The Surprisingly Complex World of Minor League Contracts

I obviously don’t have access to MLB Trade Rumors’ site traffic data, so it’s an educated guess that “[Team] Signs [Player] To a Minor League Contract” pieces are among their least trafficked pages. I get it. Big trades and big free agent acquisitions are exciting. Some vet trying to hang on and being given another chance? Not so much. That said, the world of minor league contracts for veterans is one that I was very close to during my time in baseball. The first time I was given the assignment of negotiating these deals, I thought they would be simple. I quickly learned they were anything but. Unless something dramatic and unexpected happens in terms of the labor negotiations between the league and the players, spring training is close. With an unprecedented number of free agents still out there, plenty of these types of deals are being negotiated as we speak, so it’s a good time to get into what it takes to get a deal over the line.

Opportunity

The crux of any minor league contract negotiation is opportunity. Players don’t want to be in the minor leagues. The focus is on playing in the majors, and which potential employer gives them the best chance to spend significant time in the big leagues. The reasons are obvious. They get paid like big leaguers, they accrue service time, and the perks (better per diems, charter flights, opulent hotels, palatial clubhouses) are phenomenal.

Agents don’t talk about money or contract clauses first, they talk about the possibility of their player being with the big league club. I would imagine that every Quad-A shortstop right now has his agent in touch with the Reds, while avoiding clubs like the Mets, Padres and others where the position is filled by a star-level talent who tends to stay on the field. Agents for these players become depth chart aficionados, studying every team’s situation across various position families to see where their player might slide in.

Personally, I always tried to be honest with agents and players with regards to said opportunity. Sometimes a team is offering the player a real chance to break camp with the big club; sometimes they are clearly a depth piece meant to bide their time at Triple-A until someone gets hurt or drastically underperforms. And yes, sometimes you do find yourself in direct contact with players. I always appreciated the conversations, and thought it spoke well of the player on a makeup level, as the individual was personally invested in the process.

Beyond the chances to play in the big leagues, clubs need to sell potential roster pieces on the additional benefits of joining the team. For the Astros, the player development system and the club’s ability to communicate data-based improvements was a big part of the pitch. Often players wanted to speak to someone more important than the negotiator, like the GM or field manager, just to hear assurances from the source themselves.

Money Isn’t Everything

Big league deals are actually quite simple in comparison to minor league contracts. Sure there are the occasional no-trade clauses or opt outs to discuss, but more the most part, it’s all about the years and the money. If you offer more years or more money, you’re often going to get the player.

But when it comes to minor league deals, money is often the last thing talked about and is rarely negotiated much if at all. For the most part, veteran minor league free agents earn a salary in the $20,000-30,000 per month range. MLB has recently gone from a monthly to a weekly pay structure, but teams still think in the monthly terms, leading to awkward rates like $5,833.33/week ($25,000 divided by 30, multiplied by seven days). I’ve seen rates higher than that, with some eclipsing $35,000 a month, but again, this is consistently the easiest piece of the puzzle in terms of getting deals done. True veterans with more than six years of major league service time get additional protection from the CBA in the form of a $100,000 retention bonus should they still be with the club on a minor league deal in late-March just prior to the end of spring training.

There are two other pure salary structures to reach agreement on. The first is big league pay. When signing a minor league free agent deal with no service time, most players are going to be fine with the major league minimum, which will be $570,500 in 2021, assuming full pay. Players with big league experience get a bit more. Those coming off multiple years exclusively at the big league level can get into the seven figure range. Some players look to add on with incentives based on time spent in the majors (usually measured by plate appearances for position players or games for pitchers), and teams are often happy to oblige them under the theory that if the player actually contributes that much to the major league squad, they’ll be well worth those kind of numbers, which are dwarfed by the money spent on established players.

The final money piece that few outside of baseball have even heard of is “Paragraph 2” salary, more commonly referred to as P2 money. P2 salary is how much the player will make if he reaches the big leagues and then is optioned back (and accepts said option) to the minors. It’s usually a small bump from the player’s beginning minor league rate, and it’s almost never a sticking point in negotiations.

Again, negotiations on salary are rare and when they do happen, they tend to be quite easy. The player might be one of several indistinguishable guys of a certain type (extra outfielder, catcher, bullpen arm, etc.) the club has interest in, so dollar terms are non-negotiable. If the first player on your list doesn’t accept, you move on down the list. If a player really stands out within a group and is a primary target, teams are often happy to move a bit on the money, as those shifts are usually in the five-figure range, as opposed to the multi-million dollar adjustments that bigger free agent negotiations require.

The Devil Is In the Details

It’s in the nitty gritty pieces, the contracts clauses, that getting a deal done comes down to. This is where the most work is done in terms of both discussions and preparing a contract.

The easiest clause is the NRI, or non-roster invitation. Every veteran-level minor league free agent wants one, and every team is almost certainly apt to provide it. Teams enter spring training with 55-65 players on the big league side, and managers often want more as they ease their regulars back into the grind. Having someone around with been there, done that experience to start is never an issue.

The most difficult clauses to come to an agreement on, mostly due to all of the variation, are those concerning assignment and release, which fall under the general term of opt outs. The basics are that a player can request to be added to the 25- or 40-man roster by a certain date, and the team then has 48-72 hours to honor that request or release him from the contract with no further obligation from either side. Simple enough, but the hangups come from the dates, with both the player and team perhaps looking for earlier or later timeframes depending on the situation. Beyond the simple opt out, players can ask for related clauses that allow them to search out 25- or 40-man rosters spots with other teams, either through their agent, or at times by requesting that the club they sign with inform other teams of the player’s availability should such an opportunity exist. If a team has a roster spot for the player, the player’s current team has a two or three day window to match the roster assignment or allow the player to sign elsewhere; no harm, no foul.

The player might ask for a date prior to the end of spring training, thinking, “I either make this team, or I’m outta here.” That might be just fine with the club if the player is just being seen as depth for Opening Day, not to mention that at times it saves the retention bonus mentioned above). At other times, the club might want to move the date back if the player represents a more long-term insurance policy. And the reverse might be true if the team wants an earlier date and vice versa if the player is looking for the insurance of at least having a paying gig.

Finally, there is the Foreign Inquiry Language, or FIL. Players in the minors are often interested in going to foreign leagues (predominantly NPB and the KBO) for the opportunity to make guaranteed money that is usually more than the big league minimum. While I’ll cover the details of how a signed player ends up going to Asia in a future piece, at the most basic level there is a negotiated transfer fee paid to the club by the NPB or KBO team to release the player from their contract. FIL provides a figure the club must accept should an offer come from a KBO or NPB team. Usually in the $150,000-$200,000 range, if that offer is on the table, the MLB club is required to provide the player the choice of working out a deal with the foreign club, which often has already been done by their agent behind the scenes.

We are in the home stretch of what has been one of the strangest offseasons in the history of baseball. The number of free agents still on the board as the calendar flipped to February is galling, and with owners holding tight to the purse strings except for the super-est of superstars, many players who entered November expecting a big league deal are instead going to find themselves involved in smaller, but much more complicated negotiations.

If you have any questions, I’ll keep an eye on the comments and respond there.





Kevin Goldstein is a National Writer at FanGraphs.

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darkness88
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darkness88

Thanks for the article! Yeah, admittedly this was a large part a slap in the face, especially the P2 salary part.