The First-Year Player Draft, also known as the Rule 4 Draft, is Major League Baseball's primary mechanism for assigning amateur baseball players, from high schools, colleges, and other amateur baseball clubs, to its teams.

Before the draft

Major League Baseball has used a draft to assign minor league players to teams since 1921. In 1936, the National Football League held the first amateur draft in professional sports. A decade later, the National Basketball Association instituted a similar method of player distribution. However, the player draft was controversial. Congressman Emanuel Celler questioned the legality of drafts during a series of hearings on the business practice of professional sports leagues in the 1950s. Successful clubs saw the draft as anti-competitive. Yankees executive Johnny Johnson equated it with communism. At the same time, Pulitzer Prize winning sports columnist Arthur Daley compared the system to a "slave market."

Prior to the implementation of the First-Year Player Draft, amateurs were free to sign with any Major League team that offered them a contract. As a result, wealthier teams such as the New York Yankees and St. Louis Cardinals were able to stockpile young talent, while poorer clubs were left to sign less desirable prospects.

In 1947, Major League Baseball implemented the bonus rule, a restriction aimed at reducing player salaries, as well as keeping wealthier teams from monopolizing the player market. In its most restrictive form, it forbade any team which gave an amateur a signing bonus of more than $4,000 from assigning that player to a minor league affiliate for two seasons. If the player was removed from the major league roster, he became a free agent. The controversial legislation was repealed twice, only to be re-instituted.

The bonus rule was largely ineffective. There were accusations that teams were signing players to smaller bonuses, only to supplement them with under-the-table payments. In one famous incident, the Kansas City Athletics signed Clete Boyer, kept him on their roster for two years, then traded him to the Yankees just as he became eligible to be sent to the minor leagues. Other clubs accused the Yankees of using the Athletics as a de facto farm team, and the A's later admitted to signing Boyer on their behalf.

Major League clubs voted on the draft during the 1964 Winter Meetings. Four teams -- the New York Yankees, St. Louis Cardinals, Los Angeles Dodgers, and New York Mets -- attempted to defeat the proposal, but they failed to convince a majority of teams, and in the end only the Cardinals voted against it.

The draft

Major League Baseball's first amateur draft was held in June of 1965. Teams chose players in reverse order of the previous season's standings, with picks alternating between the National and American League. With the first pick, the Kansas City Athletics took Rick Monday, an outfielder for Arizona State University.

Originally, three separate drafts were held each year. The June draft, which was by far the largest, involved new high school graduates, as well as college seniors who had just finished their seasons. A second draft was held in January for high school and college players who graduated in the winter. Finally, there was a draft in August for players who participated in amateur summer leagues. The August draft was eliminated after only two years, while the January draft lasted until 1986.

Early on, the majority of players drafted came directly from high school. Between 1967 and 1971, only seven college players were chosen in the first round of the June draft. However, the college players who were drafted outperformed their high school counterparts by what statistician Bill James called "a laughably huge margin."[16] In 1978, a majority of draftees had played college baseball, and by 2002, the number rose above sixty percent. While the number of high school players drafted has dropped, those picked have been more successful than their predecessors. In a study of drafts from 1984 to 1999, Baseball Prospectus writer Rany Jazayerli concluded that, by the 1990s, the gap in production between the two groups had nearly disappeared.

Economic impact

Initially, the draft succeeded in reducing the value of signing bonuses. In 1964, a year before the first draft, University of Wisconsin outfielder Rick Reichardt was given a record bonus of $205,000 by the Los Angeles Angels. Without competition from other clubs, the Athletics were able to sign Rick Monday for a bonus of only $104,000. It would take until 1979 for a drafted player to receive a bonus higher than Reichardt's.

Player salaries continued to escalate through the 1980s. In 1986, Bo Jackson became the first draftee to sign a total contract (signing bonus and salary) worth over one-million dollars. Jackson, a Heisman Trophy winning football player for Auburn University, was also the first overall choice in the National Football League Draft, and was offered a seven-million dollar contract to play football for the Tampa Bay Buccaneers.

Negotiating Rights

Prior to 2007, a team retained the rights to sign a selected player until one week prior to the next draft, or until the player enters, or returns to, a four-year college on a full-time basis. Starting in 2007, the deadline for signing a drafted player is August 15. A selected player who enters a junior college cannot be signed until the conclusion of the school's baseball season. A player who is drafted and does not sign with the club that selected him may be drafted again at a future year's draft, so long as the player is eligible for that year's draft. A club may not select a player again in a subsequent year, unless the player has consented to the re-selection.

A player who is eligible to be selected and is passed over by every club becomes a free agent and may sign with any club, up until one week before the next draft, or until the player enters, or returns to, a four-year college full-time or enters, or returns to, a junior college. In the one-week period before any draft, which is called the "closed period", the general rule is that no club may sign a new player.

Compensatory Picks

Teams can earn Compensatory picks in the draft based on departing free agents. Free Agents are ranked by the Elias Sports Bureau based on their previous two years of playing, and against players of similar positions. The top 20% of free agents are considered 'Type A' free agents, and the following 20% are 'Type B' free agents. Type A free agents will get their former team a supplemental round pick between the first and second rounds, and a compensatory pick from the signing team. Type B free agents get their former team just a supplemental round pick. To earn a compensatory pick, a free agent must either be signed before the arbitration deadline in early December, or be offered arbitration by their former team but still sign with someone else.