The next MLB offseason was supposed to be a bonanza. Tarik Skubal — the Tigers' ace and reigning AL Cy Young winner — was set to headline a free-agent class that could shatter pitching records. Industry insiders projected a contract averaging 7.7 years for $357 million, or roughly $46 million per year, which would obliterate Max Scherzer's $43.3 million AAV record[reference:9].
Then Skubal underwent elbow surgery in early May 2026 to remove loose bodies — his third elbow procedure since 2016[reference:10]. And in the background, MLB's Collective Bargaining Agreement is set to expire after the 2027 season, with owners already positioning for a fight over a potential salary cap[reference:11].
For the players about to sign nine-figure deals, the questions are no longer just about money — they're about when (and whether) that money actually arrives.
Before the latest surgery, a straw poll of MLB executives, scouts, and agents produced that $357 million projection for Skubal. After the surgery? "The chances that Skubal will go back to the Detroit Tigers on a shorter-term deal with opt-outs is much higher than it was before this injury," ESPN reported[reference:12].
This is the brutal math of baseball economics. A pitcher on a $46 million annual salary would pay roughly $17.02 million in federal tax (37%), $3.06 million in state tax (Michigan, 4.25%), $2.3 million in agent fees (5%), $1.08 million in FICA, and approximately $920,000 in jock tax — leaving an estimated take-home of about $21.6 million. Less than half the headline figure. And that's before any deferred compensation complications.
MLB's current CBA expires after the 2027 season, and the early signals are ominous. Owners — led by big-market teams with payrolls exceeding $300 million — are pushing for a salary cap, something the MLB Players Association has fiercely opposed for decades[reference:13]. The Dodgers are paying players $249.3 million in 2026, and the Mets' projected payroll has crossed $326 million[reference:14][reference:15].
The last labor negotiation in 2021-22 resulted in a 99-day lockout that delayed the season. A 2027 work stoppage could be worse — and free agents signing long-term deals this winter need to factor in the risk that their contracts could be restructured, capped, or otherwise impacted by a new CBA.
Shohei Ohtani will earn $127 million in 2026 from his record Dodgers contract, but famously deferred $680 million of his $700 million deal[reference:16]. That deferral strategy reduces his immediate tax burden dramatically — but it also means Ohtani won't see most of his money until the 2030s.
For players who don't have Ohtani's endorsement empire (he earns an estimated $50-60 million annually off the field), deferred money creates a dangerous cash-flow gap. You sign a $300 million contract today, but you might not actually receive half of it for a decade.
1. Tax-adjusted value, not gross value. A $46M AAV in Michigan looks different from $46M in California (13.3% state tax) or Texas (0%).
2. Deferral impact. Money deferred to 2034 loses value to inflation and delays your real access to wealth.
3. Lockout risk. If a work stoppage hits in 2027, contracts signed now could be affected. The CBA expiration should be part of every negotiation.
4. Injury protection. Skubal's situation proves that one bad MRI can cut a $357M projection in half. Guaranteed money is the only money that matters.
Further reading: Agent Commission Across Leagues · Free Agent Playbook: Compare After-Tax Earnings
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