Bradley Valentin 
*Updated December 8, 2024
As of Sunday night, December 8th, Shohei Ohtani is no longer the largest contract in MLB history. The new honors go to Juan Soto to be signed by the New York Mets with a 15-year, $765 million contract.
Baseball is a multi-billion dollar industry that has existed through three centuries. Today, all 30 baseball franchises are worth over $1 billion, while the Yankees lead that evaluation with over $7 billion in value. Players, owners, and other businesses rely on the success of the MLB and the billions of dollars in value. Today, we will look at the industry.
Player Contracts
In December 2023, the Los Angeles Dodgers signed two-time MVP Shohei Ohtani to a 10-year $700 million contract.* This contract was and still is the largest in Major League history and is the largest sports contract ever. To those unfamiliar with baseball, Shohei Ohtani is a two-way player (meaning he both pitches and hits, the first to do so successfully since Babe Ruth in the 1910s). He is a highly unique and well-performing player, considered to be the best ever to play the game. While the $700 million number shocked many, his contract is more unique than most people understand.
Ohtani is only making $2 million per year for the first 10 years of his contract. The other $68 million is deferred after his contract is over with the Los Angeles Dodgers. The Dodgers made this choice for several reasons. The smaller dollar amount allows the team freedom to sign other players but also gives them a smaller salary hit. MLB has a Luxury Tax, meaning that if a team goes over a certain amount spent each year, they have to pay an extra tax to the league. The signing of Ohtani would count $70 million each year towards that luxury tax, but since much of it was deferred, there is a “present-day” calculation. Ohtani’s present-day value on his contract is only about $46 million per year, meaning the team is only paying him $2 million/year today, with a luxury tax value of $46 million/year, but will owe him $68 million/year in the future.
Shohei Ohtani (pictured above) received the richest sports contract in history in 2023.
Shohei Ohtani’s contract is important because it explains a lot to the world about baseball. Baseball is, first and foremost (to its owners and players), a business. Millions of fans watch their teams win and lose and invest their hearts and minds to see their team on television or live. For fans, the purpose of the game is to see their team win and, each year, see their team end with a World Series trophy. And while this may be true for some players and owners, often their first priority is profits. Players like Shohei Ohtani bring more than winning to a team. Ohtani, a Japanese native, has turned hundreds of thousands of fans in Japan into Dodgers fans. He brings more people and eyes to the game of baseball, and more and more people today are watching the Dodgers. While $700 million may seem like a massive number (because it is), the Dodgers will easily make up that money. Shohei Ohtani’s first season with the Dodgers was a winner, as the team won it all and earned themselves a World Series trophy. Already, the team is seeing a payoff for that massive contract.
Billionaire Owners
While teams like the Los Angeles Dodgers are throwing around hundreds of millions of dollars to sign one player, some teams do not spend quite as much. This has become a point of contention for many fans and many in baseball media. Owners are villainized for their wealth and their lack of spending (while owners are also criticized for their perceived overspending as well). Some teams have never spent hundreds of millions of dollars on a singular contract, while other teams spend hundreds of millions every year.
John Henry (pictured above) who is the principal owner of the Boston Red Sox, has an estimated net worth of $6 billion.
It is important to understand that while some teams like the Yankees and Dodgers can afford to spend hundreds of millions each year, some owners cannot spend the money that these giants do without risking heavy losses. Underperforming teams like the Colorado Rockies or Chicago White Sox have lost money in the last few years. Other teams are losing money because of issues with regional sports network contractual issues, such as the Minnesota Twins. Yes, the owners could likely afford to sign players for hundreds of millions of dollars, but they risk minimizing their profits or even losing more money each year. The majority of owners of baseball teams are considered billionaires. However, part of the valuation comes from the worth of the teams. When people say that the billionaires have the money to spend on players, they do not understand that part of their value comes from owning the teams. To afford some of these contracts, some owners would have to sell their biggest assets first to pay for players. Unfortunately, for them, their biggest assets are the teams themselves.
