Bonus Rule

The Bonus Rule was a rule instituted by Major League Baseball in 1947 that prevented teams from assigning certain players to farm clubs. The rule stipulated that when a Major league team signed a player to a contract in excess of $4,000 ($42,400 today), the Major League team was required to keep that player on the 25-man roster for two full-seasons. Any team that failed to comply with the rule lost the rights to that player's contract. The player was then exposed to the waiver wire. If the player did remain with the team for a full two seasons, the team could then send that player down to the farm teams without repercussions. The rule went through several variations until it was finally abolished in 1965.

History of the rule

In the late 1930s and early 1940s, Major League franchises found themselves bidding against one another for the services of young players. These engagements subsided when World War II broke out. When the war ended, the bidding wars resumed.

This competition for the best amateur athletes resulted in skyrocketing signing bonuses. In 1947, Major League baseball implemented the Bonus Rule. The rule prevented the wealthiest teams from signing all of the best players and from stashing those players in their farm systems. Additionally, the bonus market was weakened as a result of inhibited competition. In return, this limited labor costs.