2013 MLB Draft: What Are the Penalties for Exceeding Bonus Pool Budgets?

Mike Stobe

MLB teams do not want to go over their allotted draft allowance.

As we mentioned just a few minutes ago, the Twins have $8,264,400 to spend on their picks in the first ten rounds of the 2013 MLB Draft. With ten picks in that range, none of which are compensation picks, they should be in pretty good shape. The league as a whole spent 97% of the bonus pool last season, and with an 8.2% increase this year it seems unlikely that every pick will turn into another Mark Appel.

Here's an outline of how the penalties work, and below that we'll outline exactly where those penalties kick in as well as their consequences in how they apply to the Twins.

  • Going over designated amounts on an individual player will NOT subject teams to a penalty, provided all players in the first ten rounds of the draft were still signed within the overall allocation. (Example: The Twins can pay over the recommended bonus for their pick at number four overall and will not be penalized provided all picks in the first ten rounds of the draft come in below $8.2644 million.)
  • For any player whose signing bonus is greater than $100,000 and signs after the tenth round, their total goes against the team's pool.
  • An escalating penalty scale will be applied based on how far over the allocated pool a team goes.
% Over Budget
Corresponding Maximum
Twins Spend
Penalties Leveled
0% $8,264,400 None
Up to 5% $8,987,535 75% tax on overage
Up to 10% $9,710,670
75% tax on overage,
loss of next season's 1st round pick
Up to 15% $10,743,720
100% tax on overage,
loss of next season's 1st and 2nd round picks
> 15% $10,743,721+
100% tax on overage,
loss of 1st round pick next two seasons

  • Each amount in the "corresponding maximum spend" column includes the maximum overage as well as the tax on that overage.
  • The cash penalty on up to 5% for the Twins this year would be as much as $309,915.
  • The cash penalty on up to 10% for the Twins this year would be as much as $619,830.
  • The cash penalty on up to 15% for the Twins this year would be as much as $1,239,600.
  • If you go over your bonus pool by up to 10%, every $1.00 you spend becomes $1.75. If you go over 10%, every $1.00 you spend becomes $2.00. I find it unlikely that a team would ever blow their budget so severely, but if they do you know they'll think it's worth it.
Will a team go over budget this year? Is there a player in this draft that you'd pay any amount to sign, regardless of the penalty?

X
Log In Sign Up

forgot?
Log In Sign Up

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

By becoming a registered user, you are also agreeing to our Terms and confirming that you have read our Privacy Policy.

Join Twinkie Town

You must be a member of Twinkie Town to participate.

We have our own Community Guidelines at Twinkie Town. You should read them.

Join Twinkie Town

You must be a member of Twinkie Town to participate.

We have our own Community Guidelines at Twinkie Town. You should read them.

Spinner.vc97ec6e

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.

tracking_pixel_9351_tracker