The ABCs of the Rule 5 Draft

Many people have heard of it, few completely understand it. But as obscure as the Rule 5 Draft might be, the basic premise behind what has sometimes been called the "Minor League" Draft is something that can easily be explained, even by someone who thinks he doesn't get it.

"I didn't really understand how it worked, but I knew it was a big chance and that I wanted to make the best of it," said Orioles outfielder Jay Gibbons, taken in the 2000 Rule 5 Draft. "All I know, you had a chance to be in the big leagues. I knew about the 40-man roster and that if you weren't on it, you had a chance to get picked up."

Unintentionally, Gibbons -- who along with 2004 AL Cy Young Award winner Johan Santana are among the best Rule 5 success stories in recent memory -- hit the nail on the head. The Rule 5 Draft, which has taken place at the Winter Meetings for as long as anyone can remember (and will take place this year on Thursday in Dallas), not only gives Minor League players a shot at making a big league club if drafted but gives teams a chance to find young diamonds in the rough at a bargain price.

Sounds simple, doesn't it? Of course, reading the actual rule is more confusing than it's worth. So here's the abridged version:

A player who is 18 when he's signed can spend four seasons in an organization before he has to be protected. Anyone who is 19 or older must be protected after three years. Once past that time of service, a prospect must be put on the 40-man roster if his organization wants to keep him from being eligible for the Rule 5 Draft.

There are three phases of the draft. The Major League phase is the one in which Gibbons was taken. Any Minor Leaguer who fits the above qualifications is game, at any level. In the Minor League phases, only players left unprotected -- and there are protected lists at each level to consider for these rounds -- can be selected.

At the Major League level, it costs $50,000 to select a player and the team must create space on its 40-man roster to select a player at this level. The fee is $12,000 for the Double-A segment and $4,000 for the Class A draft.

Got it? OK, now here's the main wrinkle. A player taken in the Major League phase of the draft must stay on the 25-man roster all season or be offered back to the original club for half the original fee.

In the past, players have been "hidden" on rosters as mop-up men in the bullpen or pinch-runners/defensive replacements off the bench. Every once in a while, they find a little more playing time. But there's a certain risk-reward teams have to weigh before slotting a valuable Major League roster spot to someone who probably isn't going to help the team that first season.

Every team gets a list of players eligible for the draft from the Commissioner's Office shortly after 40-man rosters are set. Then they go to work to try to find players who might be worth taking that Rule 5 risk.

"It's just another avenue we can pursue players to add to our pool," said Jim Rantz, farm director for the Minnesota Twins, who have had success with Rule 5 picks like Santana and, a few years earlier, Shane Mack. "We send that list to every scout and every field person that works for us. That raises some eyebrows when a field person sees it -- if a player was in his league (that jumps out). It does happen."

The Kansas City Royals have been on both sides of the risk-reward. In 2002, they snagged Miguel Asencio in the Rule 5 Draft, and he ended up being a major contributor, making 21 starts in 2002 before going down with an injury just eight starts into the 2003 season. But they also left Corey Thurman unprotected, and he went on to become a valuable reliever for the Blue Jays in 2002.

"In our market size, it's definitely an avenue we look at not when the season ends, but even during the season," Royals general manager Allard Baird said. "It's definitely an avenue for us to acquire talent."

While the actual draft might not be as confusing as it seems, the process to decide which players are worth taking can be complex. The research really begins once those reserve lists come in. Baird and the Royals have used a three-tiered system to sort out the possibilities.

"We do it A, B and C," Baird said. "'A' is guys we feel we would take in Rule 5 that would play a legitimate, contributing role to the Major League team. 'B' would be an upside guy. 'C' is for the Minor League phase."

Asencio, Baird said, fit into the B category, which brings up the other issue/problem with Rule 5 drafting. Young players with upside usually benefit from regular seasoning and consistent experience in the Minors. But if a player's good enough to stick on a Major League roster, his development may be stunted. Asencio was an exception to the rule.

"Usually, development is more subjective with a Rule 5 pick," Baird said. "Generally, they don't get that kind of experience. You look at the upside of the guy, you factor in the age and what a guy can be in the future. Usually, when you're looking at a Rule 5 guy, you're looking long-term."

And that is easier said than done. The players available aren't exactly the cream of the crop; those blue chippers are invariably protected. Of course, one team's lost cause is another's diamond in the rough. The Detroit Tigers found three of them, all of whom stuck on the 25-man roster for the entire 2003 season. While carrying three Rule 5 guys in one season is unusual, it's those kinds of finds teams will be looking for at this year's draft.

"Usually, they're not on the 40-man for a reason," Baird said. "Usually, clubs know their own players the best. There are guys who stand out. When you see them on the list, you have interest. Then you really go to work."

If all the work pays off, the dividend can be a player like Gibbons or Santana. Gibbons hit 15 homers in 225 at-bats in his first season with the O's, then finished second on the team in home runs (28) and RBIs (69) in his first year as a full-timer. He took another huge step in 2003, playing 160 games while leading the O's in RBIs (100) and runs scored (80), all while raising his batting average 30 points. After a step back in 2004, he had another productive year in 2005.

Santana is the holy grail of Rule 5 picks. He's improved each year since joining the Twins for the 2000 season until last year's masterpiece, when he went 20-6 and led the American League in ERA and strikeouts to win the Cy Young. He followed that up with another Cy-caliber season in 2005.