What is the Rule 5 Draft?
The Rule 5 draft takes place every December at the annual Winter Meeting of the General Managers of Major League Baseball.
It is a way to prevent teams from hoarding young talent. It says that players must be added to the team's 40 man roster after a fixed amount of time after their original signing, or they are exposed and another team can draft them in the Rule 5 Draft. The fixed amount varies based on their age at signing:
-If the player is signed before their 19th birthday the team has to protect him, or add him to their 40 man roster by the fifth Rule 5 Draft after he originally signed.
-If the player is signed after their 19th birthday the team has to protect him, or add him to their 40 man roster by the fourth Rule 5 Draft after he originally signed.
-If the player is not added to the 40 man roster, they are essentially exposed and added into the Rule 5 draft pool. Remember, roster spots are limited.
-Teams with empty spots on their 40 man roster can select players from the draft pool. The order of the draft is determined by 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. The draft continues until every team has their 40 man roster filled (or does not wish to further participate in the draft).
-Each player, at the major league level, costs a team $50,000. There is one major stipulation. The drafted players must be added to the team's 25 man roster - and must remain on the 25 man roster for the entire season. For any reason, if the team does not wish to keep a player for the season, they can waive him - and he can be picked up by another team. If he clears waivers (is not selected by any other team after being waived) - he is to be offered back to his original team for half of the amount spent ($25,000).
-After a full season on the 25 man roster, the player's status reverts to normal and the Rule 5 options, designations, etc. rules no longer apply.
-Some recent notable examples of Rule 5 draftees are: Johan Santana, Josh Hamilton, Dan Uggla, Joakim Soria, Derrick Turnbow, and, even though it wasn't too recent, just because of his name I have to include Bip Roberts.