The Economics of Modern Baseball
Major League Baseball (MLB) has evolved into a major global enterprise, generating $11.34 billion in revenue in 2023. Fueled by substantial revenue streams such as television contracts, ticket sales, merchandise, and international expansion, MLB’s financial ecosystem allows elite players to command unprecedented salaries, as evidenced by recent record-breaking contracts.
In 2022, MLB secured a combined $3.7 billion annual media rights deal with networks including ESPN, Fox, and Turner Sports, spanning a decade. This figure excludes lucrative regional sports network (RSN) agreements, such as the Los Angeles Dodgers’ $8.35 billion contract with Spectrum SportsNet LA. These deals provide teams with the financial resources to pursue top talent, even at premium prices. Compared to the NFL, which generated $16 billion in revenue in 2023, MLB ranks second among U.S. sports leagues, ahead of the NBA ($8.8 billion) and the NHL ($5.1 billion).
MLB’s current financial success marks a significant evolution. In the early 2000s, the league’s annual revenue hovered around $3 billion. The exponential growth seen in recent decades can largely be attributed to expanded media rights deals, globalization, and surging attendance figures in key markets. While baseball’s cultural roots have long made it “America’s pastime,” its economic rise has turned it into a global powerhouse.
The globalization of baseball has further enhanced MLB’s financial power. Players like Shohei Ohtani, a global sensation from Japan, attract audiences across Asia and North America, boosting merchandise sales and viewership. The league’s penetration into international markets continues to strengthen, with the influx of overseas talent persisting. This offseason, Japanese pitcher Roki Sasaki, renowned for his perfect game in 2022 and his triple-digit fastball, is expected to join MLB after being posted by his Nippon Professional Baseball team. Similarly, Japanese slugger Munetaka Murakami has announced plans to transition to MLB in 2026, following his final season in Nippon Professional Baseball in 2025. These anticipated moves follow the precedent set by Yoshinobu Yamamoto, who signed a 12-year, $325 million contract with the Los Angeles Dodgers last offseason, including a $50 million signing bonus.
Juan Soto, a 25-year-old outfielder, epitomizes the modern MLB superstar. His blend of youth, skill, and proven success marks him as a generational talent. In 2022, the Washington Nationals offered Soto a 15-year, $440 million contract, which he declined. The San Diego Padres subsequently traded for him, recognizing that securing such talent would likely necessitate an even greater investment in free agency. After a year with the Padres, the New York Yankees acquired Soto, aiming to end their championship drought. This strategy proved effective, as Soto played a pivotal role in leading the Yankees to the World Series in 2024, their first appearance in 15 years. Although they ultimately fell short of a title, Soto’s impact was undeniable, both on and off the field, solidifying his status as one of the game’s premier talents and making him one of the most sought-after free agents in baseball history.
This journey culminated just yesterday when Soto signed a historic 15-year, $765 million contract with the New York Mets. The deal, which includes escalators that could push the total value past $800 million, sets a new benchmark for MLB salaries and underscores the extraordinary market value of players like Soto.
Soto’s value lies in his exceptional combination of hitting prowess, plate discipline, and youth. By 23, he had already secured a World Series title, a batting crown, and two Silver Slugger awards. Advanced metrics such as on-base percentage (OBP) and weighted runs created plus (wRC+) consistently rank him among MLB’s elite hitters. His age makes him a long-term asset, and teams justify such extensive contracts by distributing costs over many years to maintain payroll flexibility. For teams like the Mets, Soto represents more than just a player; he is a marketing phenomenon who attracts fans and elevates championship prospects.
Similarly, Shohei Ohtani has become a transformative figure in MLB. As a two-way superstar, Ohtani is arguably the most unique player in baseball history. In 2021, he became the first player to hit 45 home runs and pitch 130 innings in the same season, earning him the AL MVP. Despite an elbow injury sidelining his pitching, Ohtani remained one of the league’s most productive offensive players. In December 2023, he signed a record-breaking 10-year, $700 million contract with the Los Angeles Dodgers. The deal includes $680 million in deferred payments, structured to give the Dodgers financial flexibility while ensuring Ohtani’s historic payday.
Ohtani’s contract represents the largest in MLB history, underscoring his unparalleled value on and off the field. For luxury tax purposes, the contract is valued at $46.08 million annually, though its true value is considerably lower in present-day terms due to the extensive deferrals. The deferred payments are set to run from 2034 through 2043.
The rise of mega-contracts like those signed by Soto and Ohtani reflects broader trends in MLB. Media deals generate unprecedented revenue, and revenue-sharing agreements allow even small-market teams to compete for talent. Players like Soto and Ohtani, whose abilities can single-handedly transform a team’s fortunes, command high prices as franchises seek to capitalize on their performance and marketability.
MLB’s globalization has also driven the trend of escalating contracts. The league’s efforts to expand its reach internationally have made stars like Ohtani and Sasaki invaluable, bringing in new audiences and revenue streams. Teams strategically structure these deals, often backloading or deferring payments to manage payrolls and maintain flexibility.
While these contracts symbolize MLB’s growing economic power, they are not without criticism. Small-market teams often struggle to compete financially, exacerbating disparities within the league. Long-term deals also carry significant risks, particularly if a player’s performance declines or injuries occur. Fan alienation is another concern, as rising ticket prices and streaming fees can offset the costs of these massive salaries.
The economics of modern baseball reflect the evolution of the sport’s landscape. Players like Juan Soto, Shohei Ohtani, and Roki Sasaki represent the pinnacle of talent, performance, and marketability, justifying their historic valuations. As MLB continues to grow globally and financially, the trend of escalating contracts shows no signs of slowing. For fans and teams alike, the question is not just whether these deals are excessive, but whether they are a fair reflection of baseball’s economic realities. Stars like Soto, Ohtani, and Sasaki are more than athletes; they are investments in the future of the game.
Sullivan Bean is a Contributor for Liberty Affair. He lives in New Jersey. Follow him on X: @th3BEAN99
