Rule 4 Draft
The Rule 4 Draft is the official term for the First-Year Player Draft, an amateur draft held annually. Players must be a resident of the United States (U.S. territories, such as Puerto Rico, apply) or Canada to be eligible for the draft. Players who have graduated high school but not attended college are eligible for the draft, as are those who have completed at least one year of junior college. Players attending four-year colleges are eligible to be drafted upon completing their junior year or turning 21 years old.
Per the 2022-2026 collective bargaining agreement, the Rule 4 Draft will conclude after 20 rounds and may be held each year between June 1 and July 20.
Each pick in the first 10 rounds of the Draft has an assigned value, and the total for each of a club's selections equals what it can spend on signing bonuses for players selected in those rounds without incurring a penalty.
If a player selected in the first 10 rounds doesn't sign, his pick's value is subtracted from his club's pool. If a team exceeds its allotment, it faces a penalty.
A team that outspends its pool by 0-5 percent pays a 75 percent tax on the overage. At higher thresholds, clubs lose future picks: a first-rounder and a 75 percent tax for surpassing their pool by more than 5 and up to 10 percent; a first- and a second-rounder and a 100 percent tax for more than 10 and up to 15 percent; and two first-rounders and a 100 percent tax for more than 15 percent.
A Draft lottery was established per the 2022-26 CBA to determine the first six picks. Previously, picks were based on the previous season's records -- the team with the worst record received the first overall pick, followed by the team with the second-worst record, and so on.
Lottery odds are based on the reverse order of winning percentage, with the bottom three clubs each at 16.5%. The 18 non-postseason clubs are eligible, though revenue sharing payees are ineligible to receive lottery selections in three consecutive years, while non-payees are ineligible to receive lottery selections in consecutive years.
Postseason teams pick after non-postseason teams in the order of their postseason finish (for example, clubs losing in the Wild Card Round pick before clubs losing the Division Series); within each group, teams are sorted by revenue sharing status, then by reverse order of winning percentage.