International Signing Bonus Pool

Beginning in July 2012, there will be a maximum limit on the aggregate amount of money that each club can pay as signing bonuses to international first-year players before penalties begin to accrue.

Each MLB club will initially be assigned an International Signing Bonus Pool (ISBP) of $2.9M the first year, and then beginning in July 2013, each club’s ISBP will be based upon the club’s winning percentage from the previous season. (Clubs that finish with lower winning percentages will receive a larger ISBP than clubs with higher winning percentages, with the ISBP increasing inverse to the previous season’s standings). In the case of two clubs finishing with the same winning percentage the previous season, league standings from two seasons back will be used to break the tie. If the clubs are still tied, league standings from three seasons back, four seasons back, etc, will be used to break the tie.

Beginning in July 2013, a club's ISBP will consist of four separate "signing bonus values" (specific amount of each "signing bonus value" TBD) plus an additional $700,000. An MLB club can trade a "signing bonus value" to another club, but the entire "signing bonus value" must be assigned to the other club when it is traded. A club may not acquire a "signing bonus value" in a trade if the amount is more than 50% above the club's originally assigned ISBP for that year, or if the club has exceeded its ISBP for that year.

A signing bonus paid to a first-year international player age 23 or older who has spent all or part of at least five seasons playing in an MLB-recognized foreign professional or "major" league (all or part of at least three seasons playing in Serie Nacional for Cubans who are age 23 and older) does not count against the club’s ISBP. Also, a club’s six highest signing bonuses of $50,000 or less and ALL signing bonuses of $7,500 or less that are paid to first-year international players will not count against the club’s ISBP. (Beginning in July 2014, only signing bonuses of $10,000 or less that are paid to first-year international players will not count against a club’s ISBP).

The penalty for a club exceeding its ISBP in a given year (July 2 – July 1) is a tax (no draft picks are forfeited) and a restriction on bonuses that can be paid to international players over the next year. (A club that exceeds its ISBP by 5-10% would be permitted to sign only one international first-year player to a bonus of $500K or more, a club that exceeds its ISBP by 10-15% would be prohibited from paying a bonus in excess of $500K to any international first-year player, and a club that exceeds its ISBP by 15%+ is prohibited from paying a bonus in excess of $250K to any international first-year player).

Money collected from the tax on clubs that exceed its ISBP will be distributed to qualifying clubs as Revenue Sharing funds.

A player subject to the ISBP cannot be signed to a Major League contract (same as a player selected in the MLB Rule 4 Draft or NDFA who was eligible for selection in the Rule 4 Draft).