 days. This keeps teams from "hiding" a player on the disabled list all season. For example, if a Rule 5 draftee was only active for 46 days in his first season with his new club, he must be active for an additional 44 games in his second season to satisfy the Rule 5 requirements.

What happens if the selecting team no longer wants to keep the player?

The percentage of Rule 5 draftees sticking in the majors is not very good, especially for teams that are in contention. The selecting team may - at any time - waive the Rule 5 draftee when they no longer wish to keep the player on the major league roster. Most often this happens at the end of spring training when opening day 25-man rosters are required to be finalized.

A player selected in the major league phase of the Rule 5 Draft may not be released or assigned to the minors until: (a) he first receives a 15 day trial period in spring training; (b) he is granted waivers; and (c) he has been offered back to his previous club by outright assignment.

An offer of outright assignment back to a player's previous team shall be made through the Commissioner for the consideration of 50% of the price paid for selection ($25,000). Upon receiving notice, the previous team has 72 hours to accept or reject the assignment, unless that player is eligible for free agency, in which case the previous team has 24 hours to accept or reject the assignment. Failure to accept constitutes a rejection. If the previous team rejects assignment, the selecting team owes no further obligations to the previous team.

What if the Rule 5 player is claimed off waivers?

Before the player can be offered back to the original club he has to first clear waivers. If the player is picked up off waivers, the same Rule 5 roster rules apply to the team that claims him so this rarely ever happens.

What if the Rule 5 player is traded by his new team to another team?

Any player chosen in the Rule 5 draft may be traded to any team while under the Rule 5 restrictions, but the restrictions transfer to the new team. If the new team does not want to keep the player on its 25-man roster for the season, he must be offered back to the team he was on when he was chosen in the draft.

What is the draft order for the Rule 5 Draft?

The draft order is determined by winning percentage of the previous season without regard to division standing or playoff results. Team's who finished with a worse record get higher (better) place in the drafter order.

Are teams required to participate and draft a player?

Each team reserves the right to select one player per round. Teams are not required to take a player; however, if a team “passes” when their pick comes up they forfeit their right of selection for that round and future rounds for the entire phase.

When is the Rule 5 Draft over?

For each phase, the process will continue for several rounds until all teams have passed.

What is full disclosure?

All teams are required to provide full disclosure for all players eligible including any injuries, surgeries or anything else a drafting team should know about. No agreement shall be made for the purpose of covering up a player from selection, and if this occurs the Commissioner may impose fines for such conduct.

What is the impact of the Rule 5 draft? 

Usually, the Rule 5 Draft does not have much of an impact. The players taken typically are role players a club looks to fill their team, be it a fourth outfielder, utility player, backup catcher, a power bullpen arm, or a left-handed specialist. In rare occasions there have been some nice finds in the draft who have made an impact at the major league level like Hall of Famer’s Roberto Clemente and Christy Matthewson as well as All-Stars George Bell, Bobby Bonilla, Jody Davis, Darrell Evans, Kelly Gruber, Scott Podsednick, Johan Santana, Manny Trillo, Fernando Vina, John Wetteland and Mitch Willams. In the last few seasons Dan Uggla, Joakim Soria, and Josh Hamilton were taken and then made an impact for their new team or for a team that then dealt for them.

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