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In 2007, Alex Rodriguez signed with the Yankees what was then the richest contract in MLB history for $275 million over ten years. This prompted sports fans around the world to turn their heads toward the game of baseball.
Since then, baseball has been known to hand out some of the most lucrative contracts in sports. Some parents often joke that they plan to put a baseball in their child’s hands at birth in an attempt to give him a chance to earn one of those large contracts.
What makes these deals even better for the players is the fact that they pocket every dime of the amount listed on their signed contract. All Major League Baseball contracts are fully guaranteed as long as the player meets the terms of the contract.
Yes, you read that right.
All contracts are fully guaranteed. This is different than most other professional sports where not all of the money is guaranteed to the player. Some or most of it may be guaranteed, but the rest of it is not leaving the team so wiggle room when it comes to the player’s future.
Major League Baseball is in a league of its own when it comes to the financial benefits its players receive.
Of course, there are situations where teams do not have to pay players the full amount printed on their signed document. If the player does not meet all of the terms and stipulations in the contract, then the team may have cause not to pay the player the full amount.
If a player only plays three years of a five-year contract and decides to retire, the team is not on the hook for the remaining two years. That is why MLB players rarely retire before their deal is expired.
Even players who suffer career-ending injuries sometimes refuse to retire and force the team to cut them to earn every penny for which they signed.
Take Prince Fielder, for example. Fielder was one of the top hitters in baseball in 2012 when the Detroit Tigers signed him to a nine-year $214 million contract. Five years into that deal, he was traded to the Rangers who picked up the contract — with some help from the Tigers.
Unfortunately for the Rangers, he suffered a neck injury that ended his career. Instead of retiring, Fielder remained on the active roster to force the team’s hand.
They could keep him on the roster and hope that his neck would miraculously heal to allow him to play again, or they could cut him to open up a spot on the 40-man roster for someone who could play.
They opted to cut him, but either way, they were going to have to pay him his money because of the MLB’s fully guaranteed contracts. 2021 is the last time Fielder will get paid by an MLB organization. He is set to earn $24 million this season, and he won’t even play a game.
Minor Leagues = Minor Pay
Unlike Major League Baseball contracts, Minor League contracts are not fully guaranteed. The day a player is no longer a part of an organization — whether it be by release, injury, or retirement — he is off the payroll, and his contract comes to an end.
However, teams often offer minor leaguers signing bonuses when they are drafted or signed in free agency. Those bonuses are fully guaranteed and vary in value depending on when the player is drafted.
The younger the player and the higher he is drafted, the more money he typically gets in a signing bonus. Older players who are drafted in the late rounds usually get very little in a signing bonus due to their lack of leverage.
The discrepancies in how Major Leaguers and Minor Leaguers are paid have been well-documented over recent years. Perhaps the most challenging part for the players is the fact that they are only paid during their season.
The offseason, including spring training, is unpaid by the team. During this time, most minor leaguers find second jobs to help afford daily life all while training to prepare for the upcoming season.
Still, the team can cut them at any time, and if players are released before their season starts, the team owes them nothing.
The MLB Players Association
How did MLB players get so fortunate to have the luxury of signing fully guaranteed contracts? The Major League Baseball Players Association can be thanked for that. The MLBPA represents the players when it comes to collective bargaining with the owners of the league.
It is led by former player Tony Clark as its executive director. His executive staff includes his Senior Assistant and Office Manager, Melba Markowitz; Senior Director of Collective Bargaining and Legal, Bruce Meyer; and his Special Adviser former player, Dave Winfield.
Several current players also serve as representatives to help negotiate collective bargaining and pension agreements.
Part of what makes the MLBPA so strong is its willingness to call for work stoppages. When the Association feels as if the owners are trying to take advantage of the players, the MLBPA calls for a work stoppage that can last up to an entire season.
Work stoppages, or strikes, have happened in 1972, 1973, 1976, 1981, 1985, 1990, and 1994. While many fans hate player strikes because games are often canceled due to them, no one can argue that they are very productive in getting the players what they want.
Some have speculated that with the rule changes that commissioner Rob Manfred is rumoured to implement, a work stoppage in 2022 is a likely possibility.
Do other professional sports have fully guaranteed contracts?
The NHL and NBA mostly have guaranteed contracts. If the entire contract is not guaranteed, at least some of it usually is. The NFL typically shies away from fully guaranteed contracts. Many attribute this to a relatively weak players union.
Have MLB contracts always been fully guaranteed?
Things were very different until the early 1970s. In a series of events and lawsuits that required teams to publicize contracts and pay players the remaining portions of their contracts, fully guaranteed contracts were born.
Why do MLB players make so much money?
MLB players make a lot of money for several reasons. Teams bring in a lot of revenue leaving a lot of money to pay to players. Also, the MLB does not have a salary cap like some other leagues. This allows for an unlimited amount of revenue to be paid for players’ salaries. For more information about the salary cap, check out our article Why Doesn’t the MLB Have a Salary Cap?