The annual MLB Draft has produced a wide swath of past and modern-day stars. The likes of Aaron Judge, Bryce Harper, and Mike Trout, among others, were drafted and went from prospect to star. But, how exactly the MLB Draft works can be confusing, as there are many complexities, including the format, how the draft order is determined, and compensation. We’re here to answer questions, as here’s our in-depth explainer on how it works.
Contents
- Format and rounds
- Who is eligible?
- When is the MLB Draft held?
- When do players have to sign?
- What happens if a player doesn’t sign?
- Signing bonuses and draft pool slots
- How is the MLB Draft order determined?
- Competitive Balance picks
- Free agent compensation
- Draft pick forfeitures
- Can MLB Draft picks be traded?
- PPI
- Who was the first MLB Draft pick of all-time?
Format and rounds
The MLB Draft, or the First-Year Player Draft or Rule 4 Draft, has been typically a three-day event featuring the first two rounds on the first day, Rounds 3-10 on the second, and rounds 11-20 on the third day. Thus, only 20 rounds are in the annual draft.
However, in 2025, MLB will shift to a two-day event. The first three rounds will run on Day 1, while Rounds 4-20 will take place on Day 2.
The number of rounds in the MLB Draft has varied over the years. Each MLB Draft lasted 40 rounds from 2012 through 2019 after it was cut down from 50 rounds. The 2020 MLB Draft only lasted five rounds thanks to an agreement between MLB and the MLBPA, before Major League Baseball permanently reduced the number from 40 to 20.
Who is eligible?
High school seniors who’ve graduated, community and junior college athletes, juniors and seniors in four-year universities, and select draft-eligible sophomores who meet the birth date criteria are eligible for the annual MLB Draft.
We should note that select high school players can “reclassify” their draft class and enter earlier. This means the reclassifying player will graduate from high school earlier than expected or will enter college earlier.
An example of this is in 2024, Cam Caminiti reclassified to the 2024 MLB Draft. Caminiti was previously listed as a potential 2025 MLB Draft pick.
When is the MLB Draft held?
The MLB Draft has been held in mid-July from 2021-25. The 2025 MLB Draft will be held from July 13-14, 2025. It takes place in conjunction with the MLB All-Star Weekend and before the annual All-Star Game.
Major League Baseball holds the draft in the city where the All-Star Game is held. From 2009-2020, MLB held it in Secaucus, New Jersey, where MLB Network’s production studio is located.
Before 2021, the MLB Draft was held in June. This, strategically, made sense. Many players selected in the draft would go to short-season leagues, which began in mid-June. Short-season leagues, aside from the Complex and Dominican Summer Leagues, were cut from the MiLB food chain in 2020.
When do players have to sign?
Teams only have two weeks to sign players. In 2023, the MLB Draft took place from July 9-11 and the signing deadline was July 25.
One quirk to this is the “draft-and-follow” rule, which returned in the 2022 CBA. This enables players and teams to bypass the signing deadline but there are rules. Namely, the player must be from a junior college and selected in Rounds 11-20. Those players can be signed up to the start of the following year’s MLB Draft.
What happens if a player doesn’t sign?
Should a team not sign a first, second, or third-round pick, the team would, in turn, receive a draft pick the following year as compensation. Notable players in recent years who didn’t sign after being selected in the first round include Nick Lodolo, Matt McLain, and Kumar Rocker.
The pick received would be equal to the pick number + 1. For example, a team that doesn’t sign the 10th overall pick would receive the 11th overall pick the next year.
Some players who don’t sign, though, can also affect how much money an MLB team can spend in the draft.
Signing bonuses and draft pool slots
Every MLB Draft, teams receive a certain amount of money that can be spent for each draft. This total is determined by the slot money for each team’s picks in the top 10 rounds. Higher draft picks reward higher draft pool money.
Should a team not sign a player drafted within the top 10 rounds, the slot money (i.e., recommended slot bonus instituted for that pick by MLB) gets deducted from the pool.
To save money towards players who will command larger signing bonuses, many MLB teams will take some graduating seniors or fifth-year players in Rounds 5-10. These players don’t have much leverage and will take smaller bonuses.
After the tenth round, any team can sign a player for as much as $150,000 without that bonus counting toward the total pool. Anything over that amount gets subtracted. For example, a player in the 12th round who signs for $200,000 will take $50,000 from the team’s overall pool.
Now, let’s take a look at how the order for the MLB Draft works.
How is the MLB Draft order determined?
