Exploring Monster Juan Soto Contract Structure, Which Cubs Should Pursue Even Though They Probably Won’t

Ed. note: I’m a big dummy and mathed wrong, so the Cubs only have about $43 million under the penalty with Bellinger opting in. I was thinking FanGraphs had included his salary when they hadn’t, so adjust accordingly.

This is a dark time in Chicago sports, so I’m doing my damnedest to find things that take my mind off of the ending of the Bears game yesterday. Yikes. While the pursuit of the biggest free agent in this upcoming market is typically a very disappointing topic for Cubs fans, this little nugget from FanGraphs Contract Crank Jon Becker tickled my fancy. Juan Soto is going to end up signing somewhere for a whole lot of money, and the structure of that deal could end up being very interesting.

It’s entirely possible that Soto will want all of his money paid in real-time, though Scott Boras has been known to work out heavily deferred deals. As Becker laid out, Soto could sign for $1 billion over 15 years and defer 73% of the total value to start paying out once the contract ends. That would deflate the present value of the deal to just $693 million, bringing it to a $46.2 million average value that is more than $20 million lower than face and still surpasses Shohei Ohtani‘s massive total.

Playing around w/ the calculator just to see if there’s a fun contract structure for Soto, and FWIW, a 15y/$1B contract with $730M deferred (with yearly payments starting immediately after the deal) works out to a PV of $693M, or a PV AAV of $46.2M, just beating Shohei’s

— Jon Becker (@jonbecker_) October 28, 2024

The question here is what Soto and Boras are trying to target. Is their preference to beat Ohtani’s total contractual figure or his AAV? How about the time value of money versus the long-term security of a deal that guarantees a hefty income for many years after Soto is done playing? Ohtani opting to defer 97% of his $700 million deal felt like cheating and it also seemed at the time like a unique situation, but you have to think at least a few owners got the itch to do the same for other superstars.

After all, they get to reduce both their actual and luxury tax payroll figures for the duration of the deal while pushing some or most of the real cost into the future. Given that the goal of team ownership is to increase the value of the asset over time, a situation like that above could mean those $730 million in deferred payments end up being some other billionaire’s problem. In the Dodgers’ case, it’s believed they are pulling in way more in added endorsements than it’s costing them to pay Ohtani.

Even if Becker’s example is a bit extreme, I’d say something along these lines is far more plausible than Spotrac’s market value for Soto of $514 million over 14 years. Clocking in at a mere $36.7 million AAV wouldn’t even put him in MLB’s six richest deals, and he’s at least three years younger than any of those other players were when they signed their respective deals. Seriously, dude just turned 26 years old last Friday.

Mike Trout signed a 12-year, $426.5 million extension with the Angels back in 2019 at the age of 27 which still stands as the second-richest in terms of total value. That same year, Bryce Harper — another Boras client — joined the Phillies for $330 million over 13 years at 26 years old. Kinda funny that two former Nationals are involved here. Given how the economics of the game have shifted in just five years, it’s a good bet Soto will blow by both of those guys.

What’s wild here is that whether you view it as $1 billion with massive deferrals or $693 million with none, the AAV figure isn’t necessarily prohibitive. Not that such a thing should be of serious concern to owners of the marquee franchises out there, but you know what I mean. The Cubs should have at least $70 million of wiggle room below the competitive balance tax penalty and will be closer to $100 million if Cody Bellinger chooses to test free agency.

So wait, would that mean signing Soto to the richest contract in history might only take up 46% of their potential budget?

Of course, that presupposes a budget that bumps up against the penalty threshold they are projected to have exceeded this season. It also assumes Soto is even willing to consider Chicago as a destination. The Dodgers are reportedly interested in pursuing Soto “if he’s interested,” according to Jon Heyman. The Yankees and Mets are still viewed as heavy favorites for Soto’s services, though the Blue Jays have also been mentioned as preparing an “astronomical” offer. Jays fans appear to see their team’s chances in the same light as Cubs fans, so all the grains of salt and whatnot.

Very few people believe the Cubs will meaningfully pursue Soto even though they absolutely should, but it may not matter one way or the other. If, like Ohtani, he simply prefers to stay in New York, even getting Tom Ricketts to green-light the largest guarantee in American sports won’t get the job done. So we can talk all day about how the Cubs keep coming up short and making half-assed excuses for not landing superstars, I just don’t think this will end up being a situation in which their desire or ability is of much consequence.

But if Soto is even the slightest bit willing to consider a move to the middle of the country, making him the highest-paid player in baseball is a no-brainer. The Cubs have several young prospects on the cusp of the majors and they currently have just one nine-figure deal on the books. In case you care, the Dodgers and Phillies have six such deals; the Padres have five; the Yankees have four; and the Mets have three. Even in the very likely event that they aren’t in on Soto, the Cubs can and should add at least two big-ticket stars this winter.