Incentives and Options
Options in a contract give the player, the team, or both the player and the team, the right to determine whether the player will stay with the team for one or additional years at a pre-determined amount beyond the fixed initial contract term. Options may also include an option buy-out, under which the player receives an amount of money if the option, usually a team or mutual option, is not exercised. The collected data shows four main ways incentives are being used in connection with options in the current market.
1. Vesting/Convertible Option Incentives: Incentives are used as a milestone at which an option will ‘vest’, meaning the player gains the right to a player option for a certain year, or as a milestone at which an option will convert from a team or mutual option into a guaranteed additional contract year or player option.
These incentive structures appear primarily in two types of contracts. First, they appear in long-term contracts with pre-arbitration or arbitration-eligible high potential players. For example:
OF Jackson Meriill’s pre-arbitration contract with the San Diego Padres, starting in the 2026 year, guarantees 9 years, with the 10th year (2035 season) set up as a team option that will convert to a player option if Merrill finishes top-five in MVP voting in any season during the contract. This player option year will start at roughly the same value as the annual salary Merrill will receive from 2030-2034, although, as discussed below, the value of the option year may also escalate.
Arbitration-eligible DH Brent Rooker’s contract with the Athletics, starting in the 2025 year, guarantees 5 years, with a player option for the 2030 year that will vest if Rooker achieves any of the following three objectives: (a) 500 plate appearances in 2029; (b) 900 plate appearances across 2028 and 2029; or (c) 2 top 10 MVP finishes in 2027-2029. The vesting option year salary is higher than any of Rooker’s earlier salaries in the contract and can escalate.
Arbitration-eligible C Cal Raleigh’s contract with Seattle Mariners, starting in the 2025 season, guarantees six years 6 years, with a vesting player option for the 2031 season that vests if Raleigh catches 100 games in 4 of 6 seasons from 2025 to 2030. The value of the vested player option year is slightly less than Raleigh will earn in the immediately preceding years in the contract. Interestingly, this incentive structure vests based on games played at catcher, rather than incentives related to awards or plate appearances.
Arbitration-eligible C William Contreras’ contract with the Brewers, starting in the 2026 season, is somewhat of an outlier here. It is a one-year contract with a team option for a second season, which converts to a mutual option if Contreras finishes in the top-four of MVP voting in 2026.
Second, this incentive structure appears in medium-value, medium to short-length contracts with relatively older pitchers:
36-year-old SP Seth Lugo’s contract with the Kansas City Royals, starting in the 2026 season, guarantees 2 years with a 2028 club option that is guaranteed with 335 innings pitched combined in 2026-2027 or 190 IP in 2027. The value of the option year is slightly less than Lugo’s salary through the first two years of the contract.
37-year-old SP Merrill Kelly’s contract with the Arizona Diamondbacks, starting in the 2026 season, guarantees 2 years with a 2028 vesting option that vests with with 170 innings pitched in 2027. The option year salary is less than Kelly will receive in the first two years of the contract but can slightly escalate.
35-year-old RP Tyler Rogers’ contract with the Toronto Blue Jays, starting in the 2026 season, guarantees 3 years with a vesting option for the 2029 season that vests if Rogers has 110 appearances across 2027-28 or 60 appearances in 2028. The option year value is less than Rogers will receive in the preceding contract years.
37-year-old RP Aroldis Chapman’s contract with the Boston Red Sox, starting in the 2026 season, guarantees 1 year, with a 2027 vesting option that vests if Chapman pitches 40 innings in 2026 and passes an end of year physical. The value of the option year is the same as the first year of the contract.
34-year-old RP Matt Strahm’s contract with the Philadelphia Phillies, starting in the 2025 year, guarantees 1 year with a vesting option for the 2026 year that vested if Strahm pitched 60 innings in 2025. Strahm, now with the Royals, achieved this incentive, and exercised his vested option at $7.5 million, the same amount he made in 2025.
