Major League Baseball teams have spent a record $3.36 billion on 99 free agents alone this offseason, according to figures amassed by Spotrac.
And the Yankees and Mets top the list of spenders; the two New York clubs have combined to spend just about $1 billion—the Yanks at $573.5 million and the Mets at $402.2 million after an anticipated 12-year, $315 million deal for shortstop Carlos Correa failed to materialize.
As recently as 2019, the 30 clubs combined spent $1.8 billion on 106 players.
As of this writing, Correa had agreed to return to the Minnesota Twins on a six-year, $200 million deal, but that pact was also pending a physical, and Correa has failed two of those this offseason, with the Mets and San Francisco Giants, because of an ankle injury he suffered as a 19-year-old.
If the Twins deal happens, their free agent expenditures will jump to $241 million with MLB’s overall figure at $3.56 billion.
Under hedge fund manager Steve Cohen, the Mets are sitting at an MLB-high payroll of $298 million, well above the initial luxury tax threshold of $233 million for 2023.
They signed free agent starter Justin Verlander to a two-year, $86.66 million contract and are now paying him and incumbent Max Scherzer $43.33 million a year each.
The Yankees spent much of their money on re-signing AL home run record-holder Aaron Judge to a nine-year deal worth $40 million a season—the largest free agent deal in MLB history. The negotiation process took several months as the San Francisco Giants and—in the end—the San Diego Padres were in hot pursuit of the right-handed slugging outfielder.
“The last month, it was difficult to imagine the New York Yankees without Aaron,” Yanks principal owner Hal Steinbrenner said on the day just before Christmas, when he named Judge the team captain. “One of the conversations we had two weeks ago, I actually said to him, ‘As far as I’m concerned, you are not a free agent. As far as I’m concerned, you are a Yankee, and we need to do everything we can to make sure that remains the same.’”
Along with re-signing Judge, the Yankees solidified their starting rotation by adding left-hander Carlos Rodon on a six-year, $162 million deal. The team also re-signed free agent first baseman Anthony Rizzo to a two-year deal worth $40 million that includes a club option for a third year with a $6 million buyout. He’ll earn $17 million this season.
The Yanks’ payroll of $230.6 million—second highest in MLB—includes five players making in excess of $20 million: along with Judge ($40 million) and Rodon ($22.8 million), Gerrit Cole ($36 million), Giancarlo Stanton ($36 million) and Josh Donaldson ($21 million) all pass that mark.
In comparison, the entire Oakland A’s payroll is $25.5 million—last in MLB.
Explaining the big spending is simple: Teams are flush with money. Commissioner Rob Manfred said the league had generated nearly $11 billion in gross revenue last season, back to pre-pandemic levels.
MLB struck deals with streaming TV services, Apple for seven years at $85 million a season and Peacock, worth $30 million a year for two seasons. Attendance overall was back to 95% of 2019.
“I’m excited about how it went overall,” Manfred said at the World Series. “I think the postseason in general has been great. And I look forward to 2023 being even better.”
No question there’s an imbalance in the system. The Atlanta Braves, the lowest-spending team in free agency at $1.6 million, signed two players this offseason but recently have allowed two of their top stars—first baseman Freddie Freeman and shortstop Dansby Swanson—to walk away as free agents.
The Chicago Cubs recently signed Swanson to a seven-year, $177 million contract. Freeman took a six-year, $162 million deal last year from the Los Angeles Dodgers, who this offseason shed about $100 million in payroll and spent only $44.5 million on four players, including $20 million to retain pitcher Clayton Kershaw.
The Braves, who won the World Series in 2021 and fizzled out against the Philadelphia Phillies in a 2022 NL Division Series, still have a fifth-in-MLB payroll of $168.3 million. That’s largely because they’ve re-signed or extended many of their younger players, which is certainly another way of doing it.
Since the Phillies defeated the Padres in the NL Championship Series, both teams have kept bulking up. Among high-priced spenders, they are right behind the Yankees and Mets, inking a total of $397 million and $353 million, respectively, in contracts.
Philly, who lost the World Series to the Astros, signed shortstop Trae Turner for 11 years and $300 million, among others.
The Padres signed shortstop Xander Bogaerts to an 11-year, $280 million contract. The team now has five players—including the suspended Fernando Tatis—being paid in excess of $20 million when counted against the luxury tax threshold.
San Diego's current $187 million payroll doesn’t include pending deals for at least five key players, including Juan Soto, Josh Harder and Jake Cronenworth, who will all make millions via the arbitration process.
Stars like Bogaerts are “the type of players you’re going to need if you’re going to win championships,” Padres general manager A.J. Preller said last month.
“We took into account the makeup of the players we already have in the clubhouse, which is a tough group.”
The spending has been a huge boon for veteran players in the first full winter of the new five-year Basic Agreement negotiated under the pressure of last year’s unprecedented MLB labor lockout. Last offseason, before and after the lockout, MLB clubs spent $3.2 billion on 147 players.
Under the previous agreement, older players were finding it hard to sign contracts. During the winter prior to the 2020 season, which was ultimately shortened to 60 games because of the coronavirus, 121 players signed deals worth a total of $2.1 billion.
In 2022, the average contract was $21.9 million a season for each free agent; right now, it’s $33.9 million, with a little more than a month to go before pitchers and catchers report to spring training camps in Florida and Arizona.
The Arizona Diamondbacks are one of the lower-spending teams this winter, having dished out $12.5 million on three players, including veteran third baseman Evan Longoria. They are trying to improve a team that has to compete with the high-spending Dodgers, Padres and Giants in the NL West. The D-backs are trying to compete with a projected payroll of $106.5 million.
“It just shows the game is taking a step back and [owners] are realizing what’s important to build winning teams,” said the 37-year-old Longoria, who signed a one-year, $4 million deal.
“You have to have a solid mix of young, talented players and also veteran guys, who’ve been around the game long enough and understand how to win. I hope that continues. I hope teams continue to realize the veteran players are a vital part of winning seasons and championships.”