Major League Baseball and the MLB Players Association have agreed to put an end to personal service deals and milestone bonus clauses, ESPN.com's Jayson Stark reports. Existing contracts with these deals or bonuses won’t be affected by the changes, which were agreed to this month.
Albert Pujols and Ryan Zimmerman recently signed long-term contracts which include personal services provisions and Alex Rodriguez has milestone bonuses associated with his contract. However, MLB and the union say these bonuses violate baseball’s collective bargaining agreement. The sides have agreed that the CBA doesn’t allow players to agree to deals that include obligations beyond their playing careers.
MLB is trying to prevent teams from finding loopholes that enable them to evade the luxury tax, Stark reports. Personal service deals and milestone bonuses aren’t considered guaranteed money and therefore don’t count against the luxury tax.