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The Rule 4 Draft, commonly referred to as the Major League Baseball First-Year Player Draft or simply the MLB Draft, takes place once a year in June or July. The Rule 4 Draft is for all players who are residents of the United States or Canada and who have never before signed a major league or minor league contract.
Many players from the draft will sign multi-million dollar contracts, but do all MLB draft picks get paid?
The simple answer is no, not all MLB draft picks get paid. Major League Baseball draft picks only get paid if they sign a contract with the team that drafted them.
That means most MLB draft picks end up getting paid, but they are not guaranteed any money simply for having been drafted. If a player cannot come to an agreement with the team that drafted him, he will not receive any compensation.
After the draft, each of the teams and each of their draftees has a set period of time (usually a few weeks) to negotiate a contract. The contract will come with a signing bonus, which is the main focus of negotiations. The signing bonus is how MLB draft picks get paid.
In 2021, the highest paid player in the draft was Jack Leiter, who signed with the Texas Rangers for a $7.92 million signing bonus. Players such as Kumar Rocker and Jud Fabian did not agree to contracts with the teams that drafted them, and so they were not paid.
Signing bonuses are guaranteed, which means that once a draft pick has signed a contract, the signing bonus is his to keep. If he performs poorly or is cut by his team, he will still earn his full signing bonus.
If a draftee signs and officially joins a Major League Baseball organization, he will also be paid a salary to play for a minor league team. Minor league players who are not on a major league roster earn between $400-$700 a week depending on the level at which they are playing.
What Is The Bonus Pool?
In 2012 the “bonus pool” was introduced to limit overall spending on draft pick signing bonuses. The “bonus pool” refers to the total amount of money that each team is allowed to spend on bonuses for players drafted in the first 10 rounds.
If a team spends more than their assigned bonus pool, they will incur penalties. These penalties include a tax on the amount they overspent and the loss of future draft picks.
How Is The Bonus Pool Calculated?
The bonus pool amount for each team is the total combined “slot value” of each of their assigned picks in the first ten rounds of the draft. “Slot value” is a value assigned to each pick that functions as a recommended signing bonus for the player drafted in that slot.
The slot value for the first overall pick in the 2021 draft was $8,415,300, while the slot value for the final pick of the tenth round was just $142,200.
Teams can offer players as high or as low of a bonus as they want, as long as the total of the bonuses offered does not surpass the total combined slot value of all their picks. If it does, the team will be taxed and risks losing draft picks in future years.
Do Draft Picks Ever Sign Major League Contracts?
Signing bonuses are the primary way that drafted players get paid because most drafted players are not permitted to sign major league contracts. Only players who have been offered scholarships in other sports are eligible to sign a major league contract straight out of the draft.
Minor league contracts are not guaranteed, which means a player on a minor contract can be cut from the team and the payroll at any time. In addition, players on minor league contracts only earn minor league salaries.
Major league contracts, however, are fully guaranteed. Players will earn the full amount of money they signed for throughout the length of the contract. These deals are also worth much more – the major league minimum salary in 2022 is $700,000.
Therefore, the signing bonus is the only way that most MLB draft picks can be paid a guaranteed sum.
What Happens To A Draft Pick Who Does Not Sign?
If a player and the team that drafted him cannot come to an agreement on a signing bonus, the player and the team will not sign a contract.
The player is not eligible to negotiate with any other teams until he is drafted again the following year. If the player chooses to attend a four-year college, he must wait until his twenty-first birthday or the completion of his junior year in order to re-enter the draft.
When a player re-enters the draft, he cannot be selected by the same team that picked him previously unless the player consents ahead of time.
What Happens To A Team That Does Not Sign One Of Their Draft Picks?
When a player does not sign with the team that drafted him, the slot value of that draft pick is subtracted from the team’s bonus pool. However, the team does receive a compensatory pick in the following year’s draft if they are unable to sign any of their draft picks from the first three rounds.