What if MLB Adopted NBA Maximum Contracts?

Scott Allen & Michael Ginnitti
Scott Allen & Michael GinnittiMarch 04, 2022
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What if the MLB had a maximum salary structure similar to the NBA? One where players could only earn up to a percentage of the current CBT threshold, based on how many years of service they had in the league at the time. What would those contracts look like and subsequently how much could those players earn over the life of those contracts? We will take a look at three instances, Gerritt Cole (NYY), Juan Soto (WAS) and Max Scherzer (NYM), to see what their earnings could be under such a structure.

 

NBA Maximum Salaries 101

First, we have to look at how the NBA structures their maximum contracts. In short, a percentage of the current salary cap becomes the contract’s initial salary. There are three tiers based on years of experience. Using the current 2021-22 NBA cap maximum the following are the designated maximum salaries an NBA player could sign for based on their experience in the league.

Calculating a Maximum Contract’s First Salary
(2021-22 NBA Cap = $112,414,000)

25% of Cap (0-6 years of experience) = $28,103,500
30% of Cap (7-9 years of experience) = $33,724,260
35% of Cap (10+ years of experience) = $39,344,970

Length of Maximum Contracts
If a player signs a maximum contract with their current franchise, the contract can be up to 5 years long. If that player signs a maximum contract with a new franchise, the maximum length is 4 years.

Maximum Contract Salary Structure
Once the first year salary is determined using the above breakdown, the following salaries go up by a determined percent increase. If the maximum contract was signed with a player’s current franchise, salaries will increase based on 8% of the initial salary (always). If the maximum contract was signed with a new franchise, future salaries will increase  based on 5% of the initial salary (always).

 

 

Applying A Maximum Structure to MLB

Now, let’s assume what a maximum salary structure could look like in MLB using the current and proposed CBT thresholds from the recent negotiations. Adjusted for a larger roster in MLB, we’ve determined the tiers to be 12% for 0-6 years of experience, 16% for 7-9 years of experience and 20% for 10+ years of experience.

    2020 2021 2022 2023 2024 2025 2025
YOE CBT $208M $210M $220M $220M $220M $224M $230M
0-6 12% $24,960,000 $25,200,000 $26,400,000 $26,400,000 $26,400,000 $26,880,000 $27,600,000
7-9 16% $33,280,000 $33,600,000 $35,200,000 $35,200,000 $35,200,000 $35,840,000 $36,800,000
10+ 20% $41,600,000 $42,000,000 $44,000,000 $44,000,000 $44,000,000 $44,800,000 $46,000,000

We will also assume the same maximum years for the length of contracts to be signed, but will adjust the percent increase for salaries from 8% and 5% down to 5% and 2% respectively to account for the adjustment of the percentage of the CBT ($210M) compared to the NBA cap ($112M).

Types of MLB Maximum Contracts
We’ve developed three maximum contract options for each scenario below:

  1. Soft Max: Maximum starting salary based on CBT percentage for designated years of service with decreasing salaries of 2% or 5% based on first year salary.
  2. Flat Max: Maximum starting salary with 0% raises keeping the salaries flat.
  3. Hard Max: Maximum starting salary based on CBT percentage for designated years of service with increasing salaries of 2% or 5% based on first year salary.

Now let’s apply these hypothetical maximum salaries to Gerrit Cole’s situation when he signed as a free agent with the New York Yankees in 2020, Juan Soto who is currently under contract control with the Washington Nationals and was reportedly offered a 13 year, $350 million contract and recent free agent signee Max Schrezer who signed a 3 year $130 million contract with the New York Mets.

 

Example #1: Gerrit Cole

Gerritt Cole signed a 9 year, $324 million contract (AAV of $36 million) with the New York Yankees during the 2020 offseason. At that time Cole signed, he had 6 years of service time.

So let’s assume the New York Yankees offered Cole a maximum 4 year contract under the NBA free agent structure. Cole’s starting salary would have been $24,960,000 based on 12% of the $208 million CBT. NBA free agents signing with a new team see future salaries increase based on 2% of the first salary, so Cole would earn $499,200 extra each year of the contract. So Gerrit Cole’s projected “maximum” contract options with the Yankees would have looked like:

 

4-year Maximum Free Agent Contracts starting in 2020.

