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. According to data from Spotrac, a website that monitors sports spending, the Mets have held the largest annual payroll since 2023. 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. According to reports, the New York Yankees, baseball s long-running big spenders, offered Soto only $5 million less than the Mets. But despite making the World Series this year, the Bronx Bombers havefaced roster turmoil in recent years, while continuing to employ a manager, Aaron Boone, now loathed by many fans.
Ironically, Soto is coming over from the Yankees, where he was traded in December 2023.
Soto is entering his peak years and continues to draw comparisons to the hitting legends Ted Williams and Barry Bonds. That combination of youth and potential helped clinch the salary record.
Another key to Soto ending up with such a massive contract was simply timing. He took advantage of a year lacking in other mega free agents and was able to command a premium on the open market.
It s possible Soto s contract will be surpassed in just one year. Analysts say Toronto Blue Jays star Vladimir Guerrero Jr., who finished sixth in MVP voting last season, is expected to command massive numbers when he enters free agency after the 2025 season.
Even if no one ends up reaching or surpassing Soto s figure, MLB will continue to lead all professional sports in titanic deals for contracts, for one simple reason: Unlike the NFL and NBA, it doesn t have a salary cap.
According to Michael Ginnitti, Spotrac s founder and managing editor, Baseball s luxury tax system allows billionaires to spend billions on their team if they choose.
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