Hafner, the Indians' designated hitter, was making $3.95 million this year and Cleveland had a 2008 option for a minimum $4.95 million. Under the new deal, he will receive more money next year. The new agreement includes a team option for 2013.

"Not only is Travis Hafner among the elite hitters in major league baseball today, but he will now have the opportunity to establish himself as one of the great players in the proud history of the Cleveland Indians organization," Indians general manager Mark Shapiro said. "This contract is both a credit to Travis's offensive performance and a testament to who he is as a teammate, his relentless work ethic and his strong desire to help bring a championship to Cleveland."