Is it possible for baseball teams to use draft picks in trades?

Question

The Toronto Blue Jays took away catcher Russell Martin in free agency from the Pittsburgh Pirates after the Pirates made Martin a "qualifying offer" As a result, the Blue Jays lose a first-round draft pick, and the Pirates get a compensating pick in the "sandwich" round between the first and second rounds.

My understanding is that teams are now allowed to use so-called "compensating balance" picks in trades. I was wondering if the Pirates could also "trade back" the draft pick they get from the Blue Jays using one of two mechanisms. (Say the Pirates trade the draft pick and a prospect for a player.)

Mechanism 1 works only if the Pirates have to file for the compensating pick. Then the Pirates could say to the Blue Jays, we'll give you prospect X for player Y, and in addition, we'll let the deadline pass for filing for the compensation pick, meaning that you get to keep yours. (This mechanism doesn't work if the Blues Jays lose, and the Pirates gain, the draft pick "automatically.")

Mechanism 2 is a player to be named later PBNL. That is, the Pirates trade the prospect and a PBNL to the Blue Jays for the player. On draft day, 2015, when the Pirates are about to make their compensating pick, the Blue Jays tell them who to pick, and the Pirates hand him over as the PBNL.

Can a draft pick be "traded" using either or both of those two mechanisms?

Answer 1

I think there is some confusion here between "compensation" and "competitive balance" picks.

Compensation picks are awarded to teams that lost a free agent that they extended a "qualifying offer" to. The "qualifying offer" is calculated annually. For the 2014-15 offseason, it is $15.3 million. The compensation picks occur at the end of the first round. The signing team forfeits its first pick (unless within the first 10 picks of the draft).

Note that under the old rules, the departed team received the forfeited pick as well, but this changed starting with the 2013 draft.

Competitive balance picks consist of upto 6 picks each between the first and second rounds of the draft. The competitive balance picks are awarded via lottery. The lottery consists of the ten lowest revenue teams and the ten smallest market teams. Teams that fall into both categories may be selected for two picks (see Miami in 2013).

Competitive balance picks (and the money allocated for those picks) are the only draft picks that can be traded under the current MLB rules.

MLB trade rules state that players cannot be traded in the same year that they are drafted. Often a trade will include a PTBNL with the understanding between the teams that the player was a recent draftee who can only be officially traded once that window is over. I am unaware of any case where a team has actually drafted a player with the intention of trading him to a specific team. It may have happened but was not announced.