<img alt="New Yankee pitcher Max Fried is introduced at Yankee Stadium in The Bronx" src="https://cdn.vox-cdn.com/thumbor/lLqnN2xa5-vnZ5v1Ja1b4612sBE=/0x0:4095x2730/1310x873/cdn.vox-cdn.com/uploads/chorus_image/image/73799537/2190713956.0.jpg">
Photo by James Carbone/Newsday RM via Getty Images
Sticker shock has been a theme of free agency so far this offseason. With that being said, is it really all that crazy? Do we need to look at things from a different angle? Inflation sucks. Or at least it appears to really suck.
Back in 1986, a 16 oz can of beans cost on average 43 cents in the USA. It (by “it”, I mean a 15 oz can – stupid shrinkflation) costs about $1.29.
When I first started driving, my mom would give me $20 for gas, but it was enough for a tank of gas, a drink, and a snack (at least). It now would get me about 3/5 of a tank of gas.
Mark, can you get to the point?
So what does baseball have to do with the price of beans?
Max Fried got a contract for 8 years and $218 million. TWO HUNDRED AND EIGHTEEN MILLION.
The general reaction was basically ALL CAPS on how insane it was. To be fair, most of the reaction was also, “Good for you, Max,” and it should have been. Max has been a terrific pitcher for a number years, won a lot of games, and was the ace who very literally brought a World Series trophy to the Atlanta Braves.
But my question is, “Is it really that ridiculous?” When you’re looking at a contract and deciding that it’s ridiculous, what is your criteria? What makes that contract ridiculous?
If it’s just the sheer number, I get that. $218 million is still a $#! ton of money, and it seems somewhat absurd. But we’re trying to be a little more logical here.
So how do we decide? We could use straight inflation, but while that’s helpful, it doesn’t really reflect the free-agent market or the artificial constraints of the CBA.
But the luxury cap does.
So let’s look at some contracts vs the luxury tax.
In 2025, the luxury tax threshold is $241 million dollars. Max Fried’s Average Annual Value (AAV) is $27.25 million (I’m going straight average here instead of worrying about luxury tax calculations). 27.25/241 is 11.3% of the “cap”. Still seems a lot, but it’ll help to add some context.
In 2020, Gerrit Cole signed a 9-year, $324 million contract, which is an AAV of $36 million. The luxury tax threshold was $208 million. That’s 17.3% of the “cap”. Does Fried’s money seem so ridiculous now?
Just for funsies, Alex Rodriguez signed a 10-year, $252 million contract in 2001 for an AAV of $25.2 million. The luxury tax threshold was … well, actually it was nonexistent, but in 2003, it was $117 million for a whopping 21.5% of the luxury tax.
Juan Soto, because I’m assuming you’re going to ask, has an AAV of $51 million from his 15-year, $765 million … holy moly, that’s a lot of money … contract. That’s a luxury tax cap hit of 21.1%.
And to be honest, that makes sense, right? A-Rod was a generational player hitting the market at a young age, and Juan Soto … was the same thing. They both netted roughly 21% of the cap. So yeah, that’s A LOT more physical money, but inflation happened. The luxury tax threshold went up because teams are making more money, and they can afford more.
So here’s my request. We need to start using the percentage of the luxury tax threshold when we discuss salaries and contracts. Literal money only gets us so far, and while inflation is better, the luxury tax threshold is probably better contextually. It gives us a better perspective on how much a player makes and how “ridiculous” it may or may not be.
Your next question is probably something akin to “What should they spend?” or “How do teams spend?”. For that, you’ll just have to stay tuned.
<img alt="New Yankee pitcher Max Fried is introduced at Yankee Stadium in The Bronx" src="https://cdn.vox-cdn.com/thumbor/lLqnN2xa5-vnZ5v1Ja1b4612sBE=/0x0:4095x2730/1310x873/cdn.vox-cdn.com/uploads/chorus_image/image/73799537/2190713956.0.jpg">
Photo by James Carbone/Newsday RM via Getty Images
Sticker shock has been a theme of free agency so far this offseason. With that being said, is it really all that crazy? Do we need to look at things from a different angle? Inflation sucks. Or at least it appears to really suck.
Back in 1986, a 16 oz can of beans cost on average 43 cents in the USA. It (by “it”, I mean a 15 oz can – stupid shrinkflation) costs about $1.29.
When I first started driving, my mom would give me $20 for gas, but it was enough for a tank of gas, a drink, and a snack (at least). It now would get me about 3/5 of a tank of gas.
Mark, can you get to the point?
So what does baseball have to do with the price of beans?
Max Fried got a contract for 8 years and $218 million. TWO HUNDRED AND EIGHTEEN MILLION.
The general reaction was basically ALL CAPS on how insane it was. To be fair, most of the reaction was also, “Good for you, Max,” and it should have been. Max has been a terrific pitcher for a number years, won a lot of games, and was the ace who very literally brought a World Series trophy to the Atlanta Braves.
But my question is, “Is it really that ridiculous?” When you’re looking at a contract and deciding that it’s ridiculous, what is your criteria? What makes that contract ridiculous?
If it’s just the sheer number, I get that. $218 million is still a $#! ton of money, and it seems somewhat absurd. But we’re trying to be a little more logical here.
So how do we decide? We could use straight inflation, but while that’s helpful, it doesn’t really reflect the free-agent market or the artificial constraints of the CBA.
But the luxury cap does.
So let’s look at some contracts vs the luxury tax.
In 2025, the luxury tax threshold is $241 million dollars. Max Fried’s Average Annual Value (AAV) is $27.25 million (I’m going straight average here instead of worrying about luxury tax calculations). 27.25/241 is 11.3% of the “cap”. Still seems a lot, but it’ll help to add some context.
In 2020, Gerrit Cole signed a 9-year, $324 million contract, which is an AAV of $36 million. The luxury tax threshold was $208 million. That’s 17.3% of the “cap”. Does Fried’s money seem so ridiculous now?
Just for funsies, Alex Rodriguez signed a 10-year, $252 million contract in 2001 for an AAV of $25.2 million. The luxury tax threshold was … well, actually it was nonexistent, but in 2003, it was $117 million for a whopping 21.5% of the luxury tax.
Juan Soto, because I’m assuming you’re going to ask, has an AAV of $51 million from his 15-year, $765 million … holy moly, that’s a lot of money … contract. That’s a luxury tax cap hit of 21.1%.
And to be honest, that makes sense, right? A-Rod was a generational player hitting the market at a young age, and Juan Soto … was the same thing. They both netted roughly 21% of the cap. So yeah, that’s A LOT more physical money, but inflation happened. The luxury tax threshold went up because teams are making more money, and they can afford more.
So here’s my request. We need to start using the percentage of the luxury tax threshold when we discuss salaries and contracts. Literal money only gets us so far, and while inflation is better, the luxury tax threshold is probably better contextually. It gives us a better perspective on how much a player makes and how “ridiculous” it may or may not be.
Your next question is probably something akin to “What should they spend?” or “How do teams spend?”. For that, you’ll just have to stay tuned.
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