In an interview with Andrew Ross Sorkin of CNBC earlier this year, Steve Cohen outlined his values as the owner of the New York Mets, claiming that the team was a philanthropic venture.
Cohen declared, “I don’t care about the cost side,” adding, “How cool is it if I can make millions of people happy?” In fact, I carry out this civic duty.
That mindset contributes to the fact that on Sunday, outfielder Juan Soto agreed to one of the highest-paying contracts ever signed by a professional athlete worldwide, making it the costliest contract in baseball history.
According to MLB.com, the 26-year-old Dominican Republic native Soto’s contract is worth $765 million over 15 years, including a $75 million signing bonus, and could potentially reach over $800 million.
The most noteworthy aspect of the contract is that it requires payment each year that Soto is on the Mets’ active roster because none of the money is postponed. Soto’s contract is even more eye-popping than the $700 million agreement inked by Los Angeles Dodgers star Shohei Ohtani just last year because, in addition to the financial figure, there are no deferrals. Of Ohtani’s deal, $680 million will not be paid until after 2034.
For Soto, this entails paying the full amount upfront.
Nathan Goldman, an associate professor of accounting at North Carolina State University, told NBC News that it truly doesn’t make sense that Soto would receive such a large contract without deferrals.
Soto’s final payout will be somewhat reduced due to the high combined personal income tax rates imposed by the city and state of New York, which are roughly 15% for the wealthiest inhabitants.
However, Soto still has the chance to make much more money:After his sixth season with the Mets, he has the option to opt out of his contract if he thinks he can fetch greater prices on the open market, according to MLB.com.
For the last ten years, the Mets can override that opt-out by raising his compensation by $4 million year, from $51 million to $55 million.
Additionally, the Mets’ and Cohen’s need to pay Major League Baseball’s luxury tax is not covered by Soto’s contract. Deep-pocketed owners like Cohen have not shied away from paying that penalty to acquire the most sought-after players, despite the fact that it was supposedly created to level the playing field between teams in large and small markets.
Cohen might be the easy solution to releasing Soto’s contract. The Mets have often failed, particularly with devastating losses in the playoffs and World Series, despite consistently holding some of the most costly contracts in baseball this century, including a $340 million deal struck with shortstop Francisco Lindor in 2022. The team’s most recent championship was won forty years ago.
When Cohen, a seasoned hedge fund manager, bought the team for $2.4 billion five years ago, the situation appeared to shift. Cohen has been a very approachable owner, frequently interacting with supporters and sharing his thoughts on social media.
More significantly, since taking over the organization, Cohen, who Forbes estimates is worth up to $21.3 billion, has been one of baseball’s most wasteful owners. The Mets have had the biggest yearly salary since 2023, per data from the sports spending tracking website Spotrac. Cohen may be running the team at a loss, according to a different statistic from TheScore.com that compares payrolls to teams’ estimated revenues.
Even with the annual payroll rising, the World Series winner has frequently been a mystery. Despite their extravagant spending, the Mets have been notoriously treated cruelly by the baseball gods. With a roster full of veterans, the team crashed out of the first round of the 2022 playoffs. Cohen then ripped apart the team, loaded up on another group of costly free agents, and traded for prospects.
However, that squad barely qualified for the playoffs this season and only tied for second place in the National League East Division. Even though they advanced to the National League Championship Series, the Los Angeles Dodgers eventually defeated them and won the October World Series.
Payroll does, however, appear to be correlated with success over time, despite the notorious Moneyball strategy of making efficient use of underutilized players.
It appears that Cohen won’t be turned down again because of Soto’s contract. The New York Yankees, baseball’s traditional big spenders, reportedly made Soto an offer that was just $5 million less than the Mets’. However, even though the Bronx Bombers won the World Series this year, they have had roster issues in recent years and have kept their manager, Aaron Boone, who is now despised by many fans.
It’s ironic that Soto is visiting from the Yankees, with whom he was dealt in December 2023.
As he approaches his prime, Soto is frequently compared to the great hitters Ted Williams and Barry Bonds. The compensation record was secured in part by the mix of youth and talent.
Time was another crucial factor in Soto getting such a big contract. He was able to fetch a premium on the open market by taking advantage of a year when there weren’t many other major free agents.
In just a single year, Soto’s contract might be eclipsed. Vladimir Guerrero Jr. of the Toronto Blue Jays, who placed sixth in the MVP voting the previous season, is predicted by analysts to fetch a huge price when he becomes a free agent following the 2025 campaign.
For the straightforward reason that MLB does not have a pay cap as the NFL and NBA do, it will continue to lead all professional sports in gargantuan contract deals even if no one manages to approach or equal Soto’s total.
The managing editor and founder of Spotrac, Michael Ginnitti, claims that baseball’s luxury tax system permits millionaires to spend billions on their team if they so desire.
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