Explain Pro Baseball Player Contracts, Trades and free Agency

The Game Room
1

In the offseason all the baseball talk is about free agents and signing new contracts. There has also been talk of trades. Now I left the US in 1970 so I’m aware of contracts and trades. But I don’t remember free agents so I have a few questions.

When a pro baseballer signs a contract, he signs for a specified length of time. I would guess that the player would want to live and raise his family with the secure knowledge that he would live in the same place that suits his and his family’s lifestyle. I would also think that he would like to stay there until his children reach a certain age. Does he have the option of a clause in the contract, say for ten years, that prohibits a trade? If so, would he have to sacrifice dollars for that clause? Would club negotiators be likely to allow such a clause?

When a player comes off contract, is there any expectation that loyalty would suggest that he first talk renewing his contract with the club he just came off contract with?

Is free agency always the only option when a player comes off contract?

When did free agency come into play? Was it introduced because of ‘restraint of trade’ restrictions?

If a player is traded, does he receive additional compensation to shift his family and goods and chattels to another city?

2

Dear God. You’re asking for 125 years of baseball contract law in a single post.

OK, let’s start with the concept of free agency. Free agency as we know it today in baseball did not come until 1975-1976 following arbitrator Peter Seitz’s invalidation of the reserve clause. It would be far easier for you to read about it, but here’s what it boils down to:

Baseball contracts had an option clause, called the reserve clause, which said that the owners would be permitted to pick up an option on the contract for one year after the contract had expired. The owners claimed that by picking up the option that reset the year, and therefore players could be kept in perpetuity. The owners did this to depress market value for players because they did not have to outbid each other for services.

Curt Flood sacrificed his career by challenging the reserve clause in 1969, but his challenge was rejected, although it laid the groundwork for the successful 1975 challenge by Andy Messersmith and Dave McNally.

The owners, following their loss, implemented various schemes to keep players where they were, such as limited free agency based upon time in service, where they could match any offer, and outright collusion during the 1980s.

I’ll let someone else take it from here. My head hurts.

3

Players can and have negotiated “no-trade” clauses in their contracts. Also, the Major League Collective Bargaining Agreement (Warning: PDF written in legalese) provides that no player with ten years experience, including the last five years with one team, can be traded without the player’s consent.

In practice, many players waive their no-trade contracts in exchange for a bonus.

Players who have four years of experience, but don’t yet qualify for free-agency, can request contract negotiations with their current team through binding arbitration. If the team does not agree to arbitration, that player can become a free agent. But before a player qualifies for free agency, his current team always has first rights.

And DQE, your original premise is not totally correct. Major League Baseball players have short careers (IIRC the average career in the major leagues is only about four years) and they spend all of spring training and half the championship season traveling. Many, if not most players are quite willing to make their permanent home in a different city than the one they play for, particularly if they can make more money during their careers.

4

Moving to The Game Room from GQ.

Colibri
General Questions Moderator

5

The link at the bottom of this post says the average career is 5.6 years. I have to disagree with you, though, when you say that major league baseball players have short careers. Sure, there are a ton of players who don’t make it after being called-up (which obviously skews the averages), but the players who do make it can have long careers. Since baseball isn’t as physically grueling as the other “big 3,” in baseball you don’t see players go from being at the top of the sport to being unemployed in really short spans of times. Look at baseball players like Jamie Moyer, Greg Maddux, and Randy Johnson; in what other sports do you see players their age continue to thrive in the sport (Chris Chelios might be an exception, I’ll grant)? But then look at a player like Shawn Alexander, who went from being NFL MVP in 2005 to his current state of unemployment.
http://www.sciencedaily.com/releases/2007/07/070709131254.htm

6

I don’t disagree with you, I just think we’re making two different points. Sure, a major league career can run 20 years, which is an eternity compared to football, hockey or basketball. But, as you point out, a ton of players who get to the major leagues don’t even last long enough to qualify for free agency.

The odds may be better that an MLB player will have a longer career than his counterpart in other sports, but the odds are still against it. That’s why I said that a lot of players will choose more money over a no-trade contract.

7

I guess I understand that.

So a ten year contract, like that supposedly signed by A-Rod (don’t know his real name but would guess Alex Rodriguez?) in 2007, is very unusual?

8

Ten year contracts are EXCEPTIONALLY unusual… A-Rod’s is the only one I can think of.

  1. No-trade clauses are very common for major league veterans.

  2. Irrespective of any contractual arrangement, a player with ten years of major league service time, who has spent five years with the team he is currently playing for, may veto any trade, no matter what his contract says.

Not really. If the team and player are already interested in him sticking around, a new contract will often be negotiated before the current contract ends. This is true of several current very large contracts, such as Derek Jeter or Vernon Wells, neither of whom has ever actually reached the end of a contract without arranging a new one.

“Free agency” by definition means you’re not under contract to a team. As kunilou points out, the player and team may choose arbitration in certain circumstances, but I guess you could say that’s a contract of a sort.

Actually, I think this is worked into the collective agreement.

9

Great answers.RickJay. Thank you.

