Contract Renewal

Definition

Players who haven't signed a long-term contract extension or accrued the MLB service time necessary to be eligible for salary arbitration can have their contracts renewed by their clubs as one-year deals for the coming season.

These pre-arbitration players can negotiate their salaries but have little leverage, as clubs can choose to renew a contract for the Major League minimum if they cannot come to an agreement with the player. Of course, clubs may choose to sign their pre-arbitration players to one-year deals for more than the Major League minimum to build good will for future negotiations, but they are under no obligation to do so.

Clubs cannot reduce players' salaries by more than 20 percent of what they earned in the previous MLB season -- including a player's base salary and additional payments such as performance bonuses, signing bonuses and deferred compensation -- or 30 percent of what they earned two seasons prior, per the Maximum Salary Reduction clause in the Collective Bargaining Agreement.