MLB Impact Review: Megadeals
Shohei Ohtani was the first to do it. Now Juan Soto is the newest member of the $700M+ club. I’m not going to lie, I didn’t think the Mets would put that kind of money out for him but when you want something bad enough- you’ll pay just about anything for it. Just look at the Dodgers out west. With these never before seen contracts here and accounted for, the question of impact on the future of the game through the shaping of its financial landscape and the influence it will have over team-building strategy is ever present. So let’s get into it.
Future Impact:
To start off, the immediate impact to the future of the game will be the rise in salary expectations. Record-setting contracts like the ones signed by Ohtani and Soto will push the market higher for up and coming stars in the game. In demand players like Bobby Witt Jr., Julio Rodriguez, and Adley Rutschman could and most likely will have the upper hand to command even bigger deals when they hit the free agency market. Tied to these larger than life salaries will be longer contract lengths as well. Take Ohtani’s contract for example. His 10 years/ $700M deal sees a significant portion of that money owed deferred to the later years of said contract. This can influence how teams choose to structure contracts in the future in order to offer more payroll flexibility and sign/retain superstar talent. Now the impact deferred contracts have will be a topic for another time but it begs the question of what position it puts teams in financially down the road when said stars are more likely to be less productive. Will the deferments truly pay off?
Next, these contracts heavily favor large-market teams (Dodgers, Yankees, Mets, etc.) who can afford the luxury tax that comes with said contracts. It lends itself to a financial gap between large, mid and small market teams who will inevitably struggle to keep up. Eventually, that cost will trickle down to the fans- if you haven’t already seen it (I’m looking at you Rockies. $100 for opening day tickets? After losing 100+ games two seasons in a row?). Ticket prices will go up just like concessions and merch will as well. All in an attempt to keep up with those higher payroll teams. As a die hard baseball fan, it makes me question if the game is headed in the right direction. Is everyone in it for the money now or are we still here to see/play a game we’ve loved since we were kids? These contracts have highlighted just how much control the players have over their own futures. They are securing opt-outs, no-trade clauses and unique financial structures that allow for long-term security while keeping options open that weren’t available even five years ago. Makes you wonder just how much money players like Todd Helton and Mike Trout could have gotten had they come into the game in today’s market.
Impact on Smaller Market Teams:
As I said earlier, these new-age contracts heavily favor the large-market teams. So what impact will it have on the small-market teams (Guardians, Royals, Pirates etc.)? First and foremost, we are going to see these teams struggle with retention. The loyalty to teams that players grew with is dying if not already dead. You hear jokes regularly that small-market teams are ‘farm systems’ for the large-market teams. They grow some insane talent but when it comes to give the players what they want/deserve, the small/mid-market teams will struggle to retain the homegrown talent when free agency comes because they often can’t match the financial firepower of the big-market teams. You think Montfort would have loosened the purse strings for a $700M contract in Denver? ROFL. The retention challenges means we see these teams have an increased reliance on their farm systems. Meaning more money may be going into the scouting and development of young players since it’s more critical. Teams like the Rockies and Orioles will (and to their credit have) need to consistently produce top-tier talent in order to remain competitive in their respective divisions.
Obviously the biggest challenge facing the smaller market teams is financial. But it lends itself to some interesting, alternative roster strategies. When the signing of megastars is out of reach, these teams may opt to prioritize locking down their younger talent early (the Braves and Rockies are known to bet big on youth). In addition to locking in young talent at a lower rate, these teams may also push for more enhanced revenue-sharing or salary floor discussions in order to remain relatively competitive.
Each MLB team’s approximate market by state
Final Thoughts:
While megadeals make baseball more star-driven and exciting, they also highlight the growing disparity between big- and small-market teams. The challenge for MLB will be maintaining competitive balance so that smaller teams can also contend without losing their best players in free agency.
