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Incentive Clause

Definition

Incentives in contracts allow players to earn additional money by achieving certain predetermined benchmarks. Major League Baseball's Basic Agreement prohibits incentives from being awarded based on statistical achievement. Thus, playing time is the near-universal means by which players receive incentives. Pitchers with incentive-laden contracts typically trigger the incentives based on number of innings pitched, number of games started, number of relief appearances, number of games finished, etc. Hitters will most commonly trigger incentives based on plate appearances. Some contracts also contain roster bonuses, which reward a player simply for staying on the active roster for a certain number of days.

In the 2011 wave of collective bargaining agreement negotiations, milestone bonuses were prohibited by the league, meaning that players can no longer receive contractual bonuses for reaching plateaus such as their 3,000th hit, 500th home run, 200th win, etc.

Example

In the 2015-16 offseason, the Astros signed Doug Fister to a one-year contract with a $7 million guarantee. His contract contained up to $5 million worth of incentives, allowing him to earn a maximum of $12 million for the 2016 season.