MLB Slashes Money For International Players While Draft Bonus Pools Rise

While the bonus pools for draft picks slightly increased for 2014, the amount that teams can spend on international players before facing taxes and other penalties has decreased for the third straight year.

Technically, the aggregate bonus pools for international players rose by 1.2 percent, moving from $78,226,600 to $79,194,000. In reality, the amount that teams will be able to spend on international players is decreasing for the third straight year. That’s because, for the first two years of the international bonus pools, teams were allowed six signings of up to $50,000 that would not count against their pools, giving each team an extra $300,000 beyond their pool space and $9 million for the industry as a whole.

When the 2014-15 international signing period begins on July 2, per the Collective Bargaining Agreement, those $50,000 exemptions disappear. It’s a clever accounting trick, one where Major League Baseball can claim that the international bonus pools are up a nominal amount from the previous year, when really the bar is being lowered. The reduction for international players comes while MLB has simultaneously raised the amount teams can spend on the draft before facing penalties for the last three years:

2012: $189,903,500
2013: $202,501,600
2014: $205,786,400
2012: $96,000,000
2013: $87,226,600
2014: $79,194,000

The numbers show the draft bonus pools and the amount teams can spend on international players before being penalized, which includes the extra $300,000 per team from the $50,000 exemptions. Starting on July 2, teams will get unlimited exempt signings for up to $10,000 instead of the current $7,500 unlimited exemptions, but that won’t make any real dent in overall spending. It also is one tenth of the $100,000 that teams can spend up to on players drafted after the 10th round (and nondrafted free agents) that won’t count against their draft bonus pools.

While the international pre-penalty spending numbers have been slashed, there are benefits for international players. With foreign prospects given free agency instead of being subjected to a draft, they have the leverage to negotiate with 30 teams instead of one. Since the penalties for a team exceeding its draft pool are more damaging than they are for a club that goes past its international bonus pool, the Rays, Rangers and Cubs have all already been willing to pay the maximum penalties by blowing past their international bonus pools, something no team has been willing to do in the draft. That explains why, despite the bonus pools, estimated international spending on pool-eligible players (excluding Mexican League transfers) jumped from $84 million during the 2012 calendar year to $97 million in 2013.