By Ken Rosenthal
The biggest surprise of the Vladimir Guerrero Jr. extension is not that he landed a $500 million deal from the Toronto Blue Jays without going to free agency.
No, the shocker is that the contract includes a $325 million signing bonus, according to sources briefed on the deal. Guerrero, 26, will receive the remaining $175 million in salary.
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That’s right, the Jays will pay out 65 percent of Guerrero’s contract in a signing bonus. Both the bonus and salary will be distributed in varying annual amounts over the 14-year term of the deal.
The Blue Jays officially announced the extension on Wednesday, two days after it was first reported by The Athletic.
“Through the entire process I was all-in on the business side. Every decision, every conversation and every meeting, I was aware of everything,” Guerrero Jr. said on Wednesday via translator Hector Lebron. “At the end of the day, I was the one going to make the decisions, not my agents. I was in on every part of the process.”
Asked if there was a turning point in the negotiations between Guerrero and the team, which came together in recent days, despite Guerrero opening the season without an agreement, Blue Jays general manager Ross Atkins said Wednesday that there was “not one.”
“Every deal there’s so many different levers to pull,” Atkins said. “It’s not just about the $500 million number. There’s a lot of complexity to these deals. And so we were fortunate to find one that worked for everyone.”
Baseball’s collective bargaining agreement does not restrict the amount a team can include in a signing bonus. The bonus, however, is included in the calculation of a player’s average annual value for luxury tax purposes. Including salary, Guerrero’s annual luxury tax hit will be $35.71 million.
For Guerrero, the benefit of getting the bulk of his money in a signing bonus would appear twofold. Signing bonuses are allocated to an athlete’s state of residence. Guerrero resides in Florida, a state without income tax. So, he presumably will avoid paying state tax on the bonus, generating millions in savings.
The other benefit is that signing bonuses are not contingent on the performance of services. Guerrero would receive his annual payout if Major League Baseball canceled games due to a work stoppage, a possibility with the sport’s collective bargaining agreement expiring on Dec. 1, 2026. He also would receive it if the league canceled games for some other reason, such as a pandemic.
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The benefit to the Blue Jays in paying out more in signing bonus than salary — if it exists at all — is unclear.
“There is benefit to the player that was attractive from a tax perspective and the guaranteed nature of it,” Atkins said Wednesday. “And there’s benefit to the club from an accounting perspective.”
Within 30 days, Guerrero will receive an initial signing bonus payment of $20 million. But because his deal runs from 2026 to ’39, that money will not count against the Jays’ luxury tax payroll this season. The CBA states that a signing bonus only applies to the luxury tax payroll during the guaranteed years of the contract.
Additional reporting by Jen McCaffrey
(Photo: Mark Blinch / Getty Images)
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Ken Rosenthal is the senior baseball writer for The Athletic who has spent nearly 35 years covering the major leagues. In addition, Ken is a broadcaster and regular contributor to Fox Sports' MLB telecasts. He's also won Emmy Awards in 2015 and 2016 for his TV reporting. Follow Ken on Twitter @Ken_Rosenthal
