In the United States there are five professional sport leagues, but only four are usually recognized as the major sports leagues—known as the big four—: Major League Baseball (MLB), National Basketball Association (NBA), National Football League (NFL), and National Hockey League (NHL).
In all four of these leagues the biggest story come the offseason always comes down to compensation, who will get the largest contract of the offseason and what team will be giving these players these contracts. In all four of these leagues’ players are starting to get paid more per year than ever before, this is partly due to a larger salary cap in all the leagues excluding baseball and teams just having more money to spend in general on players.
However, contracts are not becoming so large solely due to teams having the money to do it, no, players are starting to expect this type of compensation for their play. This is a trend that has always been and one that doesn’t look like it will stop anytime soon.
When we look at the biggest contracts in each of these four sports we will see two things, the contracts represent how much money the teams and the leagues earn throughout the season and how willing teams from each league are to go and get the best player for the right price.
In the NHL the largest contract belongs to the Washington Capitals Left Wing Alex Ovechkin who currently owns the richest contract that he signed in 2008, 13 years $124 million, although Ovechkin might not be making the largest salary out of any player his total contract is worth more than anyone else who ever played the game and it is fully guaranteed.
As you will soon see though NHL contracts have the lowest per year compensation, partly due to league revenue compared to players on the team but it is also because NHL players tend to take long term deals more often than not to protect themselves in the violent game.
In the NFL the richest contract distinction belongs to Seattle Seahawks Quarterback Russell Wilson who has a four year $140 million to go along with a $65 million signing bonus, for a grand total of $205 million along with incentives. The biggest difference though in NFL contracts compared to all of the other big four sports is that these contracts are not fully guaranteed.
Only $107 million of the contract is guaranteed, meaning that if Wilson is for some reason let go, whether it be due to injury or lack of production he will only make the guaranteed figure of $107 million, a little over 50% of his total contract. This seems to be the biggest topic of discussion when it comes to NFL contracts, why are the contracts not fully guaranteed?
Well, there is a simple answer from the team perspective, if you are not living up to your contract or you are unable to play your contract then you should not be able to get the full worth of your contract. With that being said this is what the National Football League Players Association (NFLPA) agreed to in their latest collective bargaining agreement, so until their next meeting in 2021 none of these rules can be changed, whether it be fair or not.
In the NBA the teams have to pay for a maximum of 15 players on a team, so the NBA is usually the league you see the largest per year averages to its top players. Much like the other three leagues mentioned so far, the NBA works under a salary cap so not every player on a team can get paid like a top player, only one or two can. As of right now the largest contract in the NBA belong to the Houston Rockets Shooting Guard James Harden at six years for $228 million.
The NBA has smallest number of players on a team compared to all of the other leagues so it does make sense that they can make some exceedingly large contracts to entice players to sign with them. However, like the other three leagues with a salary cap this could come at a cost because it means you may be able to have a superstar but not create a team that could be a true championship contender. That is one thing that all teams in these leagues need to think of when offering contract, but in the next league you can throw all of that out of the window.
As oppose to the other leagues that have a salary cap the MLB has a luxury tax which means that there is a set threshold that teams are allowed to spend each season in the free agency process. Even with the threshold though teams do not get punished if they are in the top five in spending each season, they only get punished if they exceed the spending threshold within a certain season. So, this does not mean that teams can spend all the money they want on players like they could before the luxury tax came in place, but they would be able to control their fate without being compared to other teams.
Certain teams don’t mind passing the threshold and paying a fine, specifically the New York Yankees who surpassed the threshold between 2003-2017 and have paid a total of $319.6 million in tax for surpassing the threshold. They have a chance this season to give the largest contract to a pitcher ever which would be more than $250 million, but as of right now the largest contract in MLB history belongs to the Los Angeles Angels Center Fielder Mike Trout who signed a 12-year $426.5 million contract last offseason, beating the previous record made the same offseason of 12- year $330 million.
