Key details released regarding Shohei Ohtani’s contract with Dodgers
In case you missed it, after a relatively quiet free agent process, baseball megastar Shohei Ohtani broke the sports world when he announced Saturday that he would be signing a colossal 10-year, $700 million contract with the Los Angeles Dodgers–the largest in American sports history.
However, according to ESPN MLB insider Jeff Passan, the unprecedented $700 million contract was expected to have “significant deferrals” so it “reduces the cost of the competitive-balance-tax hit,” thus helping the Dodgers’ financial flexibility. Though the details remained unclear regarding how much money would be deferred.
Well, we gained more clarity Monday–and the numbers were staggering.
According to Dodgers beat writer Fabian Ardaya of The Athletic, Ohtani will defer $68 million per year of his $70 million–meaning he will make only $2 million per season through 2033. The rest of the $680 million is expected to be deferred equally from 2034-2043, with the “expected average annual value on the contract is said to be about $46 million,” based on MLB’s present-day dollar value, per Ardaya.
I’m sorry, what? How much is he going to defer? Excuse me?!?
Mookie Betts ($115 million) and Freddie Freeman ($57 million) aren’t the only Dodgers players to have deferred money on their contracts; Max Scherzer is another notable player with deferred money attached to the end of his contract.
While we (as a baseball society) jokingly poke fun at Bobby Bonilla getting paid $1 million every July 1, it’s not super crazy for star players to have deferred money lower their AAV instead of the team having to navigate some gargantuan number for the next X seasons. It’s smart, and Ohtani following this gesture in this way indicates how badly he wants to win.
For perspective, MLB’s competitive balance tax this year is $237 million, and Ohtani’s modified deal currently projects to keep them under that threshold.
A contract structured like this might set a bad precedent for future stars down the line, but not everyone is Shohei freaking Ohtani. We won’t fully know the full player-and-team consequences until at least at least one of Ohtani, Freeman and Betts is retired, if not sooner. But there isn’t a current deferred money limit in the current CBA–which goes through 2026–so there could be a clause negotiated if the owners think it’s getting too out of hand (have fun trying to get the MLBPA agreeing to that after this, owners!).
Ardaya cited that Ohtani “is believed to” be making up to $50 million per year outside of baseball. Even though he’s in the same media market, his opportunities with the Dodgers instead of the Angels will only increase. He’s a global superstar, and people are most likely to walk down the street with a Dodgers cap on instead of an Angels one. The marketing will be near endless for Ohtani, who’s entering his age-29 season.
Most importantly, and I can’t stress this enough: This contract setup sets Ohtani up for perhaps the greatest retirement known to mankind.
Ohtani will be 39-years-old when his contract expires. If the best player in the sport is making upwards of $50 million per year through 2033 (including off-the-field money) to then make $680 million (SIX HUNDRED AND EIGHTY MILLION) in his 40s riding into his 50s … you can’t do much better than that.
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