Salary increase and decrease based on 2% of first year salary as a free agent to a new team.

  Soft Max Flat Max Hard Max    
2020 $24,960,000 $24,960,000 $24,960,000 6 years of service; 12% of CBT
2021 $24,460,800 $24,960,000 $25,459,200  
2022 $23,961,600 $24,960,000 $25,958,400  
2023 $23,462,400 $24,960,000 $26,457,600  
Total $96,844,800 $99,840,000 $102,835,200  
AAV $24,211,200 $24,960,000 $25,708,800  

At the end of that contract Cole will have 10+ years of service making him eligible to sign a new five year maximum contract with the New York Yankees (or a four year contract with another franchise). This means Cole would now be eligible for 20% of the CBT, or a $44,000,000 starting salary.

 

5-year Maximum Contract Extensions starting in 2024.

Salary increase and decrease based on 5% of first year salary by signing with the current team.

  Soft Max Flat Max Hard Max    
2024 $44,000,000 $44,000,000 $44,000,000 10 years of service; 20% of CBT
2025 $43,120,000 $44,000,000 $46,200,000  
2026 $42,240,000 $44,000,000 $48,400,000  
2027 $41,360,000 $44,000,000 $50,600,000  
2028 $40,480,000 $44,000,000 $52,800,000  
Total $211,200,000 $220,000,000 $242,000,000  
AAV $42,240,000 $44,000,000 $48,400,000  

 

Gerrit Cole's Total Compensation for 2 Maximum Contracts

  • Soft Max Combined Total: $308,044,800
  • Flat Max Combined Total: $319,840,000
  • Hard Max Combined Total: $344,835,200

 

Example #2: Juan Soto

It was recently reported that Juan Soto declined a 13 year, $350 million contract (AAV $26.9 million) with the Washington Nationals. Soto currently has 3+ years of service so he is eligible for a starting salary derived from 12% of the current CBT ($220M). Since he’ll be signing the contract with his current franchise, the deal is eligible to be 5 years, with a 5% increase for future salaries. Soto’s maximum contract options look like:

 

5-year Maximum Contract Extensions starting in 2022.

Salary increase and decrease based on 5% of first year salary by signing with the current team.

  Soft Max Flat Max Hard Max    
2022 $26,400,000 $26,400,000 $26,400,000 3 years of service; 12% of CBT
2023 $25,080,000 $26,400,000 $27,720,000  
2024 $23,760,000 $26,400,000 $29,040,000  
2025 $22,440,000 $26,400,000 $30,360,000  
2026 $21,120,000 $26,400,000 $31,680,000  
Total $118,800,000 $132,000,000 $145,200,000  
AAV $23,760,000 $26,400,000 $29,040,000  

Once this initial contract completes, Soto will be eligible to sign an extension with a starting salary derived from 16% of the 2027 CBT threshold.

 

 

5-year Maximum Contract Extensions starting in 2027.

Salary increase and decrease based on 5% of first year salary by signing with the current team.

  Soft Max Flat Max Hard Max    
2027 $37,440,000 $37,440,000 $37,440,000 8 years of service; 16% of CBT
2028 $35,568,000 $37,440,000 $39,312,000  
2029 $33,696,000 $37,440,000 $41,184,000  
2030 $31,824,000 $37,440,000 $43,056,000  
2031 $29,952,000 $37,440,000 $44,928,000  
Total $168,480,000 $187,200,000 $205,920,000  
AAV $33,696,000 $37,440,000 $41,184,000  

 

For those of you saying “it’s not fair” that Soto is still being calculated from the 2nd tier of maximum salary, this is the precise scenario that the NBA adopted the “Super Max” rule for. If a player is an MVP, Defensive Player of the Year, or multiple time All-Pro player, they can “skip a tier" of starting salary, and bump up to the next percentage level immediately, despite a lack of qualifying service time (re: Luka Doncic).

