How Blue Jays, Guerrero Jr., both benefit from bonus-heavy contract

BOSTON — Projecting all the payroll implications of Vladimir Guerrero Jr.’s $500-million, 14-year extension on the Toronto Blue Jays is difficult, given that Major League Baseball’s CBA is likely to be renegotiated three times during the contract’s span.

But casting forward under the current rules, which run through the 2026 season, the deal’s unique structure offers plenty to consider, starting with the massive $325 million signing bonus, $20 million of which is payable this year.

That $20 million will not count against the Blue Jays’ Competitive Balance Tax (CBT) threshold calculation in 2025, according to two industry sources, as it’s considered part of the deal beginning next year. As a result, the average annual value of Guerrero’s extension for CBT purposes will be $35,714,286 from 2026-2039. His hit this year is solely the $28.5 million he and the Blue Jays agreed to on Jan. 9 to avoid arbitration.

In real cash terms, though, that $20 million payout this year leaves a total of $480 million to be spread out over the 14 years, with the Blue Jays gradually escalating his annual total from $30 million in 2026 to $39 million in 2029. And intriguingly, the signing bonus portion of his annual salary escalates over the 14 years, while the salary portion decreases.

Here’s how it’s set up, according to industry sources:

* 2025 salary negotiated as part of a separate contract

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 Wednesday after the deal was announced. 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).

For the Blue Jays, “there’s benefit to the club from an accounting perspective,” said Atkins, without getting into specifics. The various layers to the contract surely helped bridge gaps — the sides are essentially amortizing the extension over 15 years instead of 14, while making it more advantageous for both sides — which is why Atkins said there was “not one” singular moment that helped pull them together.

“In every deal there are so many different levers to pull,” Atkins added. :It’s not just about the $500 million number. There’s a lot of complexity to these deals. We were fortunate to find one that worked for everyone.”

As a result, the Blue Jays continue to project a $275 million CBT payroll for 2025, according to Fangraphs’ RosterResource, which remains above the first threshold of $241 million and the second threshold of $261 million, but beneath the third threshold of $281 million.

Clubs that cross the third threshold not only pay a luxury tax on the overages, but are also penalized by having their highest pick in the next draft pushed back 10 spots unless they’re in the top six, so they have some room to work with there.

Next year — even with $70 million coming off the books in pending free agents Bo Bichette, Chris Bassitt, Max Scherzer, Chad Green, Erik Swanson and Jacob Barnes — the Blue Jays have 11 players with about $180 million in average annual value salaries for CBT purposes under contract, so they’re positioned to be a tax team again, even with the threshold inching up to $244 million.

Guerrero’s AAV is equal to 14.6 per cent of that threshold.

Alejandro Kirk’s $58-million, five-year extension also kicks in next season with its $11.6 million AAV hit, even though in real cash it’s slightly backloaded. According to an industry source, he’ll earn a salary of $7.5 million in 2026 before jumping to $11.125 million each year from 2027-2030. He also gets a signing bonus of $6 million, although it’s not clear how the Blue Jays will amortize the sum.

Both the Guerrero and Kirk deals include incentives of $150,000 for MVP, with bonuses of $125,000-$50,000 for second-to-fifth place finishes, $50,000 for all-star selections, $50,000 for Silver Slugger or Gold Glove Awards, $50,000 for winning World Series MVP and $25,000 for LCS MVP.

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Canada’s WBC pool set

Hard-hitting outfielder Tyler O’Neill is looking forward to representing Canada for a third time at the World Baseball Classic next spring and he’s excited to play in a pool absent the United States for the first time in the sixth edition of the event.

The national team’s placement in Pool A in San Juan along with host Puerto Rico, Cuba and Panama was previously announced, but this week the final compositions were announced with qualifier Colombia added to the group.

The Canadians will play the Colombians in their tournament opener on March 7, followed by Panama on March 8, Puerto Rico on March 10 and Cuba on March 11. Like the ’23 tournament, the top two teams in each pool advance to the quarterfinals.

