The Effects of Signing Bonus Pools in the Major League Baseball Draft

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2014
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Haverford College. Department of Economics
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Thesis
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eng
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Open Access
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Abstract
The purpose of this thesis is to analyze the impacts of the new signing bonus pooling system in the Major League Baseball Rule 4 draft agreed upon in the 2011 Collective Bargaining Agreement (CBA). More specifically, it evaluates whether or not the goals of each party involved (owners, league administrators, and players) were accomplished. Using linear and probit regression models on draft data from both the 5 years of the previous CBA and the 2 available years of the current CBA, this study analyzes changes in overall signing bonus levels, competitive balance, and draftee bargaining power due to the pooling system. Results suggest that owners and league administrators accomplished their goals in reducing overall signing bonus levels and improving league-wide competitive balance. The players, however, failed to accomplish their goal as draftee bargaining power decreased.
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