Professional sports contracts and guaranteed payouts upon release and/or termination vary by league. In Major League Baseball’s case, though, the rules are relatively straightforward regarding whether the money on contracts is guaranteed.
Are MLB contracts guaranteed?
Yes. Per the league itself, Major League Baseball players who have a Major League contract are guaranteed to receive the full amount promised in said deal.
In Article XXIII Section C (d) (i), the CBA outlines exactly how contract termination payouts work. For deals that cover a season, it states:
“If a Club terminates a Uniform Player’s Contract that covers a single championship season, the Club shall include in its
Actual Club Payroll for the Contract Year in which that season
falls any Salary paid to that Player, either under this Agreement
or a Special Covenant to the Contract (subject to any offset called
for by this Agreement or a Special Covenant).”
When it comes to terminated multi-year contracts, Article XXIII Section C (d) (ii) stipulates:
“If a Club terminates a multi-year Uniform Player’s Contract while it remains obligated to pay Salary under either this
Agreement or a Special Covenant to the Contract, Salary shall be
allocated to that Club for each Contract Year during which its
obligation continues. Salary shall be attributed to each such Contract Year pursuant to this Article XXIII (subject to any offset
called for by this Agreement or a Special Covenant). This attribution shall apply even if the Club pays the Salary in advance.”
Given that MLB contracts can vary in length, it’s a risky gambit for teams that release underperforming players. For example, if a team releases a player in the middle of a five-year, $150MM deal, the rest of that money is still owed to the player.
It should also be noted that Article IX (Section E) also outlines protocol for players who sustain a disability while under contract. The section states:
“If a Player’s Contract is terminated by a Club by reason of the Player’s
failure to render his services due to a disability resulting directly from
injury sustained in the course and within the scope of his employment
under the Contract, and notice is received by the Club in accordance with
Regulation 2 of the Uniform Player’s Contract, the Player shall be entitled to receive from the Club the unpaid balance of the full salary for the
year in which the injury was sustained, less all workers’ compensation
payments received by the Player as compensation for loss of income for
the specific period for which the Club is compensating him in full.”
Lastly, players signed to Minor League deals must have their contracts converted to an MLB deal to have it guaranteed.
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