Rule 5 Draft 2012: How Does It Work?

Eligibility: Players can’t be selected in the Rule 5 Draft if they are not on their team’s Major League 40-man roster, according to this guide to the draft on MLB.com. Eligible players include those who were signed after their 19th birthday and have at least four years of professional baseball experience and those who were signed on or before their 18th birthday and have five years of experience.

Draft order: Much like other drafts in other sports, the Rule 5 Draft order is determined by reverse order of the standings in the regular season. For example, the team with the worst MLB record gets the first pick. However, teams that have a full 40-man roster cannot select a player in the Rule 5 Draft.

Selection and roster rules: A team selecting a player in the Rule 5 Draft pays $50,000 to the team that controlled the player before the selection. The selecting team has to keep the player on its 25-man roster for the entire 2013 season. If the team does not keep the player on the 25-man roster during that period, the player goes back to his previous team and is given back half of the $50,000 compensation.

However, the original team can refuse to take back the player. In that case, the player can be waived.

Trades: A player selected in the Rule 5 Draft can be traded to a third team. That third team must abide by the roster rules explained above.

Phases: While the most attention is paid to the Major League phase of the Rule 5 draft, there are also minor league phases of the process. Players taken in the minor league phases have different compensation. The selecting team owes $12,000 from the team it took the player from in the case of Triple-A players, while Double-A players cost $4,000 apiece.

Successful Rule 5 draftees: Baseball’s First-Year Player Draft is the most recognizable way for teams to build their farm system, but don’t count out the chances of success for players taken in the Rule 5 Draft.

Players taken in the Rule 5 Draft who turned out to have successful careers include Hall of Famer Roberto Clemente, Cy Young Award winner Johan Santana, Dan Uggla of the Atlanta Braves and free agent slugger Josh Hamilton.