Huge signing bonus could save Blue Jays' Vlad Guerrero Jr. millions in taxes

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Not only did Vlad Guerrero Jr. get his money — a record amount for a Major League Baseball first baseman and the most for a Canadian professional athlete — it appears that some of the details in the contract will benefit the Blue Jay for life greatly.

In a twist to the deal, the Athletic’s Ken Rosenthal reported that the 14-year, $500-million US deal that was made official by the team on Wednesday, includes a whopping $325-million signing bonus.

The remaining $175 million will be paid in the form of salary at varying sums throughout the lengthy term of the deal.

The prime benefit for that structure — a full 65% of the full value as a signing bonus — would appear to be to get a sizeable break from the Canadian tax man.

According to Rosenthal, citing sources familiar with the contract, signing bonuses are paid out to the athlete’s state of residence. Jays general manager Ross Atkins confirmed that the deal had a substantial signing bonus.

Guerrero has a home in Florida, where he spends the bulk of his off-season and his daughter attends school. That would mean that on the $325-million portion of his deal, Guerrero would be exempt from the exorbitant Canadian tax rates.

It’s unclear how much that would benefit him, but it would likely be in millions of dollars as Florida is a popular “home” state for high-paid professional athletes from several sports for its tax benefits.

Speaking to reporters in Boston, Atkins acknowledged that the signing bonus structure “has benefit to the player from a tax perspective,” adding that there’s “benefit to the club from an accounting perspective.”

According to Rosenthal, the other benefit of a large signing bonus is that Guerrero would have that portion of his contract untouched should there be a work stoppage during its 14-year duration. The current CBA expires following the 2026 season.

Guerrero is scheduled to get the first $20 million of his signing bonus some time in the next month, according to Rosenthal, but since the extension doesn’t kick in until the 2026 season, it will not count against the Jays payroll in 2025 for luxury tax purposes.

Guerrero’s representative certainly played the negotiations with the Blue Jays astutely, sticking firm to the stance of not having any portion of the contract paid in a deferral. The signing-bonus arrangement would be another example.