“I like it a lot,” O’Neill said in an interview during the Baltimore Orioles’ season-opening series in Toronto. “In 2017 we had the Dominican and the U.S. and then in ’23 it was Mexico and the U.S., those are powerhouse teams. Obviously it’s going to be a good division with Puerto Rico leading the charge, but we showed a lot of improvement from ’17 to ’23 and I feel like we’re only going to get better from ’23 to ’26. So I think we have a good shot to go deep but we’ve got to make it out of round one first.”

There were 12 Canadians on opening day rosters in the majors plus Montreal-born Vladimir Guerrero Jr., with ’23 team members O’Neill, Edouard Julien, Cal Quantrill, Bo Naylor, Matt Brash and Cade Smith among them. Marlins rookie catcher Liam Hicks is newly graduated to the majors, Josh Naylor, Nick Pivetta and Michael Soroka were unavailable due to health reasons, Erik Sabrowski hadn’t reached the majors yet and Jordan Romano had plans to play for Italy until pulling out to focus on his in-season build up.

Top prospects Owen Caissie in the Cubs system, Denzel Clarke in the Athletics system and Mitch Bratt in the Rangers system, plus Blue Jays prospects Damiano Palmegiani and Dasan Brown were also on the ’23 team, which went 2-2 but fell short of advancing. Other emerging young players like Tyler Black, Adam Macko, Eric Cerantola, Jonah Tong , Matt Wilkinson, Myles Naylor and Calvin Ziegler could also factor into the mix.

“We’ve got some talent, man,” said O’Neill. “We got some talent a little lower in the minor leagues, some guys that are breaking up in the big leagues, offensively and on the pitching side. … I was really impressed with what we were showing in ’23. A couple more years of experience, that’s going to pay dividends going forward. Looking forward to seeing what we can do.”

Ernie Whitt will once again return as Canada’s manager.

O’Neill and the Orioles

Like other free-agent outfielders last off-season, Tyler O’Neill entered the open market thinking he’d need to wait for Juan Soto to sign before his turn would come. Instead, the native of Maple Ridge, B.C. “signed ahead of my market,” landing a $49.5-million, three-year deal with the Orioles that includes an opt-out after this season, one day before the superstar slugger opted for a $765-million, 15-year deal with the New York Mets.

While both players are represented by influential agent Scott Boras, O’Neill said “you never knew where he was going to go, he could have stayed with the Yankees, or gone to Toronto, Boston, other American League teams that were in the race for him that would have been interested in me as a fallback option, too.”

But he praised the Orioles, who “came at me early. Baltimore said that I’m a priority for them, they had just moved the fences in at home, they think my right-handed bat is going to fit in well to this lineup, which I think it really does, and those are all plus signs for me,” said O’Neill. “It was really a no-brainer to sign here and stay in the American League East. I love this division, it’s my favourite. Get to come to Toronto every year. We get to play the Yankees, Boston. It doesn’t get any better than that.”

Heading into free agency after hitting 31 homers in 113 games with an .847 OPS for the Red Sox, O’Neill said his priority was to join “a team that was winning and had a strong future and obviously I found that here in Baltimore. These guys are young, they’re winning, they have a lot of potential they haven’t even reached yet. The core is only going to get better here, as well.”

The Blue Jays, he said, “showed some early interest” during the GM Meetings in November, adding that “Scott did a really good job this off-season and there was interest over here, too. I would have loved to play in Toronto. American League East, I get to stay in my native country, beautiful ballpark, good hitters’ ballpark, I see the ball well here. There are a lot of plus signs for me.”

“But they were in on Soto and they were going to try that out, which they should,” O’Neill added. “I signed ahead of my market and I’m really thankful for that. I don’t know what other offers would have looked like from other teams, but it doesn’t really matter to me because I got what I was looking for. I have a very good chance to win and I’m pleased with my situation.”

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