The baseball world is still reeling from the news of two-way superstar Shohei Ohtani signing a ten-year, $700MM deal with the Dodgers. Not only is it the largest contract in baseball history (by a mile), it is the most lucrative deal for any professional athlete, surpassing the four-year €555MM contract (approximately $674MM in USD) soccer star Lionel Messi signed with FC Barcelona in 2017. Given the unprecedented nature of the deal, it’s more than fair for fans to wonder if it makes financial sense. Is Ohtani genuinely worth nearly twice as much as Aaron Judge? Can a single player truly provide $70MM in value per year over the next ten years?
Moreover, various outlets have reported that the Dodgers significantly outbid the competition to secure Ohtani’s services. J.P. Hoornstra of Dodgers Nation reports that the Dodgers upped their offer by as much as $100MM on the final day of negotiations. Jon Heyman of the New York Post quotes a team source from one of the finalists, who claimed, “We certainly were not at 699 [million dollars].” Meanwhile, when asked if the Angels had made an offer close to that $700MM number, team president John Carpino simply responded, “No comment” (per Sarah Valenzuela of the L.A. Times).
However, it is critical to remember that Ohtani’s deal is not worth $700MM in present-day value, due to the deferred payments in the contract. As Jeff Passan of ESPN eloquently explained, “Money today is more valuable than money tomorrow, inflation being what it is.” Thus, the other finalists for Ohtani might not have offered him anywhere close to $700MM total, but that doesn’t mean the Dodgers blew any other offer out of the water in terms of present-day value.
More to the point, while Ohtani’s contract might be unprecedented, so too is Ohtani an unprecedented player. The value he will bring to his new organization goes beyond his performance on the field, and the Dodgers could be in for a windfall if they know how to market their brand-new international superstar. Sam Blum and Fabian Ardaya of The Athletic quote an anonymous MLB evaluator who claims the deal will “pay for itself within six or seven years… Even just on advertising alone.” That might be an exaggeration, but still, it’s clear how highly Ohtani is valued around the league.
As many sources have pointed out (including Bob Nightengale of USA Today), Ohtani earned approximately $40MM in endorsement deals last offseason. The MLB player with the next highest endorsement-related income was Mike Trout, who took home $5MM. If Ohtani can personally command so much money, the team he plays for should be able to cash in big as well.
According to Mike DiGiovanna of the L.A. Times, the Angels earned somewhere between $10MM and $20MM per year in “Ohtani-related advertising, promotions, [and] marketing revenue.” Nightengale believes that number was even higher, claiming Ohtani “brought in $25 million a year.” Both reporters suggest the Dodgers could double that revenue, thanks to their higher level of popularity, both locally and across the globe. At the high end of that estimation, the Dodgers would earn back more than half of Ohtani’s annual salary, and the team is surely hoping he will continue to bring extra value to the franchise long after his ten-year deal is complete.
On that note, it’s worth acknowledging that although the Dodgers are regularly big spenders, their front office has demonstrated a keen ability to get the best bang for its buck. While some high-spending teams have crashed and burned in recent years, the Dodgers have made the playoffs in 11 straight seasons, winning ten NL West division titles in that time. They have won over 100 games in four of the last five years, and the only year they didn’t, the shortened 2020 campaign, they went 43-17 (.717, a 116-win pace) en route to a World Series championship. This team spends in abundance, but they don’t spend frivolously. If the Dodgers are paying Ohtani $700MM, it’s because they think he’s worth even more, and they haven’t given us any reason to doubt their accounting so far.
In other Ohtani news, Jack Harris of the L.A. Times points out that the signing has not yet been made official. However, that doesn’t mean the deal is at risk of falling through. Ohtani himself has already confirmed the agreement, and it’s hard to imagine his physical would hold up the deal; the Dodgers already know he is recovering from his second UCL procedure and won’t pitch in 2024. Instead, Harris suggests that the Dodgers are still figuring out their corresponding 40-man roster move. The club’s roster is currently full, so they will need to make a trade or designate someone for assignment in order to finalize Ohtani’s contract. What’s more, they also need to free up a roster spot for veteran reliever Joe Kelly, whose one-year, $8MM contract has not been finalized either. Expect a trade or a roster move in the