i find it odd that both sides are on board with this ... but i can't say why.

It appears that the "milestone" payments aren't that different than than the "incentive" payments, which are prohibited, so the union went along, perhaps getting something else later.

Yeah, I think there's a conflict of interest, however inocuous, with respect to those milestones.

another $7 million if he breaks Barry Bonds' all-time home-run record.

What if ARod breaks it first? Does he still get the bonus? I assume it is worded as "home run record." Imagine a scenario where he and ARod are trading places at the top of that leader board (I know it wouldn't happen). That's a lot of incentive payments.

Do the personal services portion of these deals count against the luxury tax? If not it could certainly be construed as a backdoor method of undervaluing a players' salary for counting purposes.

[5] No. From the article:

One source told ESPN.com that baseball is trying to close loopholes that teams might be able to use to avoid paying a luxury tax, and both of these provisions fall under that heading because neither milestone bonuses nor personal-services deals are considered to be guaranteed money.

This strikes me as just weird, although it may help competitive balance. But the "big local TV money" teams have been buying star free agents for decades now (the first big dustup over the buying players issue dates back to at least Joe Dugan, the Yankees and the Browns, and 1922). As for personal services contracts, while this particular one may have odd clauses, I've always thought of them as the ultimate in guaranteed contracts. If Albert is in a persistent vegetative state in 11 years, that clause will still apply. It doesn't require him to be able to play a sport or actually do anything. If you want such clauses to count against the luxury tax, that seems to me to be a much smaller fix than what is happening here.

As for the contract itself, I'm pretty sure that it comes down to:

1) The Cardinals had Albert all but formally signed, when the owner of the Angels got an enormous windfall from Fox ($3 billion is enormous). If he had gotten that windfall just one week later, Albert would have been off the table.
2) The Angels owner, like anyone else who suddenly receives an unexpected large sum of money, decided to splurge. This almost always happens. I think that people who get windfalls almost have to do a splurge, just to actually realize that they do have all this money now.
3) So he bought the best player in baseball.

As a Cardinal fan, I wasn't happy about this, but I didn't think there was anything abnormal about it, except the size of the Fox windfall. The idea that this particular contract was so outrageous that it finally got both the owners and the union to try to do something about rich owners buying superstars strikes me as very odd, much odder than the contract itself.

- Brock Hanke

Why is the union bending over like this? And why do they keep doing it? They must be getting something significant later on like a salary floor.

One source told ESPN.com that baseball is trying to close loopholes that teams might be able to use to avoid paying a luxury tax, and both of these provisions fall under that heading because neither milestone bonuses nor personal-services deals are considered to be guaranteed money.

So what if milestone bonuses aren't considered guaranteed money? All-star game, MVP, CYA, etc bonuses aren't guaranteed money either, but they all get counted for payroll tax purposes if and when they are earned. Post-retirement personal services deals are another matter.

Why is the union bending over like this? And why do they keep doing it? They must be getting something significant later on like a salary floor.

The same reason why they don't want performance-based bonuses, because they're only one step removed from non-guaranteed contracts. And I doubt either side is fond of the conflict of interest issues surrounding players getting large payoffs for set milestones and teams determining their playing time, it's just a needless point of contention.

Why is the union bending over like this? And why do they keep doing it? They must be getting something significant later on like a salary floor.

I don't think the union is bending over here. Milestone bonuses are disguised performance pay and they have no particular reason to defend that, they want all money in the contract guaranteed.

What if ARod breaks it first? Does he still get the bonus? I assume it is worded as "home run record."

I would guess it's worded as "hits 763rd HR" or similar -- at least that's certainly the language Pujols' agent would prefer. Why set it up such that your client doesn't get paid if AROD gets to 800.

Too bad Ryan and Carlton didn't have a clause that paid them a bonus each time they became the all-time strikeout leader.

I would guess it's worded as "hits 763rd HR" or similar

Cots would agree with you. All the HR bonuses from ARod's contract are also listed as numbers btw...