Major League Baseball’s offseason is underway, and so is the competition to land the services of free-agent superstar Juan Soto. Some of MLB’s biggest franchises, including both the New York Yankees and Mets, are among the clubs pursuing Soto, a 26-year-old outfielder who finds himself on a Hall of Fame trajectory.
Just how rare is it for a player of Soto’s youth and track record to reach the open market? According to CBS Sports’ research, only one player with more Wins Above Replacement than Soto has tested free agency in their mid-20s: Alex Rodriguez, who signed what was then the richest contract in American professional sports in winter 2000-01, inking a 10-year pact worth $252 million with the Texas Rangers.
We can’t answer when Soto will sign, but we’ve attempted to answer where. Today, we’ll take a swing at figuring out how much he’ll receive in return for putting pen to paper. How? By highlighting the guesses of several industry insiders, and explaining why those estimates may prove to be too high or too low in due time.
Let’s get to it.
1. What insiders say
During the late stages of the regular season, we polled several front-office types about Soto’s next contract. These individuals work for a variety of teams in a variety of roles. Predictably, their estimates checked in across the dollars and years spectrums.
A couple of sources came close to guessing the same exact contract, with one saying $520 million for 11 years, and the other saying $540 million for 12 years.
We also received a guess for $432 million across 12 years — an estimate no doubt inspired by Shohei Ohtani’s 10-year, $700 million pact with the Los Angeles Dodgers, which has a present-day value of roughly $437 million, depending on your calculations. A different source referenced Ohtani’s contract explicitly by responding, jokingly, with: “$1 million more than what Ohtani got.” Fair enough.
The takeaway: Everyone knows Soto is going to get paid — to the extent that he’s going to sign either the richest or second-richest contract in MLB history.
So, why do all of those predictions feel wrong?
2. Why those estimates could be low
To our eyes there’s a perfect storm brewing for Soto’s contract to exceed expectations.
There are a few obvious reasons for that belief, beginning with simple supply and demand. If you’ve ever taken a business class, you know how pointless and boring the endeavor is; we’ll spare you. Just understand that players of this age and quality almost never reach free agency; it’s been nearly a quarter of a century since Rodriguez, and who knows what the league or the world as a whole will look like in another 25 years. Any club that wants to sign a player of this ilk should act now. Supplies are running out.
Teams are, accordingly, lining up to try to land Soto. That includes several large-market behemoths. Mets owner Steve Cohen’s involvement shouldn’t be overlooked in this respect. There are some who feel Cohen will do whatever it takes to get a deal done — remember, Cohen’s willingness to engage in runaway spending inspired the other owners to tweak the luxury tax rules to penalize him in particular.
Soto would be well positioned to leverage teams against one another in pursuit of extracting as much value as possible no matter who he was represented by. It just so happens that his agent is Scott Boras, the same Boras who repped Rodriguez during his foray into free agency back in 2000. It’s probably fair to write that no agent in professional sports history that’s better equipped to meet this moment than Boras.
Add it all together, and yes, it’s not hard to envision a scenario where Soto, like Rodriguez before him, takes the market to a new level.
Remember, Rodriguez signed during the same winter that saw Mike Hampton ink an eight-year pact worth $121 million and Manny Ramirez put pen to paper on an eight-year, $160 million deal. Rodriguez blew away those deals just a few weeks later. A lot of the conditions in place for Rodriguez then are in place for Soto now: the limited supply; the extreme demand from high rollers; and the superagent.
3. Why those estimates could be high
Again, we’re inclined to think Soto signs for more than those estimates suggest. But, let’s play devil’s advocate for a few hundred words and answer the question at hand: why might those estimates prove to be high?
The biggest reason is the competitive balance tax. MLB didn’t have this kind of mechanism in place back then, and certainly not to the extent that teams were governed by it in a meaningful way.
Now? Teams have to think more strategically before they hand out massive contracts since the consequences go beyond mere opportunity cost.
Even if Soto were to check in at just $40 million annually (CBT payroll numbers are calculated using AAV), that would tie him (with Aaron Judge) for the highest tax hit on the Yankees; it would give him the highest tax hit on the Mets by $7 million annually; and it would give him the second-highest tax hit on the Dodgers (behind Ohtani), $10 million higher than almost everyone else. And so on and so forth.
Of course, the CBT doesn’t just restrain runaway team spending; it also arrests player earnings.
Marry those dynamics together, and there’s incentive on both sides to get creative with contractual terms and structure. That can manifest in a few ways: the contract could be longer (so as to smooth the hit); some of the money could be deferred (like Ohtani); and so on. It’s become commonplace for top-of-market signings, like Soto’s, to include opt-out clauses and the like — essentially turning the ability to re-enter the market in a few years into its own form of compensation.
In other words, there are a lot of different mechanisms that could be deployed by teams to sweeten their offer to Soto while, simultaneously, lowering the present-day value.
Just how much, if at all, that comes into play here is to be seen. But, in the event (however unlikely it seems to us) that Soto’s contract comes in lighter than expected, it’ll probably be because his deal includes a lot of the aforementioned mechanisms.
