Incentive Clauses

From reader John Bristor:

Scenario: Major League pitcher has a guarranted 1 yr contract with a no trade clause and performance bonuses based on number of games started. Pitcher and manager don’t get along, and Team A designates him for assignment, he clears waivers and is signed to a new contract by Team B at the prorated minimum.

Team A is repsonsible for the 1st contract in full, but what about the incentive clauses. Let’s say the pitcher continues to start every game for team B. And has enough starts that would have insitgated the incentive bonus. Shouldn’t the TEAM A be responsible or does the Player get nothing?

Have I ever mentioned that I love it when readers e-mail me with questions and leave comments? First of all, thank you to John Bristor for the excellent question. No Sports Agent knows the answer to every sort of question (especially contractual questions) off-hand. Hopefully this site can be a reference point to answer some questions, like this, which are not always easy to solve.

Anyway, lets look at the question and assign Team A as the St. Louis Cardinals and Team B as the New York Yankees. Let’s also assume that the pitcher under consideration is Sidney Ponson.

When Ponson was signed as a free agent in December, the contract included a no-trade clause. He was released by the Cardinals and should be added to the Yankees roster today. The Cardinals are no longer responsible to pay the $1.5 million to Sidney Ponson (he is still 10 starts away from the bonus). This freed up some money to pay for the acquisition of Jeff Weaver.

Yankees are paying Ponson the pro-rated min. salary (seems more and more like this is the particular situation that the reader is focusing on).

Since the threshold was never reached to obtain the incentive bonus on the contract signed including the bonus (with the Cardinals), it is to my understanding that neither the Cardinals nor the Yankees will pay Ponson the bonus even if he does attain 10 more starts this year. It is not gauranteed, thus it is a bonus. The Yankees will complete a new contract with Ponson, and no terms under the past contract with the Cardinals will be applicable. Ponson’s agent could negotiate with the Yankees to include a new bonus package…that remains to be seen.

Any discrepancies with my analysis?

[tags]sidney ponson, ponson, yankees, cardinals, incentive clause, mlb, baseball[/tags]