Morris Esformes on MLB Player Contracts and Salaries

Morris Esformes on MLB Player Contracts and Salaries

The financial structures behind professional athlete contracts are highly intricate, planned, and negotiated. High-profile free-agents hold a sense of responsibility to their union to set the tone for future contracts and player negotiations.The 2018-2019 Major League Baseball free-agent class was one of the best on record. Now that it is wrapping up, it is a good time to analyze the contracts that have been set and take a look at what this could mean for the future of baseball.

Manny Machado recently became the first 300 mill free agent, and for a short time, he held the record for the largest free-agent contract.

Like this post? Read the Morris Esformes post on Athlete’s Dominating Business.

There are semantics involved when naming contract record holders. Machado may have been the highest paid free-agent, but he never held the rank of largest MLB contract. Giancarlo Stanton earned that title when he received a 13-year, $325 million extension from the Miami Marlins in 2014.

Machado’s deal was then topped when Bryce Harper inked his 13-year, $330 million extension with the Philadelphia Phillies, making him the highest paid player in North American sports history. The way Harper’s contract breaks down is as follows: Harper will receive $10 million in 2019 with a $20 million signing bonus paid over two installments, $26 million annually from 2020 to 2028, and $22 million annually from 2029 to 2031.

Fun fact: the Mets will still be paying 56-year-old Bobby Bonilla his $1.19 million contract payment for four years after Harper’s contract expires.

The Changing Landscape of MLB Contracts

It will be interesting to see how the landscape of MLB contracts will change over the course of Harper’s and Machado’s careers. One might wonder, given the way FA contracts have evolved, could it be safe to assume that in five years Harper’s yearly contract price will seem like a bargain?

Overall, the price tag on player contracts continues to rise. Days prior to Harper signing his record breaking 2019 deal, Nolan Arenado signed an eight-year, $260 million contract with the Rockies. Arenado was given an opt-out after three years and an annual payment of $32.5 million.

It may also be very well possible that new milestones could be set in just a few years when Mike Trout becomes a free-agent in 2020. As a five-tool, seven-time all-star and two-time MVP he could become the highest paid MLB player of all time.

The trend should be interesting to follow considering this offseason was filled with turmoil and controversy over owners holding out and their perceived aversion to offering long-term deals. Tensions came to a head when future Hall of Famer Justin Verlander took to Twitter to issue numerous rants about the injustice players were suffering at the hands of owners.

I acknowledge it can be difficult to sympathize with athletes who make hundreds of millions of dollars playing a kids’ game a few months out of the year (especially pitchers who only participate once every five days), but the economic benefit these top-tier free-agents bring to a franchise cannot be ignored. According to the sports merchandise site Fanatics, Harper’s new jersey became “the #1 selling jersey of all-time in any sport for any player during the first 24 hours of a launch.”

All winter long, players chastised owners over their hesitation to sign the free-agent superstars;however, the results were pretty telling. Machado, Harper and Arenado all received massive, long-term deals. They all received record-breaking contracts that will span the majority of their remaining time in the league. Despite there being a lot of speculation surrounding both the possibility of ownership abandoning decade-long contract signings and the process dragging on longer than expected, the results speak for themselves. In my opinion, it is rather clear that free-agent mega deals won’t be going away anytime soon.

Morris Esformes
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