The Effect of Bonus Pool Allocation Strategies on MLB Draft Outcomes

Starting in 2012, Major League Baseball teams have been limited in the amount that they can spend on signing bonuses for players selected in the sport's amateur draft. While each club is constrained by its “bonus pool,” teams have the strategic discretion to allocate their pool across all selections to maximize the aggregate returns on their draft class. Analyzing the MLB Drafts from 2012 to 2022 under these rules, this study evaluates team strategies by estimating the expected surplus value of each draft class after players’ first three professional seasons using MLB data and prospect evaluations by Baseball America and FanGraphs. In evaluating teams’ signing bonus strategies with their first selection—going under, over, or staying near the MLB-recommended slot value—the results offer evidence that no single approach yields better, statistically significant outcomes for a team's entire draft class, implying that the market for draft selections is economically efficient.