The latest episode of the MLB Trade Rumors Podcast is now live on Spotify, Apple Podcasts, and wherever you get your podcasts! Make sure you subscribe as well! You can also use the player at this link to listen, if you don’t use Spotify or Apple for podcasts.
This week, host Darragh McDonald is joined by Tim Dierkes of MLB Trade Rumors to discuss…
- The various implications of Shohei Ohtani signing with the Dodgers and Tim’s thoughts on the CBT (1:10)
- The media circus around Ohtani… (9:35)
- ..including this piece by Bob Nightengale of USA Today (11:20)
- Is this deal bad for baseball? (16:55)
- The Yankees acquire Juan Soto from the Padres in a seven-player deal (22:55)
Check out our past episodes!
- Winter Meetings, Ohtani Secrecy, and the Mariners Shedding Salary – listen here
- Sonny Gray, Kenta Maeda and Offseason Questions – listen here
- Aaron Nola, Non-Tenders And The Pace Of The Offseason – listen here
The podcast intro and outro song “So Long” is provided courtesy of the band Showoff. Check out their Facebook page here!
The Dodgers should be commended for their creativity, but it’s not good for the game when not all organizations have the same resources. Those resources aren’t limited to money. Given the same money does anyone see someone choosing Detroit, Cleveland or Cincinnati over the west coast?
if there was a firm salary cap, then yes
If there was a firm salary cap then it is NOT equal. So, cheaper places to live draw in candidates, places with nicer weather draw in candidates as well. How do you account for those disparities? Or should we only be “equal” when it benefits certain markets?
For that type of thinking, how about you just write a rule that every second year, two small markets must play in the WS, instead of trying to write so many rules (not of which achieve parity) to try and force that scenario?
“When not all organizations have the same resources”…It sounds good on paper but it’s never been that way anywherein America. Sports Teams have always had vastly different resources in America, just like people and businesses have always had vastly different resources in America.
Four4fore;
Yes, I can see players choosing the smaller market teams, if they were run better. They’re also owned by billionaires but they take advantage of their situation by saying they can’t compete with the LA’s, NY’s etc. Instead of working smarter, coming up with some creative ways to increase revenue, they just cry “poor, poor pitiful me” all the way to the bank!
20 years 700 MM vs 10 years 700 MM:
If he gets 2 million the first 10 years and 68 million the last 10, it will have the same net prrsent value. However, the first situation counts as 35 MM for 20 years (700 MM total), while the second one is only 460 MM. This is a cheap dodge by the Dodgers that the Padres essentially tried to do and were turned down. They shouod have deferred all the money to the last 4 years instead.
What did the Padres try to do? Last four years of what?
They offered Judge 14/400 instead of 10/360. Why not just give him 2 MM the first 10 years of a 10/400 contract and then defer the 95 MM the last 4 years (2*10 + 95*4 = 400)? It would lower the tax hit and achieve a similar purpose.
The player has to be on board. Othani’s endorsement deals make this all possible. International star is the 1 in a million that makes this all work.
Bc MLB would never approve the deal where he’s still expected to play until he’s 44. Judge would also have to agree to deferment. He’s not in the same boat as Ohtani where his endorsements money annually is larger than his baseball salary.
dGTR
“They offered Judge 14/400 instead of 10/360. Why not just give him 2 MM the first 10 years of a 10/400 contract and then defer the 95 MM the last 4 years (2*10 + 95*4 = 400)? ”
Well, first of all, because those contracts would have wildly different values, and there is no way that Judge would be dumb enough to take the second one
It’s weird* that all the people who are so upset about the Ohtani deal don’t understand anything about how it works
*not weird at all that people who think they understand something they don’t are the ones with the horrible taeks.
You are completely confusing duration with deferrals.
I understand. What I am saying is they can have the same cash flows and just expect Ohtani to play 20 years, but one situation would get vetoed and would count for more, even though the NPV is the exact same of 2 and 68 MM the first vs last 10 years. That’s what I find absurd. Inflation only discounts cash flows after the contract. Delay 68 MM 10 years, and that counts; pay him 680 the 10th year and it counts as 70 MM total. Odd, no?
dGTR
“I understand. What I am saying is they can have the same cash flows ”
They do not
And you do not
“That’s what I find absurd. Inflation only discounts cash flows after the contract.”
