First-Year Player Draft (MLB Rule 4 Draft) Signing Bonus Pool

There is a maximum limit on the aggregate amount of money that each club can pay as signing bonuses to players selected in a First-Year Player Draft (MLB Rule 4 Draft) before penalties begin to accrue.

Prior to the Rule 4 Draft, each MLB club is assigned a “Signing Bonus Pool” (SBP) equal to the aggregate pre-assigned bonus value of all of the club’s draft slots in the first ten rounds (including supplemental & compensatory draft picks). The higher the slot, the higher the bonus value. (The collective MLB SBP is determined in advance by calculating industry revenues). 

The Cubs 2023 Rule 4 Draft SBP is $8,962,000 (was $10,092,700 in 2022)

If a club fails to sign a player selected in the first ten rounds (including supplemental draft picks), the value of that slot is deducted from the club’s SBP.

There is no bonus value assigned to draft slots after the 10th round, but if a club pays a signing bonus in excess of $150,000 to a player selected in the 11th round or later or to a player eligible for selection who was not drafted, the amount of that bonus in excess of $150,000 is deducted from the club’s SBP.
NOTE: A player eligible for selection in the MLB First-Year Player Draft who is not selected can be signed by any MLB club as a Non-Drafted Free-Agent (NDFA) beginning at 9 AM (Eastern) on the day after the final day of the draft. However, clubs are not permitted to discuss with a draft-eligible player the possibility of signing the player as a NDFA anytime prior to 9 AM on the day after the final day of the draft.   

If a club exceeds its SBP by less than 5% in a given Rule 4 Draft the club must pay a 75% tax on the overage. If a club exceeds its SBP by 5%-10% the club must pay a 75% tax on the overage and the club’s 1st Round draft pick in the next Rule 4 Draft is forfeited, if the club exceeds its SBP by 10%-15% the club must pay a 100% tax on the overage and the club's 1st & 2nd round draft picks in the next Rule 4 Draft are forfeited, and if the club exceeds its SBP by more than 15% the club must pay a 100% tax on the overage and the club's 1st Round picks in the next two Rule 4 Drafts are forfeited.

Money collected from the tax on clubs that exceed their SBP will be distributed to qualifying clubs as Revenue Sharing funds, and forfeited draft picks will be reassigned by lottery. (Any club that exceeds its SBP is excluded from the lottery).