Signing Bonuses & Subsequent Productivity: Predicting Success in the MLB Draft

Abstract

This study examines the ability of Major League Baseball organizations to successfully value and project the future productivity of players selected in the amateur draft. To do so, the relationship between player valuations (i.e. signing bonuses) and future productivity is investigated. Productivity is measured using three different metrics: Wins-Above Replacement, the probability of making a Major League Appearance, and the probability of becoming an All-Star. The results suggest that holding constant round & placement in round, elevated draft pick compensation significantly influences the likelihood of making the Major Leagues, and to a much lesser extent, player productivity once there. A supplementary analysis reveals that while teams are somewhat successful in their attempts to project future productivity, they are not necessarily efficient in their allocation of signing bonus expenditures.