 

5-year “Super-Max” Contract Extensions starting in 2027.

Salary increase and decrease based on 5% of first year salary by signing with the current team.

  Soft Max Flat Max Hard Max    
2027 $46,800,000 $46,800,000 $46,800,000 8 years of service; 20% of CBT
2028 $44,460,000 $46,800,000 $49,140,000  
2029 $42,120,000 $46,800,000 $51,480,000  
2030 $39,780,000 $46,800,000 $53,820,000  
2031 $37,440,000 $46,800,000 $56,160,000  
Total $210,600,000 $234,000,000 $257,400,000  
Total $43,290,000 $46,800,000 $50,310,000  

 

From there, Soto will be on one of two paths, the first where he stays on traditional maximum contract percentages (12%, then 16%, then 20%), or one where he is offered “super-max” eligibility in his 2nd extension, thus throwing his future compensation into a new stratosphere (12%, then 20%, then 105% of the final salary of his previous contract). We’ll explain more below.

Were he to stay on the traditional path, his 3rd contract extension with the Nationals would look like:

 

5-year Maximum Contracts starting in 2032.

Salary increase and decrease based on 5% of first year salary by signing with the current team.

  Soft Max Flat Max Hard Max    
2032 $50,800,000 $50,800,000 $50,800,000 10+ years of service; 20% of CBT
2033 $48,260,000 $50,800,000 $53,340,000  
2034 $45,720,000 $50,800,000 $55,880,000  
2035 $43,180,000 $50,800,000 $58,420,000  
2036 $40,640,000 $50,800,000 $60,960,000  
Total $228,600,000 $254,000,000 $279,400,000  
Total $46,990,000 $50,800,000 $54,610,000  

However, if Soto were to be designated a “Super-Max’ candidate in 2027, his 3rd contract would now look something like this:

 

5-year Super-Super Maximum Contracts starting in 2032

105% of the previous “Super Max” salary of $56.16 million
Salary increase and decrease based on 5% of first year salary by signing with the current team.

  Soft Max Flat Max Hard Max    
2032 $58,968,000 $58,968,000 $58,968,000 10+ years of service; 20% of CBT
2033 $56,019,600 $58,968,000 $61,916,400  
2034 $53,071,200 $58,968,000 $64,864,800  
2035 $50,122,800 $58,968,000 $67,813,200  
2036 $47,174,400 $58,968,000 $70,761,600  
Total $265,356,000 $294,840,000 $324,324,000  
Total $54,545,400 $58,968,000 $63,390,600  

 

Juan Soto's Total Compensation

Traditional Contract Path (12%, then 16%, then 20%)

  • Soft Max Combined Total: 15 years, $515,880,000
  • Flat Max Combined Total: 15 years, $573,200,000
  • Hard Max Combined Total: 15 years, $608,520,000

 

Super-Max Contract Path (12%, then 20%, then 105% of the 20% salary)

  • Soft Max Combined Total: 15 years, $594,756,000
  • Flat Max Combined Total: 15 years, $660,840,000
  • Hard Max Combined Total: 15 years, $726,924,000

 

Example #3: Max Scherzer

Max Scherzer signed a 3 year, $130 million (AAV of $43.3 million) contract this offseason with the New York Mets. Using the same structure above, Scherzer would be eligible for a starting salary at 20% of the projected $220M CBT threshold, or $44,000,000. He signed as a free agent with the Mets so we will only apply a 2% salary raise based on the first year ($880,000).

 

3-year Maximum Salary Contract starting in 2022.

Salary increase and decrease based on 2% of first year salary as a free agent to a new team.

  Soft Max Flat Max Hard Max    
2022 $44,000,000 $44,000,000 $44,000,000 10+ yrs of service, 20% of CBT
2023 $43,120,000 $44,000,000 $44,880,000  
2024 $42,240,000 $44,000,000 $45,760,000  
Total $129,360,000 $132,000,000 $134,640,000  
AAV $43,120,000 $44,000,000 $44,880,000  

#juan soto #gerrit cole #max scherzer #mlb #maximum contract #juan soto #gerrit cole #max scherzer
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