MLB, union ban personal-services deals
{{#rendered}} {{/rendered}}Baseball players and owners have banned the type of personal-services contracts agreed to by Albert Pujols and Ryan Zimmerman during the offseason.
In addition, the sides said Friday they have prohibited the bonuses for milestone accomplishments contained in the deal Pujols signed with the Los Angeles Angels and the agreement between Alex Rodriguez and the New York Yankees that began in 2008.
Only new contracts will be affected under the agreement, reached March 29, and the previous deals will be allowed to stand. The prohibition was first reported by ESPN.com
{{#rendered}} {{/rendered}}"After discussions with the players' association, both sides agreed permitting these type of special covenants was not in the interest of either party," MLB Senior Vice President Dan Halem said. "As a result, we agreed that players and clubs cannot enter into these agreements going forward."
Pujols' $240 million, 10-year contract, agreed to in December, says the Angels will offer a personal-services contract for $1 million annually for 10 years that will start with his retirement and may be declined or terminated by Pujols at any time. The contract also contains a separate marketing agreement in which the Angels agreed to pay up to $10 million for the promotion and marketing of certain milestone accomplishments — $3 million for Pujols reaching 3,000 hits and $7 million for breaking Barry Bonds' record of 762 home runs.
Already signed through the 2013 season, Zimmerman agreed with the Washington Nationals in February on a new deal adding $90 million in guaranteed money over six seasons though 2019. There was a separate personal-services contract for $2 million annually over five years starting with his retirement or the end of the contract. If he's traded in 2012 or 2013, the personal-services deal would be voided and his salaries during his playing contract would increase.
{{#rendered}} {{/rendered}}Rodriguez's record $275 million, 10-year contract, finalized in December 2007 after he opted out of his previous deal, allows him to receive an additional $6 million each for five milestones the team designates as historic achievements. They are contemplated to be tying the home run marks of Willie Mays (660), Babe Ruth (714), Hank Aaron (755) and Bonds, and breaking Bonds' record.
MLB and the players' association approved all these deals, deciding there was no strict prohibition against them at the time. They decided to leave them in place with the new ban because players and teams had not been given notice at the time the contracts were negotiated.
"Both milestones agreements and post-contract personal-services agreements raise issues under the terms of the Basic Agreement," said union special adviser Rick Shapiro, who negotiated the ban with Halem. "After discussions with the commissioner's office, we agreed that they should no longer be permitted as a subject of individual negotiations between players and clubs."
{{#rendered}} {{/rendered}}At the time the agreements of Pujols and Zimmerman were filed, the sides agreed the personal-services deals wouldn't count now toward the luxury tax because they aren't guaranteed. If the personal-services deals are paid, the sides might have to decide then whether they count toward payrolls for the tax.
Bonuses are allowed for awards and for performance such as plate appearances, games played and innings.