The Rule 5 Draft: How Does That Work?

MLB’s Rule 5 Draft is, in essence, a way to keep teams from stashing minor leaguers in their system forever without any hope of them advancing to the big leagues. It’s an interesting wrinkle in the player development system, and it makes for some interesting intrigue in the long winter of the baseball offseason.

The basics of the Rule 5 Draft are pretty straightforward: every year at the Winter Meetings, there’s a draft—not of college and high school players—of eligible players that currently play in the minor leagues in other organizations. The order of the draft, as you might expect, is set by the teams’ win-loss records in the previous season, the worst team going first, and so on. Teams who do not have any space on their 40-man roster forfeit their turn, and the thing keeps going until all the teams lean back, belch, and say “UGH okay that’s enough prospects for me.”

But why would a team ever stop stealing players from other teams? The answer to this question is what makes the Rule 5 Draft really interesting.

As soon as a player is drafted, he is added to the drafting team’s 40-man roster, and the drafting team pays $100,000 to the player’s former team. Additionally, the player must stay on the drafting team’s 25-man roster for the entirety of the next season, with the exception of an injured player (but we’ll come back to that in a moment). That means the drafted player can’t be optioned or designated to the minor leagues for the whole season.

Delino DeShields is an example of how a Rule Five player can work out well for a team: Texas drafted him from Houston in 2014 and he ended up playing a significant role on their 2015 playoff run (though perhaps you would argue that another converted infielder-to-center-fielder—Odubel Herrera, the player the Rangers lost in that same draft—might have helped them even more).

There are a few exceptions to the rules about staying on the active roster for the entire season.

First, if a Rule Five player just isn’t working out, he can be offered back to his original team, but the drafting team only gets $50,000 back (this is a small measure to prevent some team being a jerk and Rule 5 drafting a dozen guys from their rivals, then sending them back after a Spring Training consisting of nothing but Cheetos, sleep deprivation, and mandatory Pizza Breakfasts).

Mike Hauschild is the most recent Rangers example of a return: Texas took him (also from Houston) in 2016, then promptly pulled the wrinkled receipt out of their shirt pocket and returned him to Houston for half-price after he racked up an 11.25 ERA in his first four games with the Rangers.

A Rule Five player can also be put on waivers. A recent example of this was Logan Verrett: The Orioles drafted him from the Mets in 2015, then Texas claimed him off waivers. Verrett was a Ranger until Texas decided they couldn’t justify keeping him on the roster. When they returned him, he didn’t go back to the Orioles, he went back to his original team, the Mets (though he did re-join Baltimore as a free agent after the 2016 season).

And then, of course, there’s the issue of injuries. The rules state that a player must be active on the big-league roster for 90 days of the following season. That’s to prevent a team drafting a player, stashing him on the 60-day DL, and then subjecting him to an endless barrage of rehab assignments and minor injury “tweaks” until the following season when they can just put him in the minor leagues like normal. But this isn’t a hard rule to circumnavigate: if a player does not accrue 90 days of active service time, the team simply has to keep him on the active roster for the remainder of the balance once the following season starts. For example, if an injured Rule 5 player only gets 80 active days in the first season, he would still be under the Rule 5 rules for only the first ten days of the following season.

Sound complicated? We’re not quite done. Because you can’t just go poach someone’s first-round draft pick from last year; there are rules about how a player becomes eligible for the Rule 5 Draft. Two of them, to be precise. The first, we’ve covered: if you’re on the 40-man, you’re not eligible. The second is a two-part rule:

If you were 18 or younger on the June 5th preceding your signing, and this is the fifth Rule 5 draft since that signing, you’re eligible.

If you were 19 or older on the June 5th preceding your signing, and this is the fourth Rule 5 draft since that signing, you’re eligible.

There’s also a minor-league portion of the Rule 5 Draft, but we’ll have to get into those rules at another time. For now, let’s thank Houston for Delino DeShields, glare at the Phillies for Odubel Herrera, and see if Texas takes a flyer on anyone come December 14th.