The Los Angeles Dodgers recently signed 2020 National League Cy Young winner Trevor Bauer to one of the most unique contracts in Major League Baseball history.
Bauer agreed to a three-year, $102 million deal with the team on Thursday, making him one of the highest-paid players per year, theoretically, as the pact unfolds. It has opt-outs that trigger top salary, a deferment and a short-term model structure. But most of all, it has flexibility, something a player of Bauer’s talent usually avoids.
“This is what this player wanted,” Jon Fetterolf, a partner at litigation firm Zuckerman Spaeder, told CNBC on Thursday. Fetterolf is one of the two MLB co-agents who negotiated Bauer’s deal. The other is Rachel Luba of Luba Sports.
“We ended up doing a three-year deal where he is going to make a lot more in the first few years than we’ve historically seen,” he added, noting Bauer could make $85 million in the first two years of the deal.
Again, it’s unique, and here’s how it’s structured.
Bauer is scheduled to make $38 million in his first year. If he opts out of the deal, that total becomes $40 million, as the Dodgers would pay him an extra $2 million on his way out.
The Dodgers can benefit. If Bauer departs, they can defer $20 million of the salary for future payment – similar to the Mets’ agreement with Bobby Bonilla. There’s also a $10 million signing bonus factored in to paid out over the 2021 season.
That bonus helps, since the money is only taxed in the player’s state residence, whereas MLB game checks are taxed based on the city where clubs play during the year.
Year two of the deal totals $47 million. It’s $32 million for the year but, should he opt-out, the Dodgers will pay him another $15 million.
These salaries make Bauer the highest-paid player (per-year) in MLB for 2021 and 2022.
And if Bauer is still a Dodger after two years, he misses the $15 million buyout but recoups it all with a $32 million payment for the deal’s final year. The total: $102 million over three years.
“The structure gives him the chance to evaluate the situation year-by-year,” Fetterolf said. “It’s a different kind of contract, and it also reflects that he’s a different kind of person.”