How MLB’s Business And Labor Perfect Storm Created $1.77 Billion Of Player Contracts In Less Than A Week

It doesn’t happen every year. This may not happen again for some time. But a combination of factors created a record feeding frenzy in Major League Baseball during the 2022 Winter Meetings that saw player contract deals totaling nearly $2 billion.

Yes, you read that right. From Monday to Thursday this week, the agreements or direct signings of 23 players with half of the 30 clubs in the league amounted to $ 1,770,316,666.

Within this eye-popping number are three contracts that are in the nine figures (Aaron Judge at $360 million, Xander Bogaerts at $275 million, and Trea Turner at $300 million) with two of them 11 years in duration . According to Jayson Stark of The Athletic, in the first 46 years of MLB free agency, only one player (Bryce Harper with the Phillies in 2019 for 13 years) had a contract longer than 11 years. Between Monday and Thursday, Turner and Bogaerts both turned a decade, plus one.

And it’s not just total cost. The average annual value (AAV) which is the total value of the contract divided by its years, has increased. The Mets now have Max Scherzer with an AAV of $43.33 million, the highest in the league. Not content with that, owner Steven Cohen gave the same number to 2022 AL Cy Young winner Justin Verlander with a two-year, $86.66 million deal. To add other signatures to Wonders the AAV through their signings came to a staggering $86,583,333. To put this into perspective, the entire 2022 Luxury Tax player payroll for several clubs (Orioles, Pirates, A’s, and almost the Reds) would fit within it.

Spending five clubs could make a drunken sailor blush. The Phillies and Yankees spent more than $350 million each, with Philadelphia coming in at $390 million ($387 million). Along with the Red Sox, Padres, and Mets a staggering $1,435,166,666 was allocated to 12 players.

But how did this happen? Why, when so many Baseball Winter Meetings turn into snoozers? The combination of factors creates the perfect environment for owners to invest in luxury.

New Labor Deal Creates Calm

Remember that 99-day MLB owners’ lockout that pushed back the start of the 2022 season? It seems like a distant memory based on this past week. But the pain of labor negotiations creates a sense of certainty for the owners because they know the parameters of things like the minimum wage, how the Luxury Tax is structured, and that they have four more years of labor peace.

Gross Revenue Will Hit A New Record In 2022

Commissioner Rob Manfred said the league is “just shy” of $11 billion in gross revenue for 2022, a sign the league has turned its back on the pandemic. The last time the league saw record revenues before the pandemic was in 2019 when it hit $10.7 billion. When the final numbers are released, the league could match or exceed that solid number.

National Media Rights Increased

The 2022 season sees the start of new media rights extensions with FOX, ESPN, and TBS increasing to nearly $250 million annually. Over the life of the deal that runs through 2028, MLB will see $12.24 billion. Drop Apple’s streaming deals
and NBC for the Peacock, and the league’s 30 owners each saw an increase in lines.

Add More Playoff Teams Incentives Owners To Compete

A major change in the latest labor deal is the addition of two more Wild Card teams – one each in the AL and NL – giving clubs a reason to try and compete. With a total of 12 teams on how to make the playoffs, the clubs appeared to be more aggressive at the trade deadline because the buyers, not the sellers, because the ownership saw the possibilities of reaching the increase in the postseason.

Owners Collect Additional $900 Million From Disney

While it’s not a baseball company, the 30 MLB owners have invested in creating a streaming service for sale in the form of BAMTech. That was sold to Disney, which was rebranded Disney Streaming to host Disney+, ESPN+, and Disney-owned Hulu. Disney bought the last 15% MLB owned for $900 million in November. While some funds may go into the Commissioner’s general fund, this adds approximately $30 million more to the wallets of all 30 owners giving them more incentive to spend on free will. -on if they can’t.

MLB Owners Continue to Diversify

Call them “ballpark villages”. Call it ancillary development. But owners continue to take real estate risks by developing outdoor ballparks that aren’t considered baseball-related revenue but benefit from fans coming to games. Isn’t it important? See how A’s owner John Fisher played hardball not only in Oakland, but in Las Vegas to get development on a new ballpark.

Baseball Will Not “Die”. Six Clubs To Exceed Luxury Tax Threshold By 2022

While Major League Baseball has a system that taxes clubs that exceed a payroll threshold, so much revenue is pouring into clubs that a record six clubs are expected to break the $233 million threshold for in 2022. Those clubs are expected to be the Mets, Dodgers, Yankees, Phillies, Red Sox, and Padres. The other time six clubs exceeded the Luxury Tax threshold was in 2016 (Dodgers, Yankees, Red Sox, Cubs, Giants, and Tigers).


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