10

That study is horribly flawed as it excludes pitchers for seemingly no reason at all and then includes players who only get called up for a handful of games and then are immediately sent back down. Including career minor leaguers and excluding pitchers (who often have extremely long careers relative to other players) doesn’t prove much of anything.

And in fact, I’d say the average major league career of a real major leaguer is probably close to ten years.

11

Well, what’s a “Real major leaguer”?

I mean, if you’re trying to figure out a major league ballplayer’s earning potential, you cannot simply dismiss ones who didn’t last long.

I’ll do a sampling if you like, but I think it’s fair to say the VAST majority of major league baseball players will not play ten years, even a lot of ones who have some decent seasons. (we also have toi agree on what “Ten seasons” means - to play in ten major league seasons, or actually have ten years of service time?) However, on any given team or in any given time, many if not most of the players playing will have careers of ten seasons or more; there’s more short-career ballplayers, but most of the playing time is eaten up by long-career players because, of course, they tend to be better.

12

I think it’s the rookie threshold from the official MLB rules:

Basically, I think if your entire career falls below that threshold, you didn’t have a career but a “cup of coffee”. You were a minor leaguer who played in a handful of major league games, not a major leaguer who spent most of his time in the minors.

For example, Chito Martinez was a huge star for the minor league Rochester Red Wings in the early 90s. Put on a statistical show that some people still talk about. Yet, after getting promoted to the majors, he pretty much disappeared. He still managed to play two seasons and appear in a third.

As for what constitutes a season, I’m not sure where I’d draw the line. That’s a tough one.

13

Let me give a very fast summary of a typical player’s career arc through contracts

Entry into pro ball: Players may be drafted directly from high school or college. If you are 18, you have 4 years of the team setting your contract in the minor leagues. If you are 19 or up, you have 3 years of the team setting your contract in the minor leagues. Both of these are the maximum amounts of time you can spend in the minors before you must be added to the major league roster. If you are not, there is a second draft, called the Rule 5 Draft where all the other teams have a crack at putting you on their team. Click the link for more info.

Years 0-3: Players with less than 3 years experience, which is measured by days they are actually on a major league roster, have their contracts set by the club. This means the team pays them whatever the team deems them worth and the player has no alternative to contesting it. A few notes here: first, “experience” is measured in days with a certain number of days equaling a year. It is not uncommon for horribly cheap teams, like my Pirates, to hold off on calling up minor leaguers until sometime in early June. This maneuver assures that that year will not count as a full year, so it essentially gives an extra year of setting the player’s contract. Also, it is possible to play well enough in your first 2 years to progress to the second step; these “super 2s” meet some crazy criteria and it is a pain in the ass to try to understand.

Years 4-6: Players become eligible for arbitration. If a contract can’t be agreed upon after the year, the player and the team each submit a figure and an arbiter decides on one or the other, no compromise in the middle. This creates the uncomfortable situation of teams submitting lower offers and then crafting an argument about everything wrong with the player to the arbiter. The arbiter has no power other than weighing each case and determining whether to accept the player’s figure or the team’s. This is the first place in which a player’s contract escalates to seven figures quite quickly; as such, it is not uncommon for a team to “non-tender” the player by not offering a contract. In such case, the player becomes a free agent. Due to the lack of year-to-year assurances, it is also not uncommon for teams to guarantee a multi-year contract through arbitration in exchange for either guaranteed year-to-year stability for the player or for less money. See: Ryan Braun’s recent contract.

Free agency! Years 7+: Huzzah! After 6 years, a player finally is able to shop himself on the open market. Their current team is allowed to offer arbitration similar in structure to years 4-6; however, the player now is under no obligation to accept. Sometimes players do accept on the grounds that they can get more in arbitration than on the free market. If they do not accept, they can sign a contract with any team and their team may receive a compensatory draft pick. Allowing players to leave after offering arbitration is how the Oakland A’s built up a surfeit of draft picks in recent history.

A few last notes on trades: no trade clauses are not uncommon for veterans to insist on. Also somewhat more common are limited no trade clauses, where a player specifies specific teams that they cannot be traded to (or a limited number of teams they can be traded to). As previously mentioned, a player with 10 years experience and 5 on his current team also cannot be traded without his permission–this came into play with the Ken Griffey Jr. to the White Sox trade.

Contracts of 10 years are almost unheard of. The average is probably around 2-3 years with contracts over 5-6 being very rare. Since contracts are guaranteed, teams want to have some guarantee of year-to-year performance whereas players generally always think they will outperform their contract and always get more money on the free market. One year contracts are quite common simply because they don’t lock the team into an underperforming player and a player can outperform and quickly earn himself more money.

14

I’ll just add that there’s no expectation of loyalty, but there are reasons a player may prefer to stay: for instance the team has been successful and looks to continue doing so and the player wants to keep being a part of it; the player may not want to move his family; the player may have a particular coach or manager they’re very comfortable with; or the player is nearing the end of his career and for sentimental (and marketing!) reasons wants to retire with the team he’s been playing with. So generally nobody blames the player if he does leave, but sometimes the current team can get a ‘hometown discount’ and be able to pay the player a little less than he’d require from another team.