For the casual fan, the MLB Draft is a fairly straightforward process. The order of the draft is determined (almost) solely based on how teams finished (worst to first) the previous season. Some teams get compensation picks for losing players who they gave qualifying offers to, some teams lose picks if they signed QO players, and some teams get competitive balance picks because they are small market/revenue teams. Those extra picks generally come in-between the first and second rounds or the second and third rounds.
However, there are a lot of questions that explanation leaves unanswered. Are MLB draft picks tradeable? What happens if a team doesn’t sign their draft picks? How does draft pick compensation work? Well, the most recent Collective Bargaining Agreement outlines all of that and more, although as we will see... it isn’t always super clear.
The question regarding whether or not MLB draft picks are tradeable is actually very straightforward. Picks in the MLB Draft cannot be traded unless they are competitive balance picks. This has been a topic of conversation in years past (whether or not to allow draft picks to be traded), but the current system does not appear to be changing any time soon.
As for what happens if a team fails to sign a draft pick, up until very recently, it was understood that the team would get a pick in the next year’s draft (so long as the pick occurred before the 3rd round) one pick later than the unsigned pick. For example, if a team fails to sign the 8th overall pick in the draft, they would get the 9th pick in the next draft. Now, it was thought that that compensation could only happen once (meaning, in the above example, that if the team then failed to sign the 9th overall pick... they would be out of luck). However, MLB clarified with Baseball America in a recent report that compensation picks have the same protections as regular picks do under the most recent CBA. While this seems like a small detail, it does greatly change the negotiating position for teams with compensation picks, as they don’t have to worry as much about signability concerns with those picks. This is of interest to the Braves, Dodgers, and Diamondbacks in this draft, as they all have compensation picks.
As for picks affected by the signing of players with qualifying offers, this is where things get convoluted. All of that depends on the team that is losing the player (and their revenue/payroll status), the team that is gaining the player (and their revenue/payroll status), and how much the player signs for. All of these picks will fall somewhere in the first couple of rounds, but if you want a more detailed description, Forbes put together an excellent breakdown of the changes in the most recent CBA not long after it was agreed to.
One last note regarding teams that are well over the luxury tax threshold (over by more than $40 million): Not only are they the teams that stand to be penalized the most under the QO system above, but they also are subjected to draft penalties as well. The Red Sox are the only team that fits that description this year. Their first pick (originally #33) was moved back 10 spots in the draft because they were more than $40 million over the luxury tax threshold.
In short, the MLB Draft may seem super easy superficially, but it turns out there is a lot of complexity within it in the context of the CBA.... some of which we are only just now beginning to understand.