The Wander Franco Verdict: A Crossroads for MLB Contracts and Team Risk Management

The June 26, 2025, guilty verdict against Wander Franco, the former Tampa Bay Rays shortstop, has not only ended his MLB career but also exposed a critical vulnerability in the sports industry: the financial and reputational risks tied to long-term athlete contracts. Franco's suspended prison sentence for sexual abuse of a minor, coupled with unresolved legal issues, has forced teams, sponsors, and investors to confront the need for stricter due diligence and contractual safeguards. This case underscores a seismic shift in how off-field legal risks must now be factored into multi-million-dollar athlete deals, reshaping team risk management and investment strategies.

The Legal Verdict's Immediate Financial Impact

Franco's suspended two-year prison sentence for sexual abuse of a minor, combined with his pending gun-possession charges, has effectively ended his MLB career. His $182 million, 11-year contract—signed when he was just 20 years old—now faces potential voiding, leaving the Rays liable for only $49 million in guaranteed payments. The team has placed Franco on the restricted list, barring him from the U.S. due to visa complications arising from his conviction. For the Rays, this represents a $133 million financial risk, as they may never recoup the remaining contract value.

This outcome highlights a stark reality: teams that invest heavily in young talent without accounting for off-field risks may face catastrophic losses. For investors in sports franchises, the Franco case serves as a cautionary tale about the fragility of long-term athlete contracts in an era of heightened scrutiny over player behavior.

Due Diligence in Player Contracts: A New Standard

The Rays' decision to sign Franco to one of the largest contracts in franchise history now appears reckless in hindsight. Teams must now adopt rigorous due diligence frameworks to evaluate not only on-field performance but also a player's legal and ethical history. Background checks, psychological evaluations, and partnerships with third-party legal experts could become standard for high-dollar contracts.

Endorsement deals will also face stricter scrutiny. Sponsors are increasingly including “moral clauses” that allow termination if athletes are implicated in legal wrongdoing. For instance, has surged, with brands like Nike and Adidas now mandating such clauses for top-tier athletes.

Financial Repercussions for Teams: Beyond Lost Revenue

The reputational damage from player scandals can ripple through a franchise's bottom line. Sponsorships may evaporate, ticket sales could decline, and streaming rights values might plummet. The Franco case mirrors the fallout from past scandals involving athletes like Kobe Bryant and Marcus Mariota, though its immigration implications are uniquely severe.

Teams with high debt loads or concentrated revenue streams (e.g., relying heavily on star players) face the most exposure. The Rays, known for their analytical approach to roster construction, now must revise their risk models to account for off-field liabilities.

Risks for Investors and Mitigation Strategies

Investors in sports franchises must demand contractual safeguards to mitigate off-field risks. Key steps include:
1. Voidable Clauses: Contracts should allow teams to cancel payments if athletes face criminal charges, not just convictions.
2. Diversified Revenue: Franchises should reduce reliance on star players by investing in ancillary revenue streams like merchandise, streaming, and experiential fan experiences.
3. Insurance: Policies covering legal liabilities tied to athlete misconduct could offset financial losses.

Sponsors, meanwhile, should include “walk-away rights” in endorsement deals and prioritize partnerships with teams that maintain robust compliance programs.

Conclusion: A New Era of Prudence

The Wander Franco verdict is a watershed moment for the sports industry. Teams and investors can no longer treat off-field legal risks as anomalies; they must be treated as systemic threats requiring proactive management. By adopting rigorous due diligence, retooling contracts, and diversifying revenue, franchises can reduce exposure to the next scandal. For investors, this means favoring teams with balanced rosters, strong compliance frameworks, and resilient revenue models. The era of unchecked optimism in athlete contracts is over—a reality that demands both caution and innovation.

In the end, the Franco case is not just about one player's downfall but a wake-up call for the industry to evolve. The question now is whether teams will learn from this lesson before the next crisis strikes.