2014 MLB draft rules and regulations

Major League Baseball

A primer of the basic elements of the MLB draft.

It would be understandable if you thought that the MLB draft was like any other. How hard can it be to understand the process of a team deciding on a player, relaying that decision to the commissioner, culminating in the commissioner announcing that name, followed by a fan base immediately celebrating (Cardinals fans) or cursing (Royals fans) their team/GM/front office?

Harder than you might think, actually -- the 2014 draft is the first in three years not to add a new wrinkle -- and given that the draft has been in place since 1965, there are some arcane aspects to it that have only been made more confusing by recent alterations. Consider this a non-comprehensive guide to the MLB draft.

The Basics

As with other leagues, each MLB team begins with a first-round pick, 30 in all. The order is determined by reverse order of record, so last year's Astros, with their 111 losses, get the first pick in the 2014 draft. It may seem odd to say "begins with a first-round pick" but then, this is where things get tricky.

Teams can both gain and lose first-round picks as a result of their offseason actions. To add a pick, a team must make an impending free agent the qualifying offer (determined annually by averaging the top 125 player salaries from the previous season), and the free agent in question must decline the offer. If this happens, and the free agent then signs with another team, the team he departed from receives a compensation pick for their loss. An example would be the Royals receiving a compensation when Atlanta signed Ervin Santana this offseason.

In this year's draft the Royals, Reds, Rangers, Indians, Braves, Red Sox and Cardinals all have a compensation pick.

Teams can also add picks by not signing their first-round selection from the prior draft. There is only one instance of this in the 2014 draft, as Toronto failed to sign Phil Bickford with the No. 10 overall selection and have since been awarded with the 11th pick in this year's draft. This rule actually applies to the first two rounds of the MLB draft, with a supplemental pick awarded between the third and fourth rounds for any team that does not sign their third round pick. These compensatory picks for unsigned players are not protected in the following season, so if Toronto fails to sign the 11th overall pick in the 2014 draft, they will not receive a pick in next year's draft.

All second-round picks were signed in 2013, with the Marlins as the only team to receive a supplemental pick for not signing their third-round selection.

Losing picks is less of a complicated procedure. Remember those qualifying offers? If a team signs a player who declined one, their first round pick goes away, with the only caveat that the top 10 overall picks are protected. If a team drafting in the first 10 picks signs a player who declined the qualifying offer, their next highest pick is given up, whether it is compensation for an unsigned pick from the previous year, compensation for a lost free agent of their own, or -- and we'll get into this later -- a competitive balance pick.

The Budget

This is relatively old hat by now, having been in place for a couple years, but each team has an allotted draft bonus pool they can't exceed without penalty. The budget for each team is comprised of the combination of dollar value assignments to each of their picks throughout the first 10 rounds of the draft. The first pick in the draft is worth the most, and the values descend in order from there.

The pick values aren't a hard cap, though, and a team can exceed the slot assignment for one player if they in turn pay under the slot amount for another pick. An example would be the Cubs selecting Rob Zastryzny in the second round of the 2013 draft, and signing him for $1.1 million despite the draft slot being worth $1.3972 million. They followed that up with the selection of Jacob Hannemann, signing him for $1 million, though the slot value was only $736,200. They were able to underpay Zastryzny and apply most of those savings towards their overpayment of Hannemann.

While the Cubs chose to underpay Zastryzny a relatively small amount, many teams opt for the more brazen strategy of drafting college seniors -- players with little negotiating leverage -- and paying them meager amounts relative to the slot assignment.*

*To that end -- any high school player selected may opt not to sign, but will be unable to enter the draft again until after their junior season if they attend a four-year college. Those who attend junior colleges are eligible to re-enter the draft after only one year. Players can be deemed sophomore-eligible if they are, or turn, 21 years old within 40 days of the draft date.

Teams are allowed to go over their total bonus pool allotment, but even going over by small amounts incur harsh penalties. If a team exceeds their budget by between 0-5 percent, they are taxed 75 percent on the amount they went over. If they exceed the budget by 5-10 percent, they suffer the same penalty as 0-5 percent plus they lose their first-round selection in the following draft. Going over by 10-15 percent incurs a 100 percent tax on the overage, plus the loss of first- and second-round picks in the following draft. Anything over 15 percent results in the team paying a 100 percent tax on the overage and the loss of their first-round selection for the next two drafts.

Beyond the first 10 rounds, any signing bonus that surpasses $100,000 goes towards the cap in place for the first 10 rounds. As a hypothetical, if a team signs an 11th round pick for $200,000, $100,000 of that bonus goes towards the allotted budget for the first 10 rounds.

A team cannot simply select a player and choose not to sign them, and then use the money slotted for that pick towards another player. For any unsigned player, the team loses the money associated with that slot from their overall budget. This gives any player who can re-enter the draft in future years additional leverage, as teams count on the ability to use their entire budget.

Competitive-Balance Picks

The latest twist to the draft was the introduction of the competitive-balance picks. There are extra rounds of draft picks inserted between the first and second, and then again between the second and third rounds. These picks were introduced in last year's draft. The long and short of it is, teams recognized to be in the smallest markets participate in an off-season lottery that determines how many extra draft picks they're awarded, and where those draft picks are placed. This is MLB's latest endeavor to create more parity or, as you might have it, competitive balance.

Picks 35-41 comprise Competitive Balance Round A, held between the first and second rounds, while picks 69-74 make up Competitive Balance Round B, held between the second and third rounds.

Competitive-balance picks can be traded. The recent trade of Bryan Morris from Pittsburgh to Miami involved the Marlins trading pick 39 (in Round A) to the Pirates. The Marlins still retain one pick in Round A, because they were unable to sign their pick from last year's Round A, Matt Krook.

The first round of the MLB Draft will air on MLB Network starting at 7 p.m. ET on Thursday. Be prepared for a quicker pace than other drafts, as only four and a half minutes are allotted between first-round picks, with only one minute allowed between picks during the Competitive Balance Round A, the second round, and Competitive Balance Round B. The second and third days of the draft are held over conference call, with rounds three through 10 receiving one minute between picks, and no delays between picks thereafter.

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