Baseball Contract Rules

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For a professional baseball player, signing a contract means not only hefty financial compensation, but also affirmation of his skills at the highest profession level. Negotiating a contract, whether a player is working on his first or last deal, is process that typically requires the player to hire an agent. Additionally, baseball contracts must adhere to certain regulations to be legally binding.

Minimum Salaries

  • Major League Baseball doesn't cap team salaries, unlike the National Basketball Association or the National Hockey League, whose teams must adhere to a budget set forth by the league commissioner. However, MLB does have a minimum salary threshold for players, which means their annual earnings cannot be below a certain dollar figure. That amount doubled over a 10-year period, from $100,000 in the year 1990 to $200,000 in 2000. It doubled again over the next decade to $400,000. The minimum salary is designed to increase, based on the expected rise in cost of living. If a player is on a major-league roster, no matter how much he plays, his salary can be no less than the league minimum.

Player, Team Option

  • A contract with an option clause allows either the player or the team to renew the deal for another season. With the player option, the athlete decides whether he wishes to continue the contract at an amount worked out with the team when the deal was signed, or terminate the contract—which is called "opting out." A player who opts out becomes a free agent and can sign with any team. If the player accepts the option, the team cannot refuse. Unless the team wishes to buy out the contract, the athlete remains property of that franchise. A team option allows the club to decide whether to keep the player or terminate the deal. Should the team choose to end the contract, the player has no recourse and automatically becomes a free agent. Option clauses are offered at the end of a player's contract, and usually renew the deal for a maximum of one more season.

No-Trade Clause

  • Occasionally, teams will offer a player a no-trade clause to get him to sign a contract. This arrangement means that the team is not allowed to trade the player to any other club without his consent. The player can use the clause as a negotiating tool by agreeing to waive it in exchange for a large one-time payment. Teams don't typically offer no-trade clauses in contracts, except to the most productive players. Players can ask for a limited no-trade clause. A limited no-trade clause allows the player to block a trade to specified teams.

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  • Photo Credit signing a contract image by William Berry from Fotolia.com
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