In addition to the traditional amateur draft that occurs in major league baseball, there is what is called the Rule 5 Draft that was created to prevent major league teams from stockpiling good young talent on their farm teams. The regular amateur draft is Rule 4 in the MLB's collective bargaining agreement. Rule 5 is the fifth rule on the agreement. This is where it gets its name. In December, MLB owners and management meet some place warm to the annual winter meetings.
During the meetings, any player that is not listed on one of the 30 team's 40 man roster, is available for the Rule 5 draft. So if you are a team that has a great farm system, like the current Boston Red Sox and New York Yankee's of the 1990's, you go into the draft without the ability to draft because you fill your roster with your young talent. All the players that don't make these rosters are available to be drafted by any one of the other teams that have opening hoping to pick up some decent young players.This year's meetings took place in Nashville, TN. The Red Sox lost two young pitchers to the draft. The SF Giants picked up left-handed starter Jose Capellan who was playing for the Single A team Lowell Spinners while the Phillie drafted right-handed reliever Lincoln Holdzkom who was playing for Portland ME's AA team the Seadogs.