SoSH Glossary: Rule 4 Draft

Baseball is filled with statistics, rules, and archaic terms that can often form what sounds like a foreign language. Sons of Sam Horn’s glossary provides a better understanding of these terms through straightforward definitions, clear explanations, and examples pulled straight from the baseball world. If there is anything you would like us to add to our glossary, please contact us.

Rule 4 Draft

The MLB Rule 4 Draft, otherwise known as the First-Year Player Draft, is the 40 round domestic amateur selection process held every June over three days. The clubs select in inverse order of their winning percentages. If a team, or teams, have the same winning percentage, then the winning percentages from the preceding year are compared, and the lower of the two selects first.

Who Is Eligible?

Any player that has not previously signed with a MLB or minor-league team, and is either a citizen of or attended a high school or college in a U.S. state or territory, or Canada, or is not a resident but attended high school or college in a U.S. state or territory, or Canada in the past year as well as one of the following:

  • Has graduated high school but not yet attended college or junior college;
  • Has attended a junior college regardless of how many years completed;
  • Has attended a four-year college and completed his junior or senior year, is 21 years old, was dismissed for academic reasons, there is no baseball program at the school, or withdrew from the college at least 120 days before the draft.

The Negotiation List

Once a player is selected, he is moved to the negotiation list. Players remain on this list until they sign, or 5:00 PM (EDT) on the Friday that falls on the week of July 12-18. Any unsigned players are removed from the negotiation list and may enter the next Rule 4 Draft that they are eligible to enter.

If a player is not signed by the team that selected him, and he re-enters the subsequent Rule 4 Draft, he may only be selected by that team again if he gives his consent before the draft.

Signing Bonus Pool

In order to prevent teams from using their fiscal advantage in the draft, MLB instituted a signing bonus pool (“SBP”) that put a soft cap on teams’ spending in the draft. Each team is given an amount by MLB that they must not exceed when doling out signing bonuses. The SBP is determined by calculating industry revenue and then assigning values to each draft slot. The higher the selection, the more money a team is allotted. The SBP is based on the top ten picks, compensatory picks, and competitive balance picks that each team has. If a team fails to sign a pick then it loses the allotment for that pick.

If teams spend more than $100,000 on bonuses for players selected after the 10th round then the money over 100,000 goes against the SBP. When teams exceed their SBP, they are assessed with taxes and can be docked draft picks. The penalty structure is as follows:

  • Teams that exceed the SBP by less than 5% are taxed 75% for each dollar over the SBP
  • Teams that go over by 5% but remain under 10% are taxed at 75% for each dollar over and lose their first-round pick in the following Rule 4 Draft.
  • Teams that go over by 10% but under 15% are taxed 100% for each dollar over the SBP and lose their first- and second-round picks in the following Rule 4 Draft.
  • Teams that go at least 15% over the SBP are taxed 100% for each dollar and are docked their first-round picks in the next two Rule 4 Drafts.

Compensatory Picks

In the event of a team failing to sign a player in one of the first three rounds, that team will be awarded a compensatory pick in the next year’s draft, if they offered a bonus of 40% of the slot value.

If a team fails to sign a player in the first or second round, they will receive a pick in that round in the following year’s Rule 4 Draft one pick later than the pick that they failed to sign. As an example, if a team fails to sign the 4th pick in the first round in 2016, but offered at least 40% of the slot allotment, then they will receive the 5th pick in the first round of the 2017 Rule 4 Draft. If the team fails to sign that pick, but offered at least 40% of the slot allotment for that selection, then they will receive the 6th pick in the first round in the following year’s Rule 4 Draft. However, if they fail to sign that pick, they are out of luck.

If a team fails to sign a player in the third round, then they will receive a pick that falls in between the third and fourth rounds in the subsequent Rule 4 Draft. A failure to sign that selection results in no compensation.

When a team loses a player to free agency that it had made a qualifying offer to, it also receives a compensatory pick in between the first and second rounds of the draft. Picks are ordered identically to the regular draft (inverse to the record, ties go to the the previous season’s record). These picks may be traded (as opposed to normal Rule 4 Draft picks), but only during the regular season, and only once.

If the team is unable to sign the player selected, then it will receive a selection that is one pick later in the following Rule 4 Draft, but will not receive a second pick if it fails to sign that player.

Competitive Balance Lottery

Each year in July, a lottery is held for the teams that are eligible for revenue sharing and those in the ten smallest markets. Twelve picks are distributed based on a weighted system. Six of the picks take place after the compensatory picks in between the first and second rounds. The other six picks are selected after the second round. These picks may also be traded, but only during the season and only once.

If the team is unable to sign the player selected, then it will receive a selection that is one pick later in the following Rule 4 Draft, but will not receive another if it fails to sign that player.

What Happens to Players Who Aren’t Drafted at All?

Undrafted players are referred to as non-drafted free agents, or NDFAs. A NDFA may sign with any team as soon as the draft is completed up until one week before the following Rule 4 Draft. NDFAs can only sign minor-league contracts.


Pete Hodges has written about the call up of a top prospect, an odd tradition, and Leo the Lip.

Follow Pete on Twitter @PeterWHodges.

SHARE
Previous articleSoSH Glossary: OPS+
Next articleRed Sox Minor League Gameday June 9, 2016
Pete is the Editor-in-Chief of Sons of Sam Horn. Currently residing in North Carolina, he enjoys reading and spending time outdoors when not editing or working with his tremendous team.

LEAVE A REPLY