Roster Rules - The Rule 4 Amateur Draft

The Rule 4 amateur draft is held each year in June. It is 50 rounds long, and also includes the compensatory picks related to free agency. The draft order is set based on the previous season's win-loss record, with ties being broken by the team's win-loss record for the season prior to that.

Eligible Players:

Any players who have not signed a contract who fit the following criteria:

• Resident of the U.S., Canada, or any U.S. territory
• They must have graduated from high school, but not attended college
• They must have attended a 4 year college and be either 21, or in their junior or senior year.
• They must have attended a community or junior college.
  

Once a player is drafted, they have a certain window to sign a contract with a team. For most players, that window ends on August 15th. College seniors who have graduated (or run out of eligibility), have a longer window, due to their not being able to return to school any longer. If a team fails to sign their pick, they may potentially receive a compensation pick in the following year's draft, depending on what round the player was drafted in.

If a player does not sign by the end of their window, their age will determine when they will be eligible to be drafted again. For players drafted out of high school, they will not be eligible until they meet the requirements for college players. For college players, they will be eligible in the following year's draft. Notable examples in previous years include Aaron Crow, and Tanner Scheppers.

Each year, the office of the Commissioner gives out guidelines for what the signing bonus of each pick in the draft should be. The logic is that the best player available should be the top selection, and receive the highest signing bonus. This is also known as the slotting system. However, many teams do not adhere to it, as it is not a requirement to do so.

Analysis:

Since players drafted generally take between 2 to 4 years to make an impact at the major league level, organizations try to minimize their risk at the draft. This can include drafting players based on signability rather than talent, drafting lower ceiling players with a higher potential to reach their ceiling, and avoiding talented players with makeup concerns. This can lead to some unusual choices from time to time.

The slotting system does not help teams to land the top players available all the time, since it is only a suggestion and not a requirement. A great example was Rick Porcello. When Porcello was eligible to be drafted, he was widely viewed as a top-5 draft pick. However, knowledge of his contract demands became public, and many teams shied away from him due to concerns about signability. Since he was a high school student, if he didn't sign, he could simply go to college, and wait 2 years to be drafted again. As a result, he fell to the end of the first round, when he was drafted by the Detroit Tigers, and received a contract well over the slot suggested by the commissioner's office. The Tigers were willing to pay him what it took to get him signed. The reason that this has become a bigger problem is that it works, as evidenced by the season that Porcello had in 2009. If he had not signed with the Tigers, he would have been eligible to be drafted this coming season in 2010. The Tigers' willingness to pay Porcello what he believed he was worth impacted this season, as well as future ones as well.

Also, the fact that international players are not subject to the draft has become a point of contention. All international players who have not signed contracts are considered to be free agents, and a player can be signed after June 2nd of the year that they turned 16. As a result, teams that can offer better development opportunities and better money will generally get these players, leaving the other teams out of the process.

The Rule 4 draft is going to be a hot topic of discussion when the next collective bargaining agreement negotiations begin, and could very well see some large-scale changes with wide-ranging impacts on the market for players.

Sources:
Wikipedia
Sons of Sam Horn

Roster Rules - Arbitration

Arbitration is something that was negotiated into the collective bargaining agreement in order to help players who were not eligible for free agency to be paid similarly to players who were eligible.

How it works:

Essentially, both the player and the team submit a single figure, and an independent arbitrator looks at both cases, and chooses one of the numbers. The arbitrator is not allowed to choose any number other than one of the two that were submitted.

Each case is based on similar players. Both the team and the player will build their cases around what they view as "comparable players". Generally this will include service time, a player's accomplishments, and other improvements/deficiencies that a player has.

Who is eligible:

Any player with at least 3 years of service time can qualify for arbitration. In addition, the top 17% of all 2nd year players (in terms of service time) will also qualify as "Super-2's".

Any free agent can be offered arbitration, but unlike players that are not free agents, can either accept or decline arbitration. If they accept, they are subject to the decision made, and are no longer free agents.


Another thing to remember with arbitration is that it is related to free agent compensation.

[Edit]

MLB Trade Rumors has put together another great post about this topic as well.

Roster Rules - Free Agency

Free Agency actually started this morning at 12 AM EST, so we'll go over that topic next.

After a player has completed 6 full seasons in the major leagues, they can file for free agency. Free agency allows a player to negotiate with any team they chose. A player can also become a free agent if they are released by their previous team. Since major league contracts are guaranteed, if a player is released, any team that signs him during the remainder of that contract will only be required to pay the player the minimum salary, and his old team will be on the hook for the rest.

Free Agents may be subject to compensation as well, under the following system:

All players at the end of each season are ranked by the Elias Sports Bureau. They are broken into groups by league, and by similar positional group:

Catchers
1B-OF-DH
2B-3B-SS
Starting Pitchers
Relief Pitchers

MLB Trade Rumors has a breakdown of exactly what they look at for each player. Keith Law of ESPN.com also went into this in quite a bit of detail.

What the end result of this process is that each player is given a ranking:
Type A: Top 30% of their position group
Type B: Top 50%, but outside the top 30% of their position group
All Others: Bottom 50%

Type A free agents, if signed by a different team, earn for their previous team compensation in the form of:

• The first round draft pick of the team that signed the player (if the pick is #16 or higher), OR
  
• The second round draft pick of the team that signed the player (if their first round pick is from picks #1 through #15), AND
• A "sandwich" pick in between the 1st and 2nd rounds.
• These are all in the June Rule 4 draft. (To be discussed in a later post)

Type B free agents, if signed by a different team, earn for their previous team the following:

• A "sandwich" pick in between the 1st and 2nd rounds.

All other free agents which do not qualify as Type A or Type B will not earn their previous team any compensation. Also, any team which re-signs a player that had been on their team prior to filing for free agency does not earn any compensation for that team (since there is no loss to the team).

The key with any compensation is this: The player's previous team must offer the player arbitration by the deadline (usually in the first week of December), or the player must sign prior to December 1st. If neither of these conditions are met, then there is no compensation.

MLB Trade Rumors also has some examples about this as well.

Links for 11/9/09

Some links for today...

• Mike Silva at New York Baseball Digest breaks down his top 50 prospects in the Yankees system.
• Ken Davidoff at Newsday.com has a new article about his top 10 General Manager rankings. 
• Ryan Campbell at Love My Team has a good explanation of how free agency works. 
• Joe Posnanski has a great (and self-admittedly long) post about some of the best eligible hitters not yet in the Hall of Fame. Joe has a Hall of Fame vote, so I think it gives a little perspective into his next vote.
  

Some Other Moves from Last Week

Now that the World Series is over, we will start seeing a flurry of transactions in the coming days. Last week was no exception. I've already discussed the J.J. Hardy-Carlos Gomez trade, but wanted to make mention of some of the other moves completed last week.

- Philadelphia exercised Cliff Lee's 2010 option. No surprise here. Cliff pitched amazingly down the stretch for the Phillies. Now they need to start working on a contract extension and keep him there even longer.
- Manny Ramirez will return to the Dodgers on his exercised option. Also not a huge surprise to me here. Manny likes it in Los Angeles, and probably knew that he would never get $20 million on the open market this season.
- Brandon Webb had his 2010 option exercised as well. Based on how much the buyout was ($2 M), it wasn't a huge surprise that it was picked up. Well worth the risk in my opinion.
- Jermaine Dye had his option for 2010 bought out, and became a free agent. He'll catch on somewhere, as he is still a productive outfielder. Just not at the price of his 2010 option.