Sources: MLB teams ask about nixing Rule 5 draft

Fallout from Major League Baseball’s lockout of the players could have far-reaching implications on the trade and free-agent markets, potentially slowing them because teams have clamped down on scouting of minor leaguers currently in spring training camps due to uncertainty over the Rule 5 draft, officials from nine teams told ESPN.

Multiple teams have inquired with the league about the possibility of canceling the Rule 5 draft for this season, sources said. In the draft, teams can select players who aren’t on 40-man rosters and pay $100,000 for their rights but must keep them on their 26-man major league roster for the entire season. No decision has been made on the major league portion of the Rule 5 draft this season, according to sources, but with minor league spring training underway and games set to begin as early as March 12, the opacity of the situation has left executives wondering how the league plans to handle the complicated case.

During their talks on a new collective-bargaining agreement, MLB and the MLB Players Association have yet to discuss the Rule 5 draft, sources told ESPN. Because it is collectively bargained, the union and league would need to agree on scratching it for one season. MLB and the MLBPA declined comment when reached by ESPN.

Fearful of losing players if the Rule 5 draft remains, 16 organizations have sent letters to all teams barring scouts from their complexes, according to sources. Only five teams are allowing scouts from other organizations to watch their minor league players, according to sources: the Cincinnati Reds, Milwaukee Brewers, Oakland A’s, Tampa Bay Rays and Seattle Mariners, who joined the group Friday. The five have formed a reciprocal agreement, in which they can scout each other’s prospects. Other organizations have not formalized a policy or outlined a split plan. The St. Louis Cardinals, for example, will open to the public and media on March 7 but not for scouts until March 17, when games start.

The implications of the decisions to ban scouts, sources said, could go much deeper: Most teams also can’t evaluate players who could be trade targets after the lockout ends. The trade market is expected to be bustling as the game’s transactional ledger reopens during a new collective-bargaining agreement. But doing so without having scouted players would bring unnecessary risk, especially for teams looking to rebuild through trades, sources said.

In past seasons, executives have pointed to a stagnant trade market as the reason behind slow movement in free agency. With the A’s possibly trading star first baseman Matt Olson, third baseman Matt Chapman and starting pitchers Chris Bassitt, Sean Manaea and Frankie Montas, the Reds shopping starting pitching before the lockout and others on the move, a trade market clogged up on account of teams needing fresh looks on potential acquisitions could have a deleterious effect on parts of the free-agent market, sources said.

Canceling the Rule 5 draft, five general managers told ESPN this week, would prompt teams to lift the restrictions on scouting and mitigate the complications the lockout has caused. The MLB Players Association would need to sign off on any Rule 5 changes.

The fear of other organizations gleaning new information on prospects who improved over the winter and applying it to the Rule 5 draft originally fueled the scouting shutdown, sources said. While Rule 5 picks are typically not impact players – they are chosen from a pool of those who spent five years in an organization if they signed at age 18 or earlier, or four years at 19 years old or higher – the cost-effectiveness of the acquisition makes it of particular import to rebuilding teams.

Of the 17 major league Rule 5 picks last season, six remained with their teams for a full season: Detroit outfielder Akil Baddoo, Boston reliever Garrett Whitlock, Colorado reliever Jordan Sheffield, Miami reliever Paul Campbell, Cleveland reliever Trevor Stephan and Baltimore reliever Tyler Wells. If a team removes a Rule 5 player from its big league roster during the season, it must offer him back to the team from which he was chosen for $50,000, but if it rosters him the entire time, it can send him back to the minor leagues the next year.

The lockout, sources said, changed the standard calculus for the Rule 5 draft, which typically takes place during the Winter Meetings in December. Teams must use a 40-man roster spot for a Rule 5 pick, which, in standard years, brings with it a penalty: less roster flexibility during the offseason.

Because of the lockout, the GMs said, teams want to take advantage of the extra opportunity to scout players. While player acquisitions in 2022 take into account a number of factors including analytics, using scouts to help note any changes over the winter — such as a player’s physical condition or a jump in fastball velocity — would be novel for a Rule 5 draft.

Skipping it for a year, a possibility first raised by The Athletic, would in theory benefit the union as well. With hundreds of free agents due to hit the open market, jobs could be few and far between. By agreeing to remove the Rule 5 draft, teams could instead use the 26-man spots on free agents.

The benefit for the players typically chosen — who are not among the 1,200 members of the union — is two-fold. The chance to make a major league roster is the foremost opportunity, but those who are returned to their former teams do so with a significant raise, which players who have been on a 40-man roster receive, over the standard minor league salary.

Another issue removing the Rule 5 for a season could alleviate: giving clarity on players to be named later. Multiple teams have PTBNLs from trades last year to choose, and while they typically must be selected within six months, the lockout prevents any movement onto a team’s 40-man roster.

The Baltimore Orioles are scheduled to pick first in the Rule 5 draft, followed by the Arizona Diamondbacks, Texas Rangers, Pittsburgh Pirates and Washington Nationals. The draft’s minor league portion took place in December because the lockout does not prevent movement of players not on teams’ 40-man rosters.