How does MLB recruiting work?
Making sense of the Rule 4 Draft and a few other things
Following baseball more closely in the past couple of years, I found the recruiting system difficult to decipher based on tweets and hearsay. With the end of the Winter Meetings and as we wait around for the 2023 season, I decided to look into the details and share my findings. Here goes.
The 40-man roster
Let’s start with the MLB roster size and composition. Each MLB club is made up of 40 professional baseball players, commonly referred to as the 40-man roster. Each 40-man roster is made up of an active roster (aka the 26-man roster) and an expanded roster. The active roster includes the position players (catcher, first baseman, second baseman, third baseman, shortstop, left fielder, center fielder, right fielder), the pitcher, and the reserve players.
In order for a player to be added to the 26-man roster, he must be on the 40-man roster. All other players affiliated with an MLB club and not on the 40-man roster are signed to minor league contracts.
MLB Rule 4 Draft
The First-Year Player Draft is formally called the Rule 4 Draft, and commonly referred to as the MLB Draft. It is used for selecting amateur baseball players by an MLB franchise. An amateur player is one who has never played on any major league or minor league teams and is likely in high school or college. The Rule 4 Draft is usually held in July.
There are 30 MLB clubs in total. They select new players in the First-Year Player Draft in 20 rounds. To determine the order in which each club can pick players in each round, teams are sorted in reverse order of winning percentage from the regular season. Ties are broken by looking to previous regular season standings as needed.
Beginning with the 2023 draft, the draft order for the first six picks of the first round—and only the first round—is determined by a weighted lottery. Only the 18 clubs that didn’t qualify for the post-season in 2022 were eligible to participate in the lottery that took place at the Winter Meetings in early December. Details about the other 24 picks for the remaining lottery participants and the playoff teams can be found here.
Prior to the draft, each club is assigned a signing bonus pool (SBP) that is equal to the sum of the pre-assigned slot value of the club’s draft slots in the first 10 rounds, plus any supplemental rounds. The SBP determines the maximum aggregate amount a club can pay as signing bonuses to players selected in the Rule 4 Draft. If a club fails to sign a player selected in one of the first 10 rounds of the draft, the slot value for that pick is deducted from the club’s SBP. Clubs are penalized for spending beyond their SBP.
As briefly mentioned, beyond the 20 rounds there are a number of supplemental rounds. Referred to as compensatory picks, they are awarded to clubs with free agent losses or ones that failed to sign a top-3 round pick. Supplemental rounds are also awarded to low revenue or small market clubs, and are called competitive balance rounds A and B.
The draft spans 3 days as follows.
Day 1
— Round 1
— Compensation picks
— Competitive balance Round A
— Round 2
— Competitive balance Round B
— Compensation picks
Day 2
— Rounds 3–10
Day 3
— Rounds 11–20
Don’t miss this article on the best MLB Draft picks in each club’s history.
MLB Rule 5 Draft
The Rule 5 Draft is held on the last day of the Winter Meetings in December and involves players already in minor-league baseball. A club is eligible to select players during the Rule 5 Draft only if they have an open spot on their 40-man roster. Just like the Rule 4 Draft, the franchise with the worst winning percentage gets to pick first and so on.
Players on the 40-man roster aren’t eligible for the Rule 5 Draft, i.e., they are protected. Players signed at age 18 or younger need to be added to the club’s 40-man roster within five seasons or they become eligible for the Rule 5 Draft. Players who signed at age 19 or older need to be protected within four seasons.
The Rule 5 Draft provides young players the opportunity to play in the majors for other clubs when the timing is not right for their current organization. Clubs that pick a player must pay $100K to the club from which the player was drafted. Once drafted, players must be assigned directly to the drafting club’s active roster. See more details here.
Free agency
Players become free agents after six years of service in the major leagues or when they’re released from their organization (more on that later). A free agent can sign with any club and under any terms agreed upon by the two parties. A player with three or fewer years of service might become a restricted free agent.
Here is a list of some of the best free agents of 2023.
Trades
The trade market opens the day after the conclusion of the World Series and lasts until the trade deadline.
Trades can still be made after the deadline but only on the condition that all the players in the trade clear waivers (explained later) or are not on the 40-man roster.
Minor League options
When a player is on the 40-man roster but not on the 26-man roster, he is on optional assignment and has three option years. This means that he can be moved back and forth between the majors and the minors (up to five times) for three different seasons. After that, the player is out of options and may not be assigned to the minors without clearing waivers (explained later).
Once optioned to the minors, a position player must remain there for at least 10 days before being eligible to be called to the majors. For pitchers, the minimum is 15 days.
Waivers
Certain MLB assignments require waivers or permission from all other clubs. Not all assignments require waivers. For example, as previously mentioned, clubs can trade players without permission any time prior to the trade deadline.
There are four types of waivers.
Trade assignment waiver
The trade assignment waiver is used to gauge trade interest. It is also used to trade players after the trading deadline.
Outright assignment waiver
A club attempting to remove an out-of-options player from the 40-man roster and send him to the minors must first place that player on outright waivers. This allows the other 29 clubs the opportunity to claim the player. Once claimed, the player is placed on the new club’s 40-man roster.
Note that merely placing a player on an outright waiver does not remove him from the 40-man roster. A player must first clear waivers and outrighted before he is removed from all rosters. To immediately clear a roster spot, the player has to be designated for assignment (explained later).
An outright assignment to the minor leagues does not give the club the right of recall. This is in contrast to the optional assignment, explained previously, which carries with it the right of the club to recall that player to the 26-man active roster from the minor leagues.
Unconditional release waiver
In order to release a player on its 40-man roster, a club needs to place him on an unconditional release waiver. At this point, he may be claimed for $1. Should the player accept the claim, the new club pays him under the same contract he signed with his former club. If he rejects the claim, he forfeits what remains on his contract and becomes a free agent. Further, if the waiver clears, i.e., the player is not claimed by any other club, he becomes a free agent.
Optional waiver
Optional waivers are required when optioning a player who is three years removed from his first appearance in the majors. It allows a club to send a player to the minors while keeping him on the 40-man roster.
Designated for assignment
A player who is designated for assignment (DFA) is immediately removed from the team’s 40-man roster to clear up a roster spot for another transaction. At this point, the club has seven days to decide to trade or release the player, or to place him on outright waivers.
Injured list
A player who is unable to play due to a medical condition can be placed on the 7-, 10-, or the 60-day injured list (IL). Players on the 7- and 10-day IL are removed from the 26-man active roster, making them ineligible to play for 7 and 10 consecutive days, respectively. They remain part of the 40-man roster, however. A player placed on the 60-day IL is removed from the 40-man roster and is ineligible to play for at least 60 consecutive days.
I hope you found this useful. Please let me know if you have any feedback.
