Baseball players with deferred contracts have become a common feature in the game, especially in the modern era. This is because deferred contracts enable teams to spread out the payments of a player`s salary over an extended period rather than paying the player all at once. This helps teams to manage their payroll more effectively and stay within their budget.
What is a deferred contract?
A deferred contract is an agreement between a player and a team to delay payment for part of a player`s salary until after the contract has expired. Typically, the deferred money is paid out over several years after the player retires or is no longer with the team. Deferred contracts are often used when a team wants to offer a player a substantial salary, but wants to avoid exceeding the luxury tax threshold, which is a payroll ceiling imposed by Major League Baseball.
The benefits of deferred contracts
There are several benefits of deferred contracts for both players and teams. For players, it provides them with long-term financial security. They can receive payments for years after their playing career has ended. For teams, deferred contracts allow them to sign players to longer-term deals without busting their budgets. This is especially useful for small-market teams that cannot afford to pay top-tier free agents in one lump sum.
Famous examples of deferred contracts
There have been several high-profile examples of deferred contracts over the years. One of the most famous is Bobby Bonilla`s deal with the New York Mets. Bonilla signed a five-year, $29 million contract with the Mets in 1992, but was released after the 1999 season. Instead of paying Bonilla the $5.9 million he was owed, the Mets agreed to defer his payments for 10 years and pay him $1.19 million annually from 2011-2035. This means that Bonilla will receive a total of $29.8 million from the Mets over 25 years.
Another notable example is the deferred contract signed by former Boston Red Sox slugger Manny Ramirez. In 2000, Ramirez signed an eight-year, $160 million deal with the Red Sox that included $32 million in deferred payments. This means that the Red Sox will continue to pay Ramirez $2 million annually through 2026.
Deferred contracts have become an essential tool for teams to manage their payrolls effectively. While these contracts may seem complicated, they provide benefits for both players and teams. For players, deferred contracts provide long-term financial security, while teams can sign top-tier players to long-term deals while staying within their budgets. As the game of baseball continues to evolve, it is likely that more players will sign deferred contracts in the future.