Pre-Arbitration Bonus Pool Details & Ramifications

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            Major League Baseball (MLB) successfully started its season on time by coming to a new collective bargaining agreement (CBA) with the Major League Baseball Players Association (MLBPA), but a caveat of that deal was that they would come up with a bonus pool of money for pre-arbitration eligible players. Details on what the pool will look like were sent out to teams on September 8th, breaking down payouts based on both Awards voting and a jointly created version of wins above replacement (WAR) created by both MLB and MLBPA.[1] The most clear path to earning part of the $50 million pool is by winning some of MLB’s greatest yearly awards.

            Being voted at the top of Rookie of the Year, Cy Young and MVP Awards, as well as “All MLB Team” honors (an award created by the league in 2019) all earn a player a bonus, and if a player qualifies for two bonuses he will earn the higher of the two. The bonuses are listed below: (1) Rookie of the Year: $750k for first place and $500k for second place; (2) MVP and Cy Young: $2.5 million for first place, $1.75 million for second place, $1.5 million for third place, and $1 million for fourth and fifth place; (3) All-MLB Team: $1 million for being named “First Team” and $500k for being named “Second Team.”[2] What this says is the pool is finally allowing young stars who are recognized by their elite performances to be compensated at a rate that begins to match their worth.

            After these bonuses are handed out for accolades, there is still a margin of the pool that will remain. The amount remaining in the pool is to be divided, on a percentage basis, among the top 100 players based on the joint MLB/MLBPA-created version of WAR.[3] In December, an annual report is to be sent out detailing the bonus pool and the payouts made. It is also noteworthy that players who sign long-term extensions will remain eligible for bonuses from the pool during what would have otherwise been their pre-arbitration seasons.[4] This ensures that whether a team recognizes their young stars with a contract extension, they will still be further compensated for their quality performances.

            Since the bonus pool is just being implemented, the question to keep an eye on is, will $50 million be enough to adequately compensate all of the young talent that has entered the show in recent years. Especially as the market continues to raise the ceiling on contracts for young stars, MLB may be pressured to raise the bonus pool when the next CBA negotiation comes around. In the meantime, the MLBPA can chalk this up as a victory  by successfully finding other avenues of revenue for its young stars who are the building blocks of the game today.


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