How Juan Soto scored a record $765 million deal with the Mets
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How Juan Soto scored a record $765 million deal with the Mets
Baseball star Juan Soto, briefly a free agent, has agreed to a 15-year, $765 million contract with the New York Mets, making it the largest major league deal ever.
The outfielder, who helped the Yankees reach the World Series this year, beat the previous record held by the Dodgers’ Shohei Ohtani, a standout pitcher and designated hitter. Ohtani sealed a 10-year, $700 million deal with the Los Angeles-based team last year.
But Ohtani is only receiving $2 million a year until 2033. He deferred the majority of his pay over the length of the deal and will be paid the remainder from 2034 until 2043 without interest. Because of those deferrals, the present-day value of Ohtani’s contract is actually $460 million.
Soto will not defer any of his compensation. The pact includes a $75 million signing bonus and an opt-out clause after the 2029 season, according to MLB.com.
For sports economists, Soto’s record-breaking contract isn’t a surprise. Victor Matheson, a professor at College of the Holy Cross, told us last year that you can expect players to reap more riches as MLB teams generate more revenue. The Mets’ revenue reached $393 million in 2024, up from $263 million in 2015, according to Forbes.
The MLB also lacks a team salary cap, unlike many other sports leagues, allowing player payouts to balloon. If a team pays more than a certain amount, it’s subject to a luxury tax, also known as a competitive balance tax. The NBA has a salary cap of $141 million per team for the current season, while the NFL’s salary cap is more than $255 million, reflecting NFL clubs’ larger size.
There have been wide gaps among the payrolls of MLB teams. In the past five years, the average annual difference between the highest- and lowest-spending teams was $200 million. In the NFL, the average payroll difference is under $100 million, according to Sports Illustrated.
Through salary caps, owners are trying to limit how much they pay out and “pad their bottom line,” Matheson previously told Marketplace. But at the same time, salary caps are aimed at promoting “competitive balance,” or the idea that richer teams shouldn’t have a big advantage over their rivals, Matheson said.
Although teams outside the MLB have a salary cap, many players are guaranteed substantial shares of their league’s revenue. NFL players, for example, receive at least 48%.
“On the Major League Baseball side, there’s no cap, but there’s also no guarantee that the players get a percentage of the revenues. So that means if you have a lot of teams competing against one another for players, since there’s no cap, the players could eat up a gigantic portion of the total revenues being generated,” Matheson said.
Sometimes taking these big financial swings doesn’t result in a home run. The Mets, Yankees and Padres missed the playoffs in 2023, even though they were champs when it came to spending, according to The Ringer.
But Ohtani helped the Dodgers clinch their World Series victory this year. Come October, will the Mets be reaching for the Champagne or the tax write-offs?
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