Can MLB Teams Trade Draft Picks?

Can MLB Teams Trade Draft Picks?

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Major League Baseball’s draft to assign amateur players to its teams differs noticeably from the draft process of the other major sports. For instance, other drafts feature wheeling and dealing during the draft process, swapping players and top picking slots like crazy. Which makes one wonder: Can MLB teams trade draft picks? If not, why?

The answer is no, Major League Baseball teams cannot trade their draft picks, with a single exception noted below. Instead, MLB owners are known to come up with nifty ways to get around the rule, such as trades involving “players to be named later.”

A big change in recent years is the ability of MLB teams to swap high-round draft picks immediately after the players are selected. Prior to 2015, teams had to wait a full year before they could trade away their draft picks.

So, it could be argued that MLB teams indeed can trade draft picks ~ after they are used to secure the rights to a player.

The whole system is very different from amateur player drafts for the football, basketball, and hockey professional leagues, in a number of ways. Let’s explore a big difference, rules regarding the trading of draft picks before those picks are used to select players.

Why Can’t MLB Teams Trade Draft Picks?

When the MLB draft was instituted in 1965 (under its official name, the First-Year Player Draft), many owners feared that clubs struggling financially would sell picks en masse to large-market teams just for quick income.

Forbidding teams from trading draft picks pre-selection process is a way for the league to prevent teams, whether small market or even big market, from “mortgaging the future” of the franchise.

In other major sports, pre-draft pick trading has been common for many years, and the practice has had its share of successes and failures. Among them:

  • Success: Famed NBA coach Red Auerbach arranged a 3-way trade in April of 1956, to secure the rights to sign center Bill Russell, who helped the Celtics win 8 straight NBA championships through 1967.
  • Success: The Dallas Cowboys won Super Bowl XII based heavily on the production of 3 stars ~ Ed “Too Tall” Jones, Randy White, and Tony Dorsett ~ each of whom was selected when the club traded to move up for its pick in the draft’s first round.
  • Failure: In probably the closest example of what MLB owners long ago feared, NFL coach Mike Ditka was so enamored with University of Texas running back Ricky Williams, that before the draft he traded ALL of the New Orleans Saints draft picks to get the fifth slot. The Saints indeed selected Williams, but he did not become the superstar the Saints anticipated, and Ditka was fired after that single season. Once traded to the Miami Dolphins, Williams became an All-Pro selection and Pro Bowl player in 2002, but overall had a relatively average career. Neither the Saints, nor the team they traded all the picks to, the Washington Redskins, benefitted noticeably from what is commonly known as the “blockbuster” trade.

It should be noted that the trading of draft picks has become a popular element to the drafts in other sports, especially since the drafts started being broadcast live for television. The brief time when a team is “on the clock” to make a pick before a deadline became very hectic as team general managers scrambled to solidify deals to get the players they most desired.

A lot of fans watch drafts on TV for the excitement and last-second wheeling and dealing.

Exception: When MLB Teams are Allowed to Swap Draft Picks

Other ways the MLB draft is different than other sports is in its sheer volume of rounds (20 rounds), and total number of players picked; the awarding of additional picks to teams that lost free agent players to other teams the previous off season; and attempts to keep in check the amounts teams were paying in bonuses to draft picks.

It’s that last part where the MLB for the first time allowed the trading of draft picks. The “Bonus Pool” allocations for teams to sign players was established in 2012. Teams had bonus money capped based on how many picks they had, and how much was spent in the previous year’s draft.

Teams could go over the capped amount if they really liked a player and had to pay past the bonus pay cap for that draft. However, penalties were instituted, ranging from paying a “luxury tax” if they exceeded their cap by 5% or less, and loss of draft picks if they overspent by more than 5%.

Here’s how it works: Teams that exceed their bonus pool cap by 5 to 10 percent pay a 100% tax on the excess among; and lose their next first-round draft pick ~ quite the penalty. It gets worse if a team exceeds the cap by more than 15%: it gets hit with the luxury tax, and loses its 2 first-round picks.

Talk about “mortgaging the future.”

Picks surrendered by teams that overspent on new player bonuses are called compensatory picks, and in this instance, they can be traded away before selections start.

Still, the MLB rules forbidding the trading of regular draft picks, or extra picks given to them as compensation for losing free agents, continues.

Why are MLB Teams Quickly Trading Players Picked First-Round?

For the longest time, MLB teams had to wait a full year before they could trade their draft pick selections. That changed in 2015 when it was cut to 6 months, and later it was eliminated altogether.

It did not occur right away, but the owners’ extended lockout of players in 2021-22 created free time and a final rush to roster the best teams possible. Once the lockout ended, a trio of teams traded away players they had selected in the first round just a few months before.

Mainly the players were part of a package to get in return a solid and established player. The Atlanta Braves used Ryan Cusick to swing a deal with the Oakland Athletics for first baseman Matt Olson. The Athletics also traded away star player Matt Chapman, in exchange for the Blue Jays’ latest first-round pick, Gunnar Hoglund. Finally, the Minnesota Twins wanted established pitcher Sonny Gray so badly, the club sent its first-round pick from summer 2021, Chase Petty, to the Cincinnati Reds.

Why? Teams are more apt to protect minor leaguers who are close to contributing to the major league club ~ as opposed to players who are years away like recent draftees.

Baseball draftees are not considered as valuable as draft picks in other major sports, because baseball’s young players need several years of seasoning before joining the big club. If they ever do.

A recent top draft pick is valuable enough to help some teams meet other needs, and lets the club save the resources needed to develop that player. For some players, their value is never higher than immediately after the draft, when all anyone knows is they went in Round One.

Final Words on the MLB and Trading Draft Picks

Unlike in football, basketball, and hockey, Major League Baseball teams cannot trade their draft picks before the official drafting process begins. This rule was established when the first-year player draft was instituted in 1965, as a mechanism to prevent poor teams from selling off all their draft picks to teams with more money.

Related Question

Question: What does “player to be named later” mean?

Answer: It is a term used with baseball player trades relatively often, and it means just that: one team will send a player, to be decided upon after the trade is formalized, to the other team. Usually stating “for a player to be named later,” as a trade is announced, gives a team 6 months to decide who that player will be.

See Also:
MLB Draft: High School vs. College
Why Is The MLB Draft In The Middle Of The Season
Do Sports Agents Get Paid Up Front?
How Does Free Agency Work in Baseball?