Club Option

Definition

A club option is an optional year at the end of the contract which may be guaranteed at the discretion of the club. In most instances, the option comes with a buyout that represents a fraction of the option value. If the player is injured or performs poorly enough that the club believes the option value to be too expensive, the club will typically pay the buyout and decline the option. In most cases, this results in the player being eligible for free agency. However, if a player signed a contract that turned one of his arbitration-eligible seasons into an option season, the option can be declined with the player then entering the arbitration process instead.

Should the club exercise the option, the player is considered signed for the following season at that option's value. Contracts can contain multiple option years.

Examples

Following the 2014 season, the Baltimore Orioles exercised club options on left-hander Wei-Yin Chen and right-hander Darren O'Day. The options, valued at $4.75 million and $4.25 million, respectively, were both included on each player's originally agreed upon contract. Chen had signed a three-year, $11.388 million contract with a fourth-year club option as a free agent out of Japan's Nippon Professional Baseball. O'Day had signed a two-year, $5.8 million contract with the Orioles that contained the aforementioned club option.