In the land of excess, sport is no exception to the rule. Major League Baseball (MLB), the American baseball league, recorded the largest contract in the history of sport on Monday, December 9. Free agent (without contract), Juan Soto signed with the New York Mets for an unprecedented contract: $765 million over 15 years. A contract that makes you dizzy, but which responds to the current dynamics of American sports.
“In baseball, we are used to having longer contracts than what we see in Europe, with football for example.notes Gaétan Alibert, author of several books on baseball. But this is really an extremely long contract. It is historic in total amount and duration.” Two elements which explain “by the generational talent of this player. He is only 26 years old but has already demonstrated that he is exceptional, particularly at the offensive level. He will be able to play for many more years. In addition, with such an important contract, we secure him in time.”
“The players want the highest salaries to be among the best in the hierarchy. It is also a race between them to obtain the best contracts.”
Gaétan Alibert, author of several books on baseballat franceinfo: sport
The Dominican player is not, however, the first to reach such high amounts. If Juan Soto is indeed the player with the “biggest” contract, per year, it is Shohei Ohtani who negotiated the best amount. The Japanese joined the Dodgers in 2023 for $700 million over ten years, or $70 million per season. The new Mets player will earn around $51 million per year.
Even if contracts can be longer in MLB than in other American sports (NBA, NFL, NHL), salaries per season are equivalent. “We are around 50 million dollars in the NBA, in the NFL“, notes Frank Pons, ddirector of the International Observatory on Sports Management and professor at Laval University in Quebec.
Main financial windfalls for franchises, traditional TV rights are now accompanied by other resources: “Since they have managed to monetize the marketing of content on different platforms, there has been an increase in broadcasting rights. This is often boosted by sports betting, which generates additional income with the results and some images. So there is an increase in content values“, explains Frank Pons.
Salary amounts are also amortized by player-related sales. “They are 'market players'. Soto will sell jerseys, he will increase revenue from derivative sales. Ohtani brings this to a new market, with Japanese people who consume a lot. He is the idol of a country and he brings in an extremely significant financial windfall, around 200 million dollars per season.“, explains the researcher. Merchandising is also present in the football economy in Europe.
“At the same time, the value of franchises increases, revenues follow and so do salaries.”
Frank Pons, sports management specialist at Laval University in Quebecat franceinfo: sport
Last point, unlike the NBA and the NFL, MLB franchises are not restricted by a “salary cap”, but a “luxury tax”, called the “Competitive Balance Tax” (CBT). If franchises exceed $230 million in payroll, they are subject to a tax, an amount then returned to smaller teams. This constraint is not really one for the league's historic teams like the Yankees and the Dodgers, who pay this tax each season.
To bring in Shohei Ohtani, the Dodgers had made a financial arrangement to avoid additional taxes. The player is only paid $2 million for the first 10 years of his contract, before receiving the rest of his salary thereafter. Thus, the $702 million is not counted in the payroll, which allowed the team to strengthen with other players.
