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.

Test No. 1 – All players of similar slot values 

My first test was for all players in the 10th round or higher with a slot value under $200,000 — 309 players over the three-year set. How did the low-bonus group do here in terms of making it to Triple-A or to MLB?

2014 alone suggests that yes, giving players more money is associated with a better chance of making it to Triple-A or the major leagues (with the caveat that these players were on average drafted a bit earlier, too). In terms of making the majors, that was consistent across all three years — but surprisingly, in 2015/2016, the lower bonus group was actually more likely to make it to at least Triple-A, despite being on average a lower draft pick. That seems odd.

What about differences between types (batter/pitcher) or ages (HS/college) of players? The data only includes 29 high schoolers, which isn’t enough for any meaningful samples, but filtering to only college players and grouping by batter vs. pitcher still shows similar results (though our sample sizes are getting pretty small here):

Low-bonus 2014 hitters showed a much worse success rate at advancing and 2014 pitchers were about a wash, but all other groups still showed a higher advancement rate for low-bonus players. This seems like a mixed record for whether paying players more leads to better results.

Test No. 2 — Matching low-bonus players to regular players

My second test was for low-bonus players drafted a bit higher, and testing their performance versus a very similar group of regular players. I identified every player drafted in the top 250 with a signing bonus of $50,000 or below, and then I found the closest draft pick with the same batter/pitcher and college/high school status. This gave me 48 low-bonus players and 48 “normal” players over the three years. Again, the results were surprising:

With the repeated caveat that these are very small sample sizes, you can again see that the group with lower signing bonuses actually outperformed, and had at least as good a result of making Triple-A or MLB in each year.

So, what does this all mean? Both results seem pretty counterintuitive and not at all in line with what I expected, which was for higher signing bonuses to translate into better odds of advancement through a team’s system. Again, these are small samples, so I’m prepared to say the jury is still out on whether higher pay would lead to better player performance, but at least at first glance when it comes to minor league pay, it seems like we’ll have to rely on teams doing the right thing because it’s the right thing to do rather than doing the right thing to boost performance.