For the resident scouting expert and people that have dumb friends.
This is relatively old hat by now, having been in place for a couple years, but each team has an allotted draft bonus pool they can't exceed without penalty. The budget for each team is comprised of the combination of dollar value assignments to each of their picks throughout the first 10 rounds of the draft. The first pick in the draft is worth the most, and the values descend in order from there.
The pick values aren't a hard cap, though, and a team can exceed the slot assignment for one player if they in turn pay under the slot amount for another pick. An example would be the Cubs selecting Rob Zastryzny in the second round of the 2013 draft, and signing him for $1.1 million despite the draft slot being worth $1.3972 million. They followed that up with the selection of Jacob Hannemann, signing him for $1 million, though the slot value was only $736,200. They were able to underpay Zastryzny and apply most of those savings towards their overpayment of Hannemann.
While the Cubs chose to underpay Zastryzny a relatively small amount, many teams opt for the more brazen strategy of drafting college seniors -- players with little negotiating leverage -- and paying them meager amounts relative to the slot assignment.*
*To that end -- any high school player selected may opt not to sign, but will be unable to enter the draft again until after their junior season if they attend a four-year college. Those who attend junior colleges are eligible to re-enter the draft after only one year. Players can be deemed sophomore-eligible if they are, or turn, 21 years old within 40 days of the draft date.
Teams are allowed to go over their total bonus pool allotment, but even going over by small amounts incur harsh penalties. If a team exceeds their budget by between 0-5 percent, they are taxed 75 percent on the amount they went over. If they exceed the budget by 5-10 percent, they suffer the same penalty as 0-5 percent plus they lose their first-round selection in the following draft. Going over by 10-15 percent incurs a 100 percent tax on the overage, plus the loss of first- and second-round picks in the following draft. Anything over 15 percent results in the team paying a 100 percent tax on the overage and the loss of their first-round selection for the next two drafts.
Beyond the first 10 rounds, any signing bonus that surpasses $100,000 goes towards the cap in place for the first 10 rounds. As a hypothetical, if a team signs an 11th round pick for $200,000, $100,000 of that bonus goes towards the allotted budget for the first 10 rounds.
A team cannot simply select a player and choose not to sign them, and then use the money slotted for that pick towards another player. For any unsigned player, the team loses the money associated with that slot from their overall budget. This gives any player who can re-enter the draft in future years additional leverage, as teams count on the ability to use their entire budget.
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