There are also a couple short-term position player contracts, namely the 2026 1-year contract between Yandy Diaz and the Tampa Bay Rays and the 2025 1-year contract between Jorge Polanco and the Seattle Mariners, which contain this incentive structure based on plate appearances (450 and 500 respectively).
2. Option Year Escalator Incentives: Incentives are used as a milestone which, if achieved, will increase the player’s salary during an option year. This is the most common structure under which incentives affect options.
As above, there are certain types of contracts which appear more likely to contain this incentive structure. First, this structure again appears in long-term contracts with pre-arbitration and arbitration-eligible players, with the option year escalator being tied to award incentives:
Jackson Merrill’s contract, described above, also contains option year escalators whereby his salary in the option year will increase by $1 million each time he finishes in the top 10 in MVP voting, potentially pushing the value of his option year above those in the preceding years.
Brent Rooker’s contract, described above, also contains option year escalators whereby his salary in the option year will increase by $2 million per top 5 finish in MVP voting and $1 million per 6th to 10th place finish in MVP voting, potentially raising his option year salary significantly higher than his earlier salaries in the contract.
Pre-arbitration OF Roman Anthony’s contract with the Boston Red Sox, starting in the 2026 season, guarantees 8 years with a club option in the 9th year. Anthony’s salary in the option year can increase as follows: $2 million per first place in MVP voting during the contract, $1 million per 2nd and 3rd in MVP voting during the contract, $750,000 per 4th or 5th in MVP voting during the contract, $500,000 per 6th to 10th in MVP voting during the contract, and $200,000 per all-star selection during the contract. The salary during the club option year is significantly higher than the average annual value of the contract, and can escalate well beyond this figure if Anthony achieves these incentives.
Pre-arbitration 2B Kristian Campbell’s contract with the Red Sox, starting in the 2025 year, guarantees 8 years and then contains two team options for the 2033 and 2034 seasons. Campbell can receive additional money, up to $2.2 million per year, during the option years (as well as the two years preceding the option years) based on his finish in MVP and all-star voting in the immediately preceding year.
Pre-arbitration OF Lawrence Butler’s contract with the Athletics, starting in the 2025 season, guarantees 7 years with a club option for the 2032 season. There are a maximum of $6 million in escalators for the option year tied to finishes in MVP voting, which, if achieved, would, like Roman Anthony’s contract, push his option year salary well beyond any salary prior to the option year.
Arbitration-eligible SP Christopher Sanchez’s contract with the Philadelphia Phillies, starting in the 2025 season, also contains a similar structure. While only guaranteeing 4 years, there are two club options for the 2029 and 2030 seasons. The salaries for each of these years can be increased by $1 million each per top-10 finish in Cy Young voting. These club options start at significantly higher values than the first 4 years of the contract, and were already escalated with Sanchez finishing second in Cy Young voting in 2025.
Pre-arbitration SS Jacob Wilson’s contract with the Athletics, starting in the 2026 season, guarantees 7 years with a club option for the 2033 season. There are a maximum of $4 million in escalators for the option year tied to finishes in MVP voting in the 2031 and 2032 seasons.
This structure can also be quite significant from a player perspective in one-year RP contracts. For example, Matt Strahm’s contract, discussed above, contained option year escalators that increased Strahm’s option year salary from $4.5 million to $7.5 million based on a $1 million increase per each of 40, 50 and 60 innings pitched. Jonathon Loasiga’s 1-year contract in 2025 with the Yankees and John Brebbia’s 1-year contract in 2025 with the Tigers similarly contained significant option year escalators, although neither player achieved these objectives.
