Clubs pay $100,000 to select a player in the Major League phase of the Rule 5 Draft. If that player does not stay on the 25-man roster for the full season, he must be offered back to team from which he was drafted for $50,000.
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Smith is 24-23 with three saves and a 3.41 ERA in 94 games, including 69 starts. He was the Yankees' 14th-round pick in the 2013 Draft. The lefty has held opponents to a .236 average in his career, giving up 18 homers over 367 1/3 innings.
He spent this past season at Double-A Trenton, and appeared in 27 games (seven starts), striking out 70 and walking 20 over 63 2/3 innings.
"Caleb was a guy we settled on and we're excited about," Cubs general manager Jed Hoyer said. "We've had some success with Rule 5 guys. Hector [Rondon] has been a huge part of what we did. We felt good enough to move forward and select [Smith]."
Rondon was the most recent player the Cubs took in the Rule 5 Draft, doing so in 2012.
The Cubs' goal this offseason was to add depth to the bullpen -- specifically left-handers, if possible.
"That was a priority," Hoyer said. "We'd talked about that all winter -- that if we were going to [take someone in the Rule 5 Draft], we were going to focus on a left-handed pitcher. It's a challenging market. Lefties come from all over. Our guys did a good job and narrowed it down, and ultimately we decided on Caleb."
Smith has started, which means he could be used for a spot start if needed. Hoyer said their reports showed good velocity and an above-average changeup. Cubs pitching coach Chris Bosio watched video of Smith as well in preparation for the Draft.
"It seemed he was getting better and better as the season went on," Hoyer said of Smith.
The Cubs lost two players in the Rule 5 Draft. The Braves picked right-handed pitcher Armando Rivero in the Major League phase, and the D-backs took infielder Daniel Lockhart in the second round of the Triple-A phase.
"That, among others, was a difficult roster decision," Hoyer said of not protecting Rivero on the 40-man. "You hope you get him back, but wish him well with Atlanta."
The Cubs selected infielder Kevin Cornelius in the Triple-A portion of the Draft from the Yankees. Cornelius, 24, batted .299 with 13 homers and 48 RBIs in 56 games between Rookie League Pulaski and Class A Tampa in 2016. He was originally selected by the Yankees in the 31st round of the 2013 Draft, and he has batted .296 across four Minor League seasons.