MLB termination pay is a big problem. First, most players have no idea what this means. Second, every season there are Players that get burned by this because they do not understand the rules. Third, your Club knows and you should too.
Thus, this article focuses on my analysis of in-season MLB termination pay.
Rumors about MLB Termination Pay
In case you heard otherwise, baseball contracts are not necessarily guaranteed.
However, a player can negotiate a guaranteed contract through “special covenants”.
I believe every Player should do their due diligence and protect their contract from termination pay by seeking a special covenant within their contract that guarantees their pay.
What is MLB Termination Pay
The rule for MLB Termination Pay comes from your collective bargaining agreement. The rule says a Club can end a Player’s contract during the season and limit their wages to what would have been paid for the remainder of the season.
Wait, the Player’s contract was for five (5) years? Yes, a Club has the power to end it early and end the Player’s career.
Luckily, a Player can reduce this risk by using special covenants.
On the other hand, if a player signed a standard contract (a contract that was hardly edited or altered), very likely the player granted a Club the opportunity to terminate their “guaranteed” contract without player recourse.
Players Do not Believe This
Yes, the termination rule contradicts anything and everything players have heard in the news. If you need proof, consider reviewing section C, page 34 of the Collective Bargaining Agreement.
Reasons a Club might enforce the MLB Termination Pay Rule
More than one reason is one too many reasons, right? Yes, every Player can reduce this risk.
The MLB Termination Pay Rule identifies four (4) ways a Club can terminate a contract and reduce a Player’s wages during a season when:
- A Player failed to conduct themselves in a positive light,
- The Player did not keep themselves in top physical condition,
- A Club determined the Player’s skill was not MLB sufficient, or
- The Player did anything else to materially breach their contract (like not show up or use performance enhancing drugs).
Certainly, you are not standard. Just in case you are, you can find these reasons under section 7(b)(2) of MLB’s “standard contract“.
Other types of MLB Termination Pay
Yes, there are other types of termination play scenarios. Although this posting is focused on in-season baseball termination pay, here is a short list of other issues:
- Off-Season Termination Pay,
- Spring Training Termination Pay,
- Split Contract Termination Pay,
- Injury Termination Pay, and
- Non-Duplication Termination Pay.
Stop or increase MLB termination pay
Every player has the ability to stop or prevent termination pay by entering into “special covenants”.
Basically, this means a player needs to negotiate a payment schedule above and beyond what the “in-season MLB Termination Pay” clause allows.
Yes, you and your agent can negotiate this small, yet critical clause into your next contract.
Therefore, make it happen.