In an interview with CNBC’s Andrew Ross Sorkin earlier this year, Steve Cohen outlined his values as the New York Mets’ owner, calling the team a “philanthropic” venture.
Cohen declared, “I don’t worry about the expense side,” adding, “How great 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 for $765 million over 15 years, including a $75 million signing bonus, and could potentially reach over $800 million.
None of the money in the contract is “deferred,” which means that it must be paid each year that Soto is on the Mets’ active roster. This is particularly noteworthy.
Soto’s contract is even more eye-popping than the $700 million agreement that Los Angeles Dodgers star Shohei Ohtani received only last year since, 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 “really makes little sense why (Soto) would get such a big contract without deferrals.”
Soto’s final payout will be considerably reduced due to the high combined personal income tax rates imposed by the city and state of New York, which are around 15% for the wealthiest citizens.
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 may override that opt-out by raising his compensation by $4 million year, from $51 million to $55 million.
Additionally, the amount that Cohen and the Mets must pay to meet Major League Baseball’s luxury tax is not included in Soto’s deal. 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 clubs in major and small markets.
Cohen could be the easy solution to releasing Soto’s contract. The Mets have often failed, particularly with devastating defeats 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 club 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 most yearly salary since 2023, according data from the sports expenditure tracking website Spotrac. Cohen could be running the club at a loss, according to a different metric from TheScore.com that compares payrolls to teams’ estimated revenues.
Even with the yearly payroll rising, the World Series champion has frequently been a mystery. Despite their extravagant expenditures, the Mets have been notoriously treated cruelly by the baseball gods.
With a squad full of veterans, the club 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 effective use of underutilized players.
It appears that Cohen won’t be turned down again thanks to 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 deal. 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 only a single year, Soto’s deal may be eclipsed. Vladimir Guerrero Jr. of the Toronto Blue Jays, who placed sixth in the MVP vote 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 like the NFL and NBA do, it will continue to dominate all professional sports in gargantuan contract agreements, even if no one manages to meet or exceed Soto’s amount.
