Earlier this year, Steve Cohen outlined his principles as owner of the New York Mets in an interview with CNBC’s Andrew Ross Sorkin, calling it a “charity.”
“I’m not concerned about cost,” Cohen said, adding: I actually do it as a civic responsibility. ”
That attitude explains how outfielder Juan Soto came to terms on Sunday with the richest contract in baseball history and the richest ever signed by a professional athlete in the world. would be helpful.
According to MLB.com, the 26-year-old Dominican Republic native’s contract is worth $765 million over 15 years and includes a $75 million signing bonus, which could grow to more than $800 million. .
What’s particularly notable about this deal is that no funds are “deferred.” That means Soto would have to be paid every year while he is on the Mets’ active roster. In addition to the amount, the lack of deferrals makes Soto’s contract even more impressive than the $700 million deal that Los Angeles Dodgers star Shohei Ohtani signed just last year. $680 million of Ohtani’s contract is not paid until after 2034.
For Soto, that means paying the full price upfront.
Nathan Goldman, an associate professor of accounting at North Carolina State University, said in an interview with NBC News, “It actually makes little sense why[Soto]would get such a large contract without a deferral.” Ta.
Combined with the high personal income tax rates imposed by New York City and the state (about 15% for the wealthiest residents), Mr. Soto’s final payout will be reduced somewhat.
Still, Soto still has the potential to make even more money. According to MLB.com, he can opt out of his contract with the Mets after the fifth year if he believes he can earn a higher amount on the free market.
However, the Mets can override that opt-out by increasing his salary by $4 million per year over the final 10 years, from $51 million to $55 million.
And Soto’s contract does not include the amount the Mets and Cohen would have to pay to meet Major League Baseball’s luxury tax. Ostensibly designed to create a more level playing field between large-market and small-market teams, deep-pocketed owners like Cohen can acquire the most coveted players. I had no hesitation in paying the penalty for this.
The simple answer to getting Soto out of his contract might just be Cohen. Despite regularly signing the richest contracts in baseball this century, including the $340 million contract they signed shortstop Francisco Lindor in 2022, the Mets have struggled to win in the playoffs or World Series. He has suffered many setbacks, including a crushing defeat. The team is about to celebrate the 40th anniversary of their last championship.
That outlook seemed to have changed five years ago, when Mr. Cohen, a longtime hedge fund manager, bought the team for $2.4 billion. Cohen is an unusually approachable owner, often meeting with fans and exchanging opinions on social media.
More importantly, Cohen, who is worth $21.3 billion according to Forbes, has been one of the most profligate owners in baseball since taking the reins of the team. The Mets have the highest annual payroll since 2023, according to data from Spotrac, a website that monitors sports spending. Another metric from TheScore.com, which tracks payroll costs and the team’s estimated revenue, shows Cohen may actually be running the team in the red.
World Series winners are often unpredictable, even though salaries have increased slightly each year. But the baseball gods are notoriously cruel to the Mets, despite their massive spending. After losing in the first round of the 2022 playoffs with a veteran-filled roster, Cohen exploded his team, acquiring new high-priced free agents and trading for prospects.
However, the team remained tied for second place in the National League East this year, barely making the playoffs. They still advanced to the National League Championship Series, but ultimately lost to the Los Angeles Dodgers, who went on to win the World Series in October.
However, over time, salaries appear to equate to wins, which confirms the infamous “Moneyball” approach of spending efficiently on underutilized players.
With Soto’s contract, it appears Cohen won’t be denied again. According to reports, the New York Yankees, who have spent a lot of money in baseball over the years, offered Soto just $5 million less than the Mets. However, despite reaching the World Series this year, the Bronx Bombers have faced roster turmoil in recent years while continuing to employ manager Aaron Boone, who is disliked by many fans.
Ironically, Soto comes from the Yankees, where he was traded in December 2023.
Soto is at his peak and continues to be compared to hitting legends Ted Williams and Barry Bonds. This combination of youth and potential helped him solidify his salary record.
Another key to Soto landing such a large contract was simply timing. He could take advantage of a year without other mega free agents and command a premium on the open market.
Soto’s contract could be exceeded in just one year. Toronto Blue Jays star Vladimir Guerrero Jr., who finished sixth in MVP voting last season, is expected to command huge numbers when he becomes a free agent after the 2025 season, according to analysts. are.
Even if no one ever reaches or surpasses Soto’s numbers, MLB will continue to lead all professional sports in big contract negotiations. The reason is simple. That’s because, unlike the NFL and NBA, there is no salary cap.
“Baseball’s luxury tax system allows billionaires to spend billions on their teams if they choose,” said Michael Ginnitti, founder and editor-in-chief of Spotrac.
