Mo’ money, no problems

Bryce Harper is a sign of things to come

MLB spring training is upon us, and it seems spring spending is too. Two of the largest contracts in American sports history were signed in the last few weeks.

The first was signed by Manny Machado, the new third baseman for the San Diego Padres. He signed for $300 million over the next 10 years. At the time of signing, this was the second largest contract, in terms of overall dollar amount, in MLB history, just behind Giancarlo Stanton’s 13-year, $325 million deal.

It’s now the third largest in MLB history. The Philadelphia Phillies signed right fielder Bryce Harper to a 13-year, $330 million contract. That contract is the second largest in the world, just behind boxer Canelo Álvarez’s $365 million contract.

There has never been a better time in the United States to be a professional athlete. In the NFL, the salary cap for 2019 is set at $188.2 million, which is an increase of 53 percent in the last decade. In the NBA, the salary cap increased nearly 80 percent in the last decade and is nearing $100 million. The NHL salary cap has seen a relatively smaller change, increasing by 40 percent in the last decade to $79.5 million. The MLB has seen an increase too, but the impact of that increase means less due to the difference between the MLB and the other sports mentioned.

What makes baseball different from the others is that it doesn’t have a true salary cap. Instead, there is a luxury tax threshold. The NBA also has a luxury tax, but the MLB’s system has far fewer limitations. If a team exceeds the threshold, which was $197 million this past year, they are taxed a percentage of that.

For example, the New York Yankees, who have exceeded the threshold every year since 2003, paid 50 percent more for every dollar they spent over $197 million last year. In short, MLB teams can spend however much they want on players as long as they’re willing to pay the luxury tax.

The freedom of MLB teams is just one reason why MLB players get larger contracts than hockey, basketball and football players. Another key reason is that MLB players have the ability to sign long-term contracts. NHL players are limited to eight-year contracts at the most, and NBA players can only sign for six years at a time.

The NFL currently has no limit to the duration of a player contract, but it would be foolish for a team to sign a player for an extended period of time. Due to the high injury risk in the NFL, contracts only become riskier the longer they get. In terms of overall dollar amount, the top eight largest sports contracts in the U.S. are MLB contracts; the ninth largest is James Harden’s $228 million NBA contract.

While it’s not uncommon for NBA and NFL contracts to be worth more annual money than MLB contracts, it’s unrealistic to think we’ll ever see any NBA, NFL or NHL contract surpass the size of MLB contracts, barring any major changes to the format of those leagues.

The good news for all professional athletes is the market is going to continue to grow. Given the increasing popularity of the NBA, we could see an NBA contract hit the $300 million mark in the next decade. The fact of the matter is that the world, including the United States, is in love with sports. As the market increases, so does the size of the contracts. Manny Machado and Bryce Harper are a sign that the contracts are only going to get larger.

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