The MLB Draft order is largely determined by the reverse order of the previous season’s standings and postseason. Meaning, that the defending World Series champion — in 2024, the Rangers — will pick last, followed by the loser of the World Series, and so on.
However, this is not the only component.
Major League Baseball instituted a draft lottery in 2022 that determines the top six picks in the MLB Draft. Non-playoff teams are entered in the lottery. This is done to deter tanking but there are some quirks.
For one, “payer clubs” are not eligible for the MLB Draft Lottery in consecutive seasons, or clubs that pay into the revenue-sharing system from local profits but do not receive net profits from this fund.
According to MLB rules and regulations, each team puts 48% of its local revenue into a revenue-sharing pool. That money is then evenly distributed among the 30 teams.
Per the 2022-2026 MLB-MLBPA Collective Bargaining Agreement, the Yankees, Mets, Dodgers, Angels, Cubs, White Sox, Blue Jays, Athletics, Giants, Nationals, Phillies, and Red Sox fit that definition.
However, the Athletics — set to leave Oakland after 2024 — received an exemption from that and are eligible for revenue-sharing.
Revenue-sharing teams are only eligible to net a top-six pick in two consecutive seasons.
This system means that teams that meet either of the above criteria are dropped out of the top nine and can draft no earlier than 10th. Hence, why the Nationals will pick 10th even though Washington technically won the 2024 MLB Draft Lottery.
Teams that exceed the Competitive Balance Tax (CBT) threshold for two consecutive seasons will have their first-round pick dropped by ten slots the following year unless they win a top-six pick.
Competitive Balance picks
Every year, Major League Baseball awards competitive balance picks after the first and second rounds, otherwise known as Competitive Balance A (CBA) or B (CBB). These picks are awarded to teams either in the 10 smallest markets in Major League Baseball or the 10 with the lowest revenue. Some overlap, resulting in the number being fewer than 20.
MLB awards these picks to teams. These teams can be traded but only the team trading those picks can move one time. Once the pick is traded, it can’t be moved again.
Free agent compensation
Here’s how free agent compensation for the MLB Draft works.
Teams that lose players qualified in the offseason are eligible to receive an MLB Draft pick as compensation. However, there are layers to this qualification.
Competitive balance payers receive a fourth-round draft pick, regardless of contract. Revenue-sharing receivers that lose a player will receive either a pick after CBA (should the player sign for $50M or more) or CBB (less than $50M).
Any team that doesn’t fit in either category receives a pick after the second round.
Now, let’s look at how pick forfeitures in the MLB Draft work.
Draft pick forfeitures
Teams can not only receive but also forfeit draft picks for signing players qualified by their previous team.
CBT payors lose their second and fifth-highest picks in the following draft, plus their third and sixth-highest should another sign with the same team. Revenue-sharing teams lose their third-highest pick and fourth for a second qualified player.
Lastly, teams that don’t fit in either category lose their second-highest pick and third for a second qualified player.
Additionally, MLB teams can lose picks as part of punishments. The Astros lost picks after MLB’s sign-stealing investigation in 2019-20.
Can MLB Draft picks be traded?
Only Competitive Balance Round A and B picks can be traded. No other picks can be dealt.
PPI
To prevent service time manipulation, MLB instituted the Prospect Promotion Incentive (PPI) beginning in 2023. Simply put, if teams that promote an eligible prospect (i.e., a rookie who hasn’t exceeded eligibility) for their Opening Day roster (or if he accrues a full year of service time) and that prospect receives significant consideration for an award, the team would be eligible to receive a draft pick in the first round.
In 2023, the Mariners received the 29th pick, used on Jonny Farmelo, after Seattle promoted Julio Rodriguez for Opening Day 2022. Rodriguez won the 2022 AL Rookie of the Year.
Similarly, Corbin Carroll and Gunnar Henderson netted draft picks for their teams after the two won the Rookie of the Year Awards in 2023.
Now, what exactly is “significant consideration”? If a former prospect (who must be on the same team he debuted with) wins the Rookie of the Year, or finishes in the top three of either the MVP or Cy Young vote in their pre-arbitration years (fewer than three years/Super Two eligibility), that player can net their team an additional pick.
To be eligible, a prospect must appear on a Top 100 preseason prospect list for at least two of the following outlets: ESPN, MLB Pipeline, and Baseball America.
Who was the first MLB Draft pick of all-time?
Former Dodgers outfielder Rick Monday was the first-ever MLB Draft pick, selected by the then-Kansas City Athletics in 1965.