Major League Baseball’s 2024 draft gets underway Sunday. We’ve been getting you amply prepared with rundowns of the top prospects, regular mocks, and lots of other angles. That will continue up to and beyond the event itself, but now let’s take a moment for more “nuts and bolts” matters. The royal we speak of the signing-bonus slotting system that underpins the MLB Draft and shapes many of the decisions that teams make.
To get you in the know, let’s proceed in time-honored FAQ format so that MLB’s somewhat byzantine bonus setup might be a bit less confusing for you before the names start being called. Onward we go, costumed in feigned wisdom …
So what is the slotting system?
The slotting system assigns specific dollar values to each draft position. These dollar values are in essence MLB’s “recommended” bonus amount for the player drafted at said position. These are not reflective of prevailing talent markets or tailored to each player’s estimated future value. Rather, they are arbitrary dollar figures, the purpose of which is to limit a draftee’s bargaining power and put a cap on the bonus he’ll command. Stated another way, it’s a means to limit labor costs, which is what team owners crave above all else.
What are the slot values for the 2024 draft?
Here are the assigned for values – i.e., the “recommended” bonus for the player drafted at each of these spots – for the first round of this year’s draft and the team that holds each respective pick (via MLB.com):
Pick No. 1: Guardians: $10,570,600
Pick No. 2: Reds: $9,785,000
Pick No. 3: Rockies: $9,070,800
Pick No. 4: Athletics: $8,370,800
Pick No. 5: White Sox: $7,763,700
Pick No. 6: Royals: $7,213,800
Pick No. 7: Cardinals: $6,823,700
Pick No. 8: Angels: $6,502,800
Pick No. 9: Pirates: $6,216,600
Pick No. 10: Nationals: $5,953,800
Pick No. 11: Tigers: $5,712,100
Pick No. 12: Red Sox: $5,484,600
Pick No. 13: Giants: $5,272,300
Pick No. 14: Cubs: $5,070,700
Pick No. 15: Mariners: $4,880,900
Pick No. 16: Marlins: $4,704,700
Pick No. 17: Brewers: $4,534,100
Pick No. 18: Rays: $4,372,900
Pick No. 19: Mets: $4,219,200
Pick No. 20: Blue Jays: $4,073,400
Pick No. 21: Twins: $3,934,400
Pick No. 22: Orioles: $3,802,200
Pick No. 23: Dodgers: $3,676,400
Pick No. 24: Braves: $3,556,300
Pick No. 25: Padres: $3,442,100
Pick No. 26: Yankees: $3,332,900
Pick No. 27: Phillies: $3,228,300
Pick No. 28: Astros: $3,132,500
Pick No. 29: Diamondbacks: $3,045,500
Pick No. 30: Rangers: $2,971,300
As you can see, the slot bonuses decline as we move down the draft order. The draft order is determined by lottery at the top end (Cleveland very much defied the odds to land the top overall pick). Further down, the order is determined by regular-season finish and then by postseason finish among the 12 teams that qualified for the playoffs. Other wrinkles that affect draft order include whether a team is a revenue-sharing payor or payee, whether a team signed a qualifying-offer free agent, and whether a team is above the luxury-tax threshold on payrolls (and by how much and how many years in a row). The latter consideration is why the Mets, Padres, and Yankees are picking lower than you’d think based on their 2023 records.
What’s this about the luxury tax and draft order?
The luxury tax is officially and misleadingly known as the Competitive Balance Tax (CBT) on major-league payrolls, and, like the slotting system, its purpose is to put artificial limits on how much teams can pay players. If a club’s CBT payroll, which is determined by calculating the average annual value of the contracts of all players on the 40-man roster, exceeds the CBT limit then penalties follow. The most notable of these involves paying various levels of taxes on the money they spend in excess of the CBT threshold, which for 2023 was set at $233 million. These penalties compound based on how far above the CBT threshold the team is and how much of a “repeat offender” they are.
For those well over the CBT line, there’s also a draft-related sanction. Here’s how the league explains it:
“Clubs that are $40 million or more above the threshold shall have their highest selection in the next Rule 4 Draft moved back 10 places unless the pick falls in the top six. In that case, the team will have its second-highest selection moved back 10 places instead.”
(Aside: The Rule 4 Draft is the solemn and bureaucratic official name of what regular folks call the MLB Draft.) So that explains why the Yankees, Mets, and Padres saw their first-round picks slide 10 spots: each team surpassed that $233 million figure in 2023. That means not only that theoretically more modest talents will be available to them at those lower slots, but it also means less total 2024 draft bonus money for these three clubs. Now let’s pose a question that gets us into that aspect of things.
So teams can’t pay a draftee more than his assigned slot value?
Not necessarily. A team’s draft budget is determined by what’s called its bonus pool, which is the sum of the assigned slot values for all its picks. Yes, every pick in the first 10 rounds of the draft is assigned a dollar figure – from the $10.6 million you see at the tip top above all the way down to $178,800 for pick No. 315 (held by the Rangers). For picks after the 10th round, a team this year can pay those draftees bonuses up to $150,000 each without having it count against their total pool. This figure also applies to undrafted free agents.
As you have probably already figured out, the higher a team picks, the higher its bonus pool.
MLB’s 30 clubs have varied bonus pools for this year, with the Guardians leading the pack at $18,334,000 and the Astros at the bottom with $5,914,700. The wide gaps between the bonus pools allow teams to strategize their signings and potentially land players with more potential than their draft position suggests.
Teams are allowed to pay drafted players less than their assigned slot value, as long as they offer at least 75% of the slot value to players who attended the MLB Combine. Additionally, teams can exceed their bonus pools, but it comes with penalties. The penalties increase as the overage percentage goes up, with the most severe penalty being the loss of two first-round picks and a 100% tax for exceeding the pool by more than 15%.
Teams can also trade pool money indirectly by trading Competitive Balance Draft picks, which come with slot values that can be transferred to the acquiring team. This allows teams to increase their bonus pools and maneuver their signings strategically.
There is a deadline of August 1st at 5 p.m. ET for teams to sign drafted players. If players drafted in the first 10 rounds are not signed by this deadline, their slot money is subtracted from the team’s total bonus pool. This prevents teams from drafting players they do not intend to sign and using their slot money elsewhere.
Overall, the bonus pool system in MLB draft requires teams to carefully manage their resources and make strategic decisions to maximize their potential for landing top talent. following sentence:
The quick brown fox jumps over the lazy dog.
Rewritten sentence: The lazy dog is jumped over by the quick brown fox.