The Toronto Blue Jays can celebrate amid an 8-7 start to the 2025 season as they locked in franchise superstar Vladimir Guerrero Jr. to a long-term extension.
The team agreed to a blockbuster, 14-year, $500 million deal with Guerrero, who has been a four-time All-Star and one of baseball’s best young sluggers throughout his career.
While the team is receiving near-universal praise for the deal, one of its details is raising some eyebrows. The Blue Jays have structured a $325 million signing bonus into the contract, taking advantage of a tax loophole.
“Putting 65 per cent of the contract into a signing bonus provides ‘a benefit to the player that was attractive from a tax perspective and the guaranteed nature of it,’ general manager Ross Atkins said,” per Sportsnet’s Shi Davidi. “Signing bonuses are paid even if there’s a labour interruption — a possibility after the 2026 season, meaning Guerrero is guaranteed $14 million in 2027 if games happen to be lost to a lockout — and can avoid the highest taxation rates based on residency (Guerrero lives in Florida).”
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While nobody can blame the Blue Jays for making the most of the current rules to retain Guerrero, particularly in the face of historic contract deferrals that have fueled the Los Angeles Dodgers’ juggernaut roster, Sean McAdam of MassLive has raised a red flag.
“While some carp about the fairness of deferred payments in baseball, there’s something untoward about the Toronto Blue Jays classifying almost two-thirds of Vladimir Guerrero Jr.’s new $500 million deal as a ‘signing bonus,’” he wrote. “That’s done because there’s a loophole in the CBA which stipulates that signing bonuses can be assigned to a player’s official place of residence — in this case, Florida, which has no income tax, saving Guerrero tens of millions.”
McAdam added that, without a rule change, a team could potentially pay a player the league minimum over a long-term deal while paying the vast majority of a major contract as a signing bonus.
Along with some of the criticism of major contract deferrals, the Blue Jays’ high-profile use of this contract loophole could become a sticking point in upcoming collective bargaining agreement negotiations between Major League Baseball and the players association. While the tax loophole allowed the Blue Jays to secure their franchise star, it could also be a significant tipping point for the future of baseball contracts.
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