DETROIT (CBSMiami) – The Detroit Tigers signed former Miami Marlins star Miguel Cabrera to an 8-year contract extension worth $248 million. Cabrera’s deal will average out to roughly $30 million per season over the next decade.
But the question is how much more money can teams give players before thing start to collapse. For some teams, that time is now, but for the vast majority of teams, the money spigot is going to continue to flow for at least another decade.
Cabrera’s contract is on top of his current contract that had two-years remaining on it and $44 million, meaning the entire new contract will cost the Tigers roughly $292 million through the year 2025, when Cabrera will be in his 40’s.
The contract, coming from a team in a city that’s been ravaged by the Great Recession and is in bankruptcy protection, is stunning to say the least.
The new contract for Cabrera is not the only expensive contract being handed out this offseason. The Los Angeles Dodgers gave starting pitcher Clayton Kershaw a 7-year, $215 million extension that will run through 2020, but Kershaw will be just 32 then, meaning he will be eligible for another big payday.
The Seattle Mariners started the offseason spending spree when the team signed 31-year-old Robinson Cano to a 10-year, $240 million contract. Cano was considered the top free agent player available, but will be 41 when the team finishes paying off his contract.
Between Cabrera, Kershaw, and Cano, the value of their contracts will total out to $747 million over the next seven to 10 years. While the number is eye-popping, the owners who are signing the checks aren’t hurting for money.
From revenue sharing, ticket sale growth, and other financial streams of money, owning a baseball team is a lucrative business. Consider, according to hardballtimes.com, since 2002, player salaries as a share of net revenue has declined by 16 percent. “Even though the average payroll has gone up by 58 percent, revenue has gone up by 122 percent,” hardballtimes.com reported.
In other words, even though the eye-popping numbers from Cabrera, Kershaw, and Cano continue to get bigger; the actual contracts could be even bigger if payroll matched up to revenue growth.
The Tigers have a payroll this season of $163 million. The Los Angeles Dodgers payroll will reach $233 million. The Mariners will pay their team $76 million in 2014, and the L.A. Angels will pay out $147 million in 2014 alone.
Still, on the other end of the spectrum are teams with owners not willing to spend any money like the Miami Marlins and Houston Astros. According to spotrac.com, the Marlins total payroll this year will be $42.9 million and the Astros payroll will top out around $50 million.