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Do Higher Signing Bonuses Help Players Advance?

A lot has been written over the past year about pay at the minor league level and attempts to fix things, and with good reason — it’s a pretty bad situation, and with fundamental decency in mind, it is certainly a good thing that it may be changing.

But alongside that discussion, I’ve been kind of curious of how changing minor league pay would actually change performance. In theory, paying players more could let them focus on baseball, translating to better performance. If that’s the case, it’s even possible that paying players more could actually “pay for itself” if the value of the extra wins players generate outweighs the costs of paying them more. In a perfect world, to test that, you could randomly pay some players more than others and see which group does better.

We don’t live in a perfect world, but we do live in one where signing bonuses are still pretty random. Yes, obviously players drafted higher receive higher bonuses on average, but there’s still pretty significant variation across the board, especially when you get into later rounds. In 2015, for example, there were 105 players drafted who had assigned “slot values” of between $130,000 and $200,000, and their bonuses were anywhere from $2,000 to $1,000,000. While in general higher bonuses should go to more talented prospects, it also stands to reason that two players drafted around the same time with around the same slot values should have around the same talent level and chances to make the majors.

With that in mind, I took a look at a couple different ways of seeing how well players with much lower bonuses progressed. Using 2014-16 draft data from SBN, I had a set of all players drafted in the first 10 rounds along with their signing bonuses and slot values, which I then matched with FanGraphs’ data on player appearances at either the Triple-A or major league level from 2014 to 2019. In total, this left me with 922 players, of whom 319 (~35%) made a Triple-A or MLB appearance and 144 (~16%) that made an MLB appearance. 153 (~17%) had a signing bonus of $50,000 or lower. I looked at two different ways to see how signing bonuses varied with advancement. Read the rest of this entry »