A related, but more nuanced, incentive appears in one-year contracts for pitchers who may appear as starters or relievers. Of particular note, Jacob Waguespeck’s 1-year contract with the Rays for the 2025 season contained a very interesting structure whereby his salary in a subsequent club option year would increase from $1.5 to $2 million if he reached 20 points, which included two points for every start and one point for a relief appearance. Reflecting a similar goal, Kyle Hart’s 2026 contract with San Diego contains option escalators for a 2027 option year that can double his salary in the option year if he starts 32 games through a tiered escalator system that rewards him for 16, 20, 24, 28 and 32 starts. Jose Urquidy’s 2025 contract with Detroit included a similar setup.
This incentive structure can also be seen in a few shorter-term SP contracts, as Zach Eflin’s 1-year 2026 contract with the Orioles, Merrill Kelly’s 2-year 2026 contract with the Diamondbacks, and Jack Flaherty’s 2-year 2025 contract with Detroit all containing option escalators based on innings pitched or games started
Finally, SP Drew Rasmussen’s 2025 contract with the Rays presents a unique form of this structure. Rasmussen, who has a history of injuries, is guaranteed 2 years under the contract, with the third year being a club option for the 2027 season. This club option starts at $8 million, more than he makes in the first two years of the contract combined, and can also escalate by up to an additional $12 million, with a possible $6 million coming from number of games started in 2026 (tiered structure at 8, 12, 16, 20, 24 and 28 starts) and the other potential $6 million coming from Rasmussen’s health during the 2026 year. This aspect of the incentive is conditional upon Rasmussen passing a physical for the 2027 season, and will escalate the value of the option based on his health in the 2026 season as follows: (a) $2.5 million if he spends more than 75 days on the injury list for arm-related reasons or spends more than 105 days on the injury list for any reason; (b) $3.5 million if he spends 75 or fewer days on the injury list for arm-related reasons and spends 105 or fewer days on the injury list for any reason; (c) $4.5 million if he spends 45 or fewer days on the injury list for arm-related reasons and spends 75 or fewer days on the injury list for any reason; or, (d) $6 million if he spends 15 or fewer days on the injury list for arm-related reasons and spends 45 or fewer days on the injury list for any reason.
3. Buy-Out Escalator Incentives: Incentives are used as a milestone which, if achieved, will increase the value of a buy-out that a player receives if an option is declined.
This incentive structure is not very common and seem to be focused in one-year deals, but there are a few notable examples. Pitchers Zach Eflin and Kyle Hart’s contracts, both discussed above, include buy-out escalators in addition to option incentives. For Eflin, the buy-out escalators have the potential to significantly increase the value of the 2027 buy-out, from $2 million to $4.5 million depending on how many starts he makes (tiered at 15, 20 and 25 starts). Hart’s incentives can similarly more than double the buy-out amount, as his 2027 buy-out can increase from $200,000 to $500,000 if he makes 60 appearances (tiered at 50, 55 and 60 appearances). RP Justin Topa’s 2026 contract with the Twins also contains a buy-out escalator.
The impact of the buy-out escalators are similarly significant for position players. OF Harrison Bader’s 2025 contract with the Phillies contained a 2026 mutual option with a $1.5 million buy-out, that was escalated to $3 million based on Bader making over 500 plate appearances. C Jacob Stalling’s 2025 contract with the Rockies contained an interesting version of this structure, as his 2026 mutual option contained a $500,000 buy-out that could have been escalated to $1 million if he caught 100 games in 2025 (tiered 80, 90, and 100 games caught). IF Taylor Walls’ 2025 contract with Tampa Bay also included a buy-out escalator based on plate appearances.
4. Reverse Incentives: Finally, there are contracts which contain reverse incentives, where a team stands to benefit from a contingency related to a player, usually related to player’s health. This structure essentially serves as the inverse of incentives which provide the player with additional potential money based on their health. The contracts of Drew Rasmussen and Aroldis Chapman, both above, are examples of this.
The LA Dodgers stand out significantly as the team most frequently using this incentive structure. Dodgers’ SP Blake Snell, RPs Edwin Diaz and Tanner Scott, and OF Teoscar Hernandez all have contracts starting in 2025 or 2026 with these clauses. SP Yoshinobu Yamamoto’s 12-year contract starting in 2024 also contains a similar structure. The data collected shows only two non-Dodgers contracts signed for the 2025/2026 seasons that have this incentive structure, and Hernandez is the only position player identified with this structure in their contract.
