Rule 5 draft

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The Rule 5 draft is a draft specific to Major League Baseball that occurs each year in December, at the annual Winter Meeting of general managers. Its purpose is to prevent any one team from stockpiling too many talented young players in its minor league affiliates. The Rule 5 designation differentiates it from the Rule 4 or First-year Player Draft, in which teams select high school and college players each year in June. As in the Rule 4 draft, the selection order of the teams is based on each team's win-loss record from the prior regular season, each round starting with the team with the worst record and proceeding in order to the team with the best record. Any player selected under Rule 5 is immediately added to his new team's 40-man roster; thus, teams who do not have an available roster spot may not participate in the Rule 5 draft.

Players who are not currently on their team's 40-man roster are eligible to be selected in the Rule 5 draft, but only after a standard exemption period has elapsed. Players signed at age 19 or older are exempt from the Rule 5 draft for four years after being drafted (in the Rule 4 draft) or signed by their current organization; players drafted or signed at age 18 or younger are exempt for five years. For example, players drafted in 2004 (or later) at age 19 (or older) will be exempt from the 2007 Rule 5 draft, as will players drafted in 2003 (or later) at age 18 (or younger).

The exemption periods were extended by one year in October, 2006, as part of a new Collective Bargaining Agreement. The change took effect immediately, exempting many players from the 2006 Rule 5 draft even though they had been signed in some cases more than four years before the new agreement came into effect. Prior to the rule change, players were exempt for three or four years after the year they were signed (regardless of the year they were drafted), rather than four or five years.

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 after the draft--he may not be optioned or designated to the minors. The selecting team may, at any time, waive the Rule 5 draftee, such as when it no longer wishes to keep him on the major league roster. If a Rule 5 draftee clears waivers, he must be offered back to the original team, effectively canceling the Rule 5 draft choice. Once a Rule 5 draftee spends an entire season on his new team's 25 man roster, his status reverts to normal and he may be optioned or designated for assignment. To prevent the abuse of the Rule 5 draft, the rule also states that the draftee must be active for at least 90 days. This keeps teams from drafting players, then "hiding" them on the disabled list for the majority of the season. For example, if a Rule 5 draftee was only active for 67 days in his first season with his new club, he must be active for an additional 23 games in his second season to satisfy the Rule 5 requirements.

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.

The intent of the Rule 5 draft is to prevent teams from holding major league-potential players in the minor leagues when other teams would be willing to have them play in the majors; however, this draft has also become an opportunity for a team to take from another team a top prospect who might not be ready for the major leagues. For example Johan Santana was chosen in the 1999 Rule 5 draft by the Florida Marlins when the Houston Astros declined to put him on their 40-man roster. After the Marlins traded Santana to the Minnesota Twins, the Twins kept him on their roster for the 2000 season, in which he toiled to a 6.49 earned run average at only 21 years of age. Two years later, he legitimized himself as a Major League pitcher with an ERA under three, and in 2004 he was recognized as the best pitcher in the league, winning the Cy Young Award and again in 2006. Had he not been chosen in the Rule 5 draft, he likely would not have made his major league debut until the 2001 or the 2002 season with the Astros.

To prevent excessive turnover in the minor league levels, each draftee costs $50,000. If the draftee does not stay on the drafting team's 25-man (major league) roster all season, the player must be offered back to his original team at half-price. Organizations may also draft players from AA or lower to play on their AAA affiliates for $12,000, and may draft players from A teams or lower to play for their AA affiliates for $4,000.

The Rule 5 Draft is named for its place in the Professional Baseball Agreement [1]. It follows the regular major league baseball draft, which is defined in the rulebook in Rule 4.