News broke Tuesday that the Milwaukee Brewers will sign all-star outfielder Christian Yelich to a contract extension. Reports indicated the offer is for seven additional years and could total upwards of $215 million. The 28-year-old former league MVP is currently under a seven-year, $49-million contract signed with the Miami Marlins in 2015. He was traded to Milwaukee in early 2018 and now looks to remain a Brewer through 2029. Fans were ecstatic with this news, yet the financial impact of Yelich’s deal remains unclear.
The Brewers have made the playoffs for the past two seasons for the first time in the 50-year history of the franchise. After several years of significant trades and free-agent signings, the Brewers were noticeably quiet in the build-up to the 2020 season. Many fans felt the team could improve upon their recent playoff performances with an upgrade in starting pitching. However, General Manager David Stearns opted not to make a huge splash in the free agency market. Perhaps now we know the reason why.
The Brewers’ Finances
At $215 million, the Brewers likely received the ‘hometown discount’ from Yelich and his agent. At his age and high level of offensive production, Yelich could have easily have been offered contracts upwards of $300 million. A contract such as that would have looked similar to those recently signed by Mike Trout or Bryce Harper.
Milwaukee is considered a small-market in terms of Major League Baseball franchises. This in spite of its rich baseball history and solid fan support. Usually, it leaves the Brewers – like many other small-market teams – unable to compete financially with the likes of the Yankees or Dodgers in spending due to the vast difference in market size. In short, this handicaps many small-market teams in terms of competing with large free-agent contracts offered to their budding players by teams with significantly more financial flexibility.
The Competitive Balance Tax
The MLB implements a Competitive Balance Tax which sets an annual payroll threshold for each franchise. Teams that exceed this predetermined threshold are required to pay a progressive tax. Teams that did not exceed this threshold receive a percentage of the collected tax. This is an attempt to level the playing field for all teams in terms of contacts and free-agent spending. In the basic concept, this tax is similar to the NFL’s salary cap. But there still remains an upper echelon of franchises which seem to have limitless amounts of capital. For them, the Competitive Balance Tax may seem like a speed bump on the road to winning a World Series title.
Three teams exceeded the Competitive Balance Tax in 2019: the Cubs, the Yankees, and the Red Sox. Only the Yankees made the playoffs in 2019, which may offer evidence of the success of this program. Milwaukee currently ranks 20th in overall payroll for all MLB teams. In addition, they are more than $66 million under the luxury tax. Yelich’s contract will impact this figure in the future, but exactly how remains uncertain. The very real possibility remains, this contract will impact the Brewer’s ability to sign future free agents or even retain high-performing players.
Brewers Chairman and Principal Owner Mark Attanasio reported in February that the Brewers had operated at a financial loss for the 2019 season. This statement left many fans wondering about the future of Yelich with the team. A common theory held that Yelich would be traded at or near the end of his current contract. This is because the Brewers do not have the financial flexibility to compete with what the market may offer.
Brewers and Braun
The last six-figure contract the Brewers signed was with former league MVP Ryan Braun. In 2017, he signed for 5 years and $105 million. Braun has two seasons remaining on this contract as he continues to post solid offensive numbers. In spite of this, his production has not matched that of past seasons and remains overshadowed due to allegations of performance-enhancing drug use. Either way, Braun has mentioned that this season could be his last, though deferred payments would continue until 2031.
Yelich and Milwaukee
After his trade to Milwaukee, Yelich quickly became a fan favorite. The 2018 season saw him hit .326 with 36 home runs and 110 RBI on his way to earning the league MVP title. Yelich further improved upon his numbers in 2019. He totaled .329 with 44 home runs and 97 RBI until a freak injury abruptly ended his season. This left Yelich off the roster for the playoffs and potentially cost him his second consecutive league MVP.
With an aging Braun, Yelich has become the face of the franchise; one which is experiencing a renewed identity and again learning what it means to win. In conclusion, the exact financial impact of Yelich’s deal on the teams remains unclear. For now, he looks to be a long-term fixture in the Milwaukee outfield. Above all, this fact alone is enough for most fans to look past the issue of money.
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