New MLB International Signing Rules

The new Collective Bargaining Agreement includes significant changes to the international signing rules.

There is no international draft, as Major League Baseball had initially proposed, but teams will now have bonus pools with hard caps. Gone are the days of teams being allowed to blow past their bonus pools, pay an overage tax and be limited to signings for no more than $300,000 the following two signing periods.

Bonus Pools

Under the new system, beginning for the 2017-18 signing period that starts on July 2, most teams will have a bonus pool of $4.75 million. The clubs that receive a “Competitive Balance Pick” in Round A of the June draft get a $5.25 million bonus pool. The clubs that get a “Competitive Balance Pick” in Round B get a $5.75 million pool. So, essentially, some of the smaller market teams will get extra money in their pools. Signing bonuses of $10,000 or less will continue to be exempt from the bonus pools. Every team’s 2017-18 bonus pool is available here.

Teams can also trade pool space once the signing period opens on July 2. They can acquire up to 75 percent of their original pool allocation in 2017-18 and 2018-19, then after that they can trade for up to 60 percent of their original pool. Teams are allowed to trade away as much of their pool as they want. So a team that starts with a $4.75 million pool could trade up to around $8.3 million, while a team with $5.75 million could trade up to get a little more than $10 million. One difference in the new CBA is that teams will now be allowed to trade for additional pool space even if they have already spent their full pool allotment. Under the previous system, a team’s bonus pool consisted of four individual slot values, and trading pool space required trading those slot values. The new system is just a straight bonus pool with no individual slot values, so that should make things simpler with regards to trades.

The size of a team’s bonus pool could also shrink if the club signs a qualifying offer free agent. A team over the major league luxury tax that signs a qualifying offer player loses $1 million from its international pool the next signing period. All other clubs who sign a qualifying offer player will lose $500,000 from their pool the next signing period. All forfeited international bonus pool money will be distributed equally among the other clubs.

Penalties

Teams that went over their bonus pools in previous signing periods to incur penalties will have those penalties carry over into the new CBA. So teams like the Padres, Astros and Braves that are over their current 2016-17 signing pool will be unable to sign a player for more than $300,000 in the 2017-18 and 2018-19 signing period, though they are still able to spend their full pool allotment or trade it away.

Pool Exemptions

The rules also raise the signing age for players to be exempt from the bonus pools. The rules had been that international players were exempt from the bonus pools if they were at least 23 with five or more seasons of experience in a foreign professional league, like Serie Nacional in Cuba. Now players must be at least 25 with six seasons in a foreign professional league to be exempt. While those rules most commonly come in to play for Cuban players, the rules encompass all international players, including foreign professionals in Japan and Korea.

Just like under the previous system, signings from Mexican League clubs will continue to only have the amount of money that goes to the player count against a team’s bonus pool. The majority of Mexican players are signed directly from Mexican League teams, some of which keep as much as 75 percent of the payment, though it varies by team and player.

A joint announcement from the commissioner’s office and the players’ association also notes that the bonus pools will grow in subsequent years along with industry revenues. The growth rate of the international bonus pools and the draft bonus pools will be equal. The announcement also noted that MLB “may impose strict penalties on any club that attempts to circumvent the system.”