Publicly Traded Teams
Today, the Atlanta Braves is the only publicly traded team in the Major Leagues. This means that the public can openly buy and sell shares for the team. All of the other 29 teams are owned by large ownership groups, singular owners, or small ownership groups made up of a few people.
In July 2023, Liberty Media Group, which previously owned the Braves, split the stock BATRA into a separate stock for just the Braves. This is a unique scenario for baseball, as the 150+ year history of baseball has had major influential figures as owners of baseball. These owners made massive impacts on the game and on American culture.
BATRA, the Atlanta Braves Holdings, Inc. is down 1.55% year-to-date in 2024.
While many other teams are controlled by a majority shareholder, more and more teams are being consumed by ownership groups. Some majority shareholders and families that own teams are looking to sell their teams at this new height in the 21st century, which is seeing record-setting valuations for teams. While we see new owners like Steve Cohen of the Mets snatch up high-valued teams, it is unlikely that many more teams will go the way of the Atlanta Braves.
MLB is its Own Economy
Major League Baseball is a prism that can be looked at in many different ways. For one, it’s a sport that generates millions of fans each year and untold happiness and sorrow for the winners and losers. Another way to look at the sport is the business aspect, as we’ve discussed above. But another way to view the MLB is through its own lens, which is that of its own economy.
Outside of the contracts between owners and players, there are many more factors within the MLB economy. One major factor that has impacted the MLB recently is the regional sports networks on cable. The 2010s are famous for the booming of the streaming industry, with new giants like Netflix, Disney, and Hulu taking over the TV-watching culture. Because of this, traditional cable is losing its value amongst customers, while many companies are going out of business because millions are moving away from the antiquated model. Because of this, MLB owners have struggled to continue funding their team (outside of selling tickets), as TV contracts with RSNs were worth tens or hundreds of millions of dollars each year. This has caused owners to rethink their spending and restrategize their plans for making money from TV.
Major League Baseball owners are looking to expand their own economy as teams are moving away from traditional TV rights to streaming but are also moving towards more untraditional ballparks and field locations. Teams of the past would own a ballpark within or near a major city and include parking and vendors available for fans. However, today, teams are interested in prime locations located within the city where they can own local businesses, such as restaurants, bars, and hotels, to encourage fan engagement within and outside of the ballpark. The Atlanta Braves have their own entertainment district, known as the Battery Atlanta, where players can spend all day (outside of watching a game), being entertained and spending their hard-earned dollars. More teams are looking to abandon their old stadiums and develop these ideas in other cities across the country.
MLB Players Union
The MLB Players Union, known as the Major League Baseball Players Association (MLBPA), is considered by some as one of the strongest unions in the world. In the early days of baseball, players were mistreated and underpaid by owners and organizations. But in 1968, the MLBPA was created, and since then, players have had more power and impact on the game than ever before. The MLBPA helps protect players and their contracts but also has a major impact on the sport. Ever since its creation, the MLBPA has earned the players more and more rights, including increasing the minimum salary for all MLB players to $740,000 in 2024, to negotiating retirement packages that include insurance benefits and lifetime pensions.
Edwin Diaz (pictured above) was suspended and fined nearly $1 million for “foreign substances on body/uniform.”
The MLBPA has also had concessions to the owners, such as fines and suspensions. In 2024, players were fined over $2.5 million for fighting, gambling, conduct, and other infractions with their teams and the sport. Players agree to these fines through the MLBPA, and while millions have been spent on fines by the players, their union benefits substantially outweigh any fines they might agree to.
One major benefit the MLBPA has negotiated for the players is that player contracts include guaranteed money. Unlike American football, where players are not guaranteed their contracts, baseball includes guaranteed money for almost all circumstances except for suspensions and legal issues. This means when players are injured or have to retire due to injury, they are guaranteed all the benefits of their contracts, even if they have years left. Many players have signed contracts worth hundreds of millions of dollars, only to spend the whole season on the injured list or even retire due to inability.
Major League Baseball is one of the biggest industries in the world, and in the world of sports, it stands alone. While other sports may surpass baseball in popularity, baseball’s long history and fervent have brought it to be the multi-billion-dollar giant that it is today.
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