The CBT is an attempt by the owners to restrict player compensation.
NOT using discounts for long-term contacts makes them more expensive which means teams will offer less money
The players bargained for using discounts on deferred money. This allows teams to offer more money
It’s absurd that PV isn’t used for long-term contracts. But that’s the penny-pinching millionaire owners for you
You are forgetting that the player has to agree, and in this case it was the player who suggested that type of deal. 46m for tax purposes is not small.
Its the same that Padres and other teams tried to do last year by handling 10+ year contracts instead of 6, 7 years just to lower the cbt tax.
I’ve yet to see this question answered…
How much do the dodgers have to escrow for the deferred amount? The whole nut up front like the NFL?
Can the money only be invested in risk free instruments?
~$44M each year while Ohtani is under contract. I’m assuming the money will be invested bc it would be awful use of money to only let it sit there.
44 mill will grow to 68 mil in 10 years at 4.4ish %. That’s about the going rate for a 10 year Treasury. Which is the highest definition of “guaranteed”.
Which takes care of year 11.
Since the escrow is less than the amount due in the deferrals, there is a growth expectation on the value of the money. Since MLB isn’t regulated like banks in terms of investment holdings, they should have some leeway to invest. That said, I think it’s highly unlikely the Dodgers would choose anything risky. Probably large cap blend and investment grade bond mix or something like that.
Every time I hear someone refer to Soto as a Ted Williams-level hitter, it makes me want to puke into a bag. Come on….that’s just ridiculous to even think, let alone let fall from your lips.
That’s nothing new. I believe that Darryl Strawberry was supposed to be the next Ted Williams, and Gibson and Bo Jackson were supposed to be the next Mickey Mantle.
To which one pundit replied, does that make Jackson the next Gibson?
When all is said and done, Ohtani will be paid $700 million. Who cares about the economy or all the other factors that put him “at risk”……he’s guaranteed $700 million.
Deck
“Who cares about the economy or all the other factors that put him “at risk””
Because this is what actually matters
I really don’t see Ohtani’s contract as unique going forward. There are other big names who can make a ton of money on endorsement deals, and I very much expect other MLB players to take note of how Ohtani has leveraged his position.
Baseball players aren’t like basketball players for instance. Baseball players usually keep their heads down and aren’t big name celebrities. That will change as a result of this.
The problem is endorsement dollars are largely confinded to large market teams. If you’re not in LA or NY the endorsements are harder to come by, so the Brewers, Twins and Royals of the world will have to overpay for talent.
Not remotely true in Ohtani’s case. His endorsements are Japan-based. He could and would make his money in any city Major League Baseball is played.
He is the one in a million that makes this work. Teams not in big market areas will still have to overpay.
MLB has continued to do a poor job of marketing its players. Trout had no interest in being its face when asked. Anecdotally, the last time a ballplayer was featured nationally in an ad was Derek Jeter for Ford, Chisolm for a video game, and a few others since for Subway sandwiches. I don’t play games nor eat Subway. It’s not as much money like you said compared to other sports.
MLB use to a have a TV studio in Manhattan. and held a bunch of fan events there. It was a popular spot to meet and hang out with players if you were selected. I have no idea why they shut it down.
Baseball players don’t need MLB to market them. Baseball players need to market themselves, but being boisterous and public hasn’t been something we’ve seen baseball players gravitate towards.
There are a lot more Mike Trouts than Bryce Harpers.
Endorsement dollars do not have to be local. Baseball just hasn’t had guys wanting to be national brands.
Ohtani isn’t a Guardian because their ownership group, one of the 5 richest in the sport, is too cheap to pay him (or anyone else besides Jose Ramirez). That’s the only reason. Not deferments or future vs present value or anything. End of discussion.
The 30-50% of seats filled at Progressive Field would have been really excited to see Ohtani play!
Maybe, ownership isn’t 100% die hard fans willing to lose money every year?
is too cheap to pay him
==========================
No, it is because fans like you are too cheap to go to games.
Anyone that wants to win now or in the next 2-3 years will not sign with the Yankees. They Yankees can only acquire talent via trade. And no one will sign after the trade. The Yankees need a new manager and 4-5 solid players to contend. 2 of which need to be aces and 2 need to be quality fielders with Big bats.