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Following his victory in the Home Run Derby, New York Mets star Pete Alonso won $1 million in bonuses. In fact, this is more than his base salary of $676,775. How is this possible?

First, it is important to understand how contracts in the MLB work. Similar to other sports, the MLB has a collective bargaining agreement (CBA). This agreement serves as the basis of the relationship between players and their teams. One aspect of this agreement is the rights that both players and teams reserve regarding contracts. Once a player makes the Major League, their team reserves their rights for three seasons (years). This essentially means that the given player does not have the ability to pursue other teams in free agency.

Following these three years, players are eligible for arbitration. This occurs when a player and team cannot decide on a salary. Both the team and player will submit a salary that they think is fair, to which an independent hearing will be held between the two parties. A decision will then be made on the player’s salary. After six seasons (years) in the MLB, a player is then eligible for free agency. They have total control over where they would like to sign, provided that teams are interested in their services.

Returning to Alonso, he is currently playing in his third season in the Major League. Therefore, he will be eligible for arbitration this upcoming offseason (2021-2022). Over the preceding few years, arbitration hearings have led to large contracts for some of the MLB’s brightest talents. If this is needed, a star like Alonso would certainly be one of these players on tap for a large extension.

As of now, Alonso’s pre-arbitration contract is still minuscule in comparison to what he could be making in the future. These contracts are generally quite “small”, partly due to the fact that young and new players are still risky, as the Minor Leagues are very different from the Major Leagues. Teams do not want to take unnecessary risks and spend large amounts of money on the seemingly unknown.

While Alonso does not fall into a category of the “unknown”, the Mets would love to save as much money as they can to save themselves from paying the luxury tax. This “tax” is a way of balancing teams and discouraging teams in large markets from hogging all of the league’s top talents. Teams above the luxury tax pay a fee to the MLB in an increasing amount every year. The only way for this to be negated is for a team’s salary to be brought down under the limit.

Bonuses such as the one Alonso received can be obtained in numerous ways. Such ways include the incentive clause (bonuses for playing time), signing bonuses, and participating in competitions such as the Home Run Derby. Through these processes, Alonso has come out with an extra $1 million.



Photo: John Minchillo/Associated Press