Paul Skenes signed a 1-year contract with the Pirates on July 19, 2023 for $9.2 million after being drafted #1.
1.July is in the middle of the MLB season. What happens when the contract nears its end?
2. Skenes is on a clear trajectory to the majors, but remains in the minors. How does it benefit the Pirates to keep him there?
Obviously they’re doing what’s best for the Pirates, but I’d like to know how it all works from the inside financially bc I have no idea.
In: Economics
Paul Skenes didn’t sign a one year, $9.2 million contract. He signed with a $9.2 million signing bonus, and a minor league contract, which is standard for draft picks. Minor league contracts do not pay well (compared to the majors). Most players play in the minors for a few seasons, earning very little money, and then eventually make it to the big leagues. Once they’re in the big leagues, they have a pro contract for the minimum amount, prorated for how long they’re there.
youll want to learn about **farm teams** and **optioning players**……basically the MLB team can move players from the majors to the minors at will throughout the season (with some rules on roster size and stuff)
keeping a player contracted but in the minor league keeps the player from moving to another team and keeps the ability to use the player if needed
having a contract expire in the middle of a season is strategic – its a bit harder to negotiate with other teams mid-season when other budgets and contracts have been settled…..harder to shuffle things around
A draft pick doesn’t sign a 1-year deal… that’s more like a drafting/signing bonus. Besides that, he gets a minor league salary, which are very low (like $25k/season). The team has full control over his contract through the minors and for 5 years once he makes the MLB roster. Which is part of the reason why teams don’t want to rush players to the majors. They prefer to let them develop, learn the pro game, etc. in the minors to prolong the team control for as long as possible.
I’ll throw in that $9.2 million signing bonus Skenes got is most likely being paid out over the course of several seasons.
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