The Dodgers have used the same setup for all of these pitcher contracts, whereby the Dodgers’ gain a team option at the end of the contract at a heavily discounted rate relative to the other years in the contract if the player spends a certain amount of time on the injury list for a specific injury during the contract.
For example, Snell’s 5-year contract gives the Dodgers a heavily discounted team option at $10 million (roughly 1/3 of his average annual salary during the first five years of the contract) for the 2030 season if Snell spends 90 days or more on the injury list for a specific injury (the specific injury was not reported). Snell spent 119 days on the injury list in the 2025 season, raising the possibility that the team option is now in effect if the injury specified in the incentive structure covers the reason for his injury list stints in 2025. The other Dodgers’ pitchers have similar structures:
Tanner Scott – 4-year contract with a possible team option for a fifth year if Scott suffers a defined injury (not reported). The team option would be at $5 million, less than half of what he will be making in any other year of the contract.
Edwin Diaz – 3-year contract with possible team option for a fourth year if Diaz has a specified injury between 2026 and 2028 and does not end the season or post-season healthy or if Diaz undergoes a specific surgery (neither the injury or surgery reported). The team option would be at $6.5 million, less than 20% of what Diaz will earn on average in the first three years of the contract.
Yoshinobu Yamamoto – 12-year contract with a possible team option for a 13th year if, between 2024 and 2029, Yamamoto has Tommy John surgery or spends 134 consecutive service days on injured list with a right elbow injury. The team option would be at $10 million, roughly 37% of his average annual salary during the contract. These injury occurrences would also serve to negate player options in Yamamoto’s contract.
Hernandez’ contract is somewhat different as it essentially serves to protect a pre-existing team option and not include the heavy discount for the option year. Hernandez has a 3-year contract with a team option for a fourth year. However, if Hernandez has surgery for a specific injury (unreported) and spends 75 days on the injury list, the fourth year option becomes guaranteed and the Dodgers gain a team option for a fifth year. The team option would be at $15 million, which is higher than Hernandez’ earlier salaries in the contract.
The only non-Dodgers contracts containing this incentive structure in the data set were for pitchers:
SP Garrett Crochet’s 6-year contract with Red Sox, starting in 2026, has a possible team option for a 7th year if Crochet spends 120 or more days on the injury list for a left arm injury during the contract. The team option would be at $15 million, just over half of Crochet’s average annual salary during the contract. As with Yamamoto’s contract, the injury occurrences can also serve to negate a player option in the contract.
SP Nick Pivetta’s 4-year contract with the Padres, starting in 2025, has a very team-friendly version of this structure, under which the Padres gain the right to a team option after the second year of the contract (prior to the 2027 season) if, at any point in 2025 or 2026, Pivetta has a specified injury or related surgery and spends 130 or more consecutive days on the injured list in any season or one-year period. This team option would be for $14 million, which is approximate to Pivetta’s average annual salary under the contract. The Padres will also gain a team option for the 2029 season if, between July 1, 2026 and the end of the 2028 season, Pivetta has a specified injury or related surgery and spend 130 or more consecutive days on the injured list in any season or one-year period. This 2029 option would be at $5 million, less than half of Pivetta’s average annual salary during the contract.
RP Justin Martinez’s 5-year pre-arbitration contract with the Diamondbacks, starting in 2025, has two club options for a 6th and 7th year, followed by a possible team option for an 8th year if, at any point during the contract, Martinez has elbow surgery or spends a specific number of days on the injured list (number of days unreported). The team option would be for $3 million, which is roughly equivalent to how much Martinez will make through the first 5 years of the contract, but less than half of what Martinez will make in the optional 6th and 7th years if exercised.