Now that we know the largest contract in the four major sports there are two important questions that arise, why are these players getting paid so much, and is it worth it to pay players this much?
These questions are tough to answer, a general consensus of people not in the industry will say that there is no need to pay these players that much money because there is no one profession where anyone should earn that much money.
There is a point to that argument, but at the same time players, like everything else, which comes at an economic stance of supply and demand.
As we see when it comes to contracts, it is usually a top member at their profession who will be the one to get such a large contract. With that in mind, if they are one of the top players in their profession than do they not deserve to be paid equally so. Thankfully that is not a decision that many of us will never have to answer in our lives because it is safe to assume that many of us would say no. Instead that decision falls upon the owner and the general manager of a team—more the owner— because this is where you will be getting your pay from.
While in the offseason teams think as hard as possible to what will be best for their team and that determines how they will spend money in the offseason. Whether this means spending a lot on one player or spending a quality amount on many players we don’t know but that is what every single team faces in the offseason.
For instance, the latest big-name free agent to sign a contract was Pitcher Stephen Strasburg of the Washington Nationals who signed for seven years and $245 million, that is the largest contract a pitcher has ever gotten.
Should he be paid that much from a measure of worth? I would say no, Strasburg has never been a top pitcher in the game, he has always been a very good pitcher but never a top pitcher. With that being said Strasburg’s performance in the playoffs last season helped him secure a large contract in the offseason.
This is when the second question comes into effect, is it worth it for teams to pay these players this much. The simple answer for many teams is yes. It is yes because of the old supply and demand, and the thought process that if I don’t pay him a certain amount than another team will come along who is willing to pay the amount and they will leave.
This is true to a certain extent, some players look to go where the most money is, but some players look to go where they will have the best chance to win, so the situation changes with every player.
However, teams look at it from the perspective that if I put the best offer on the table than they will be more likely to sign with me. That’s not always a bad mindset to have, but these players may not be worth what you are willing to give them.
As stated earlier, this trend of larger and larger contracts will never stop, the only way it will stop is if teams from any sport deny paying a player for a contract in which the player thinks they are worth. This means that no contract has been signed, but the player is holding out for more money before they come back to play.
The biggest issue that could arise with this is the thought that collusion is going on, sports leagues have had problems with collusion in the past and therefore they will not be willing to not pay a player (who should be playing) because it could easily look like collusion.
This would cause the biggest issue in the NFL, where contracts are not fully guaranteed. Since contracts are not fully guaranteed we are seeing more players than ever holding out until they feel like they get what they deserve in terms of guaranteed money. This is what we saw last offseason with Ezekiel Elliot of the Dallas Cowboys, he held out to get a new contract until right before the season started after he got a new contract. He signed a new contract worth $90 million ($50 million guaranteed) over a four-year period, so far this season he has not lived up to that type of money whatsoever.
If teams never gave in to demands from these players than it could look like collusion depending on how the situation goes down, although the bottom line is many of these guys are replaceable. Ezekiel Elliot has been one of the best running backs in the league since he entered the league, but this season he has been pedestrian, easily replaceable, so was the big contract worth it. Probably not, but that was the price that the Cowboys paid in order to have him back on the team (supply and demand).
As in any sport you are bound to find bad contracts for any type of player, but when looking at a player you have to think of the two questions that were brought up earlier, if one of them does not match your though for a player than pass on them.
Contracts will continue to grow and grow and that is on the team that they play for, but why are we giving mediocre players some of our largest contracts. Again, this is something that many of us will never have to deal with, but it brings up an issue that is going on in professional sports, can contracts begin to go down again before they get too out of hand.
Probably not but we will have to wait and see what the next decade brings when it comes to contracts. If salary caps and luxury taxes continue to get larger with an equaled amount of support than that is exactly what you can expect. But at the same time, it is up to the owners to pay what they feel is right when offering a contract, so my guess is that this trend will continue throughout our lifetime and probably beyond.