A signing bonus or sign-on bonus is a sum of money paid to a new
employee
Employment is a relationship between two party (law), parties Regulation, regulating the provision of paid Labour (human activity), labour services. Usually based on a employment contract, contract, one party, the employer, which might be a cor ...
(including a professional sports person) by a company as an incentive to join that company. They are often given as a way of making a
compensation package more attractive to the employee (e.g., if the annual salary is lower than they desire). It can also lower risk to the employer compared with a higher salary; for example, if the employee does not meet expectations. Signing bonuses are often used in
professional sports
In professional sports, as opposed to amateur sports, participants receive payment for their performance. Professionalism in sport has come to the fore through a combination of developments. Mass media and increased leisure have brought larger a ...
, and to recruit
graduates into their first jobs.
To encourage employees to stay at the organization, there are often clauses in the contract whereby if the employee quits before a specified period, they must return the signing bonus. In sports contracts, the full amount of signing bonuses is not always paid immediately, but spread out over time. In such cases, the main difference between a signing bonus and base salary is that the former is "guaranteed" money meaning the team is required to pay the bonus when due even if it cuts the player, unless the player retires or the contract is otherwise terminated due to a significant breach on the part of the player.
As of March 2019,
Aaron Rodgers had received the highest signing bonus in
National Football League
The National Football League (NFL) is a Professional gridiron football, professional American football league in the United States. Composed of 32 teams, it is divided equally between the American Football Conference (AFC) and the National ...
history, at $57.5 million. As of July 2023,
Paul Skenes had received the largest signing bonus in
Major League Baseball draft history, at $9.2 million.
See also
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Advance payment
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Bonus rule, a defunct policy within Major League Baseball
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Golden hello
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Play or pay contract
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Roster bonus
References
{{DEFAULTSORT:Signing Bonus
Employee bonus
Human resource management