Cloud Nine-Figures: Why membership in the exclusive $100 million club has exploded, especially for MLB and NBA players
Once a rarity, the number of playing contracts worth $100 million or more has exploded in recent years, especially in basketball.
In the past three years, 46 nine-figure NBA contracts, with a total value of nearly $6.5 billion, have been signed, based on exclusive SBJ research. Since 2016 in Major League Baseball, 21 such contracts have been negotiated, with a total value of $3.5 billion.
All told, those two leagues alone accounted for about $10 billion in playing contracts during that period.
The NFL doesn’t have guaranteed contracts like the NBA or MLB, but that league also has seen an increase in nine-figure “maximum value” contracts in the same time period.
The trend among the leagues is fueled by soaring revenue, with skyrocketing media rights deals the biggest accelerator. Collective bargaining agreements spell out how that revenue can be divided.
“People were stunned” in July 1996, agent David Falk said, when he negotiated the first two $100 million contracts in North American sports history, landing client Alonzo Mourning a $105 million deal with the Miami Heat and Juwan Howard a $101 million contract with the Washington Bullets.
Now, “A hundred million dollars today doesn’t mean very much,” he said.
In fact, a total of 203 contracts with a maximum value of $100 million or more have now been signed. MLB leads the way with 86, followed by the NBA (73), NFL (39) and NHL (5).
The biggest increase in nine-figure deals in recent years has come from the NBA. In the history of that league, 63% of its nine-figure contracts were negotiated in the past three years, SBJ research shows.
This calendar year alone, 18 of those $100 million deals were signed, a record for any pro sports league. The previous high mark for a single year was 11, achieved twice by MLB in 2012 and 2014, and by the NBA in 2016 and 2017.
NBA agents point to the rise in basketball revenue, which in turn increased the salary cap. Under the NBA’s labor agreement, players receive 51% of basketball-related income.
“The cap is dictating so much of this,” said Jeff Schwartz, Excel Sports Management president and founder, who has negotiated 11 NBA contracts of $100 million or more in his career. “The cap in 2014 was $63 million. In 2015 it was $70 million and in 2016 it was $94 million. If the cap goes up $4 or $5 million, it’s a pretty hefty jump, but the cap went up $24 million.”
Leon Rose, co-head of CAA Basketball, said the cap is set at $109 million for the upcoming season, “a massive increase in just four years.”
Players can earn a certain percentage of the cap, with the top being 35%. And the current CBA makes it easier for some NBA players to get a max contract. “The latest CBA gave incumbent teams the ability to offer their own players with seven to nine years of service the same ‘supermax’ contract that a player with 10-plus years of service was previously exclusively able to attain,” Rose said.
Schwartz notes that NBA teams are required to spend 90% of the cap, and with small rosters “you are going to have guys today that are making $20 million or $30 million or $40 million a year.”
League revenue — and the salary cap — should continue to climb in the NBA, but how it solves its backlash over China will factor into those numbers.
MLB is the only major team sport without a salary cap, because the MLB Players Association is the only union to successfully fight against one.
Unlike in the NBA, MLB does not have a limit on individual salaries or durations of contracts, so it’s no surprise that baseball has the largest contracts ever negotiated in sports.
Three of those contracts were reached this year — Manny Machado’s 10-year, $300 million deal with the Padres; Bryce Harper’s 13-year, $330 million pact with the Phillies; and Mike Trout’s 12-year, $426.5 million extension with the Angels. Trout’s deal, signed in March, is now the biggest contract in U.S. sports history.
Despite those record-setting contracts, the last two free agent markets have been cold for many but the very top players.
Ominously, the qualifying offer that clubs can make to impending free agents this coming offseason dropped for the first time since it was implemented in 2012, falling $100,000 to $17.8 million. The offer is based on the top 125 MLB player salaries. The Associated Press reported that the Machado, Harper and Trout deals may have had an adverse impact on the qualifying offer number because those deals had large signing bonuses and relatively low salaries for 2019.
Research shows that while MLB has the most and the largest nine-figure contracts, the growth in such deals is not as strong in comparison with the NBA.
“It’s really comparing apples to oranges,” said MLB Deputy Commissioner Dan Halem, when asked the reason why. “We have a totally different system. We have had multiyear contracts of unlimited length.”
Halem noted that since 2011, the number of MLB players earning $20 million or more a year has nearly quadrupled — from 11 to 40. Additionally, MLB leads all sports with the most $200 million contracts: 14, or 16 if the two that went over that mark with deferred money are included. The NBA has two.
MLB players can become free agents after six years of major league service. Teams have been eager to lock many of them in early.
Wasserman agent Joel Wolfe, whose $100 million-plus deals include Giancarlo Stanton’s 13-year, $325 million contract in 2014, sees a surge in talented young position players and pitchers moving through the pre-arbitration and arbitration system.
“I believe that is the main source of reason behind the teams making such a voracious attempt to sign the best young players to long club-friendly extensions well before they enter arbitration,” Wolfe said. “The clubs have recognized that this unique group of players exists and are certainly spooked by the number of $200 million-plus contracts. There is no question that the clubs will do whatever it takes to try and avoid having to pay these types of contracts in length and value.”
NFL and NHL
In April of this year, agent Mark Rodgers negotiated a four-year, $140 million contract for Seattle Seahawks quarterback Russell Wilson. The deal includes a $65 million signing bonus among the $107 million guaranteed on signing.
NFL agents have made a lot of movement toward guaranteeing contracts in the last few years, Rodgers said, noting that both Minnesota Vikings quarterback Kirk Cousins’ three-year, $84 million deal and New York Giants running back Saquon Barkley’s $31 million contract were fully guaranteed.
The other guarantees on Wilson’s deal will occur in the first of each of the next three league years, so barring a catastrophic injury, he will get all $140 million, Rodgers said.
Brett Favre signed the NFL’s first $100 million contract in 2001. But the sport’s lack of career longevity and the league’s lack of guaranteed contracts made $100 million deals a relative oddity, especially for players in any position besides quarterback. The first seven $100 million-plus deals in NFL history went to quarterbacks, until defensive tackle Albert Haynesworth nabbed one from Washington in 2009. Twenty-six of the NFL’s 38 all-time $100 million-plus contracts have gone to QBs.
In recent years, the situation has improved for NFL players, especially non-quarterbacks. Since 2016, the league has doled out 17 contracts of $100 million or more, just behind MLB’s 21. The 17 deals represent 45% of the all-time NFL $100 million deals, in just a three-year period. Falcons quarterback Matt Ryan’s $150 million deal signed in May of this year also included $100 million in guaranteed money.
The NHL has seen only five $100 million contracts.
Jeff Jackson, the Wasserman NHL agent who negotiated Connor McDavid’s eight-year, $100 million extension with the Edmonton Oilers in 2017, said the salary cap, the number of players on a team and term limits contribute to that situation. An NHL player is limited to seven years when he joins a new team and eight years if he re-signs with his own team.
Because of the NHL’s hard cap system, with no special exemptions allowed, combined with a 23-man active roster plus any players on injured reserve, it is difficult to have star players making enough to hit that threshold, Jackson said in an email.