Why Are Baseball Contracts So Long? Breaking Down Juan Soto's Record-Breaking Deal

The New York Mets have signed outfielder Juan Soto to a 15-year, $765 million contract, marking the largest deal in Major League Baseball history. According to ESPN, the Mets' initial offer was around $660 million, but competition from teams like the Yankees, Dodgers, Red Sox, and Blue Jays drove the final amount higher.

Sources close to the athlete told The New York Post that Soto’s deal includes an opt-out clause after the fifth season with no deferrals. If the Mets fail to raise his salary from $51 million to $55 million for the final 10 years of the contract, Soto can opt out after the five years with the team. The contract guarantees Soto $305 million over the first five years, which includes a $75 million signing bonus, averaging $61 million annually during that period.

Soto’s deal outpaces every contract in baseball history by over $300 million. In 2023, Shohei Ohtani signed a 10-year, $700 million contract with the Los Angeles Dodgers, but $680 million in deferrals brought its present-day value down to about $460 million. Despite these record-breaking numbers, fans remain puzzled. Many question why baseball contracts are so lengthy. Here’s what we know!

Major League Baseball (MLB) has become synonymous with lengthy player contracts, with deals often spanning a decade or more. Players like Bryce Harper, Mike Trout, and Mookie Betts have signed contracts exceeding 10 years, raising questions from fans. Similarly, Juan Soto’s contract will guarantee his spot on The Mets for 15 years, unless he chooses to leave after five.

Baseball teams use long-term contracts to lock in elite talent for extended periods, ensuring stability and consistency. By offering lengthy deals, franchises reduce the risk of losing their star players to competitors in free agency. For example, Harper’s 13-year, $330 million deal with the Philadelphia Phillies guarantees the team a cornerstone player without the distraction of contract negotiations.

Lengthy contracts also allow teams to spread massive financial commitments over many years, lowering annual salary cap implications. While the MLB does not have a strict salary cap, teams aim to stay under the luxury tax threshold. For instance, dividing $300 million over 10 years results in a more manageable $30 million annual payroll hit, enabling teams to build a competitive roster around their marquee players.

MLB contracts spanning 10 or more years ensure a guaranteed income, even in the event of injuries or performance declines. Players like Mike Trout and Fernando Tatis Jr. have embraced long contracts, knowing they are set for life regardless of career uncertainties. However, these extensive deals do come with a set of risks. Players' performance may decline as they age, leaving teams with massive commitments to veterans.

Despite this, teams do not want to miss out on the chance to score a talented player. “There happens to be a bunch of really good players that happen to be young for free agents," an MLB Assistant GM told ESPN. "That's helping teams feel OK about it. Players aren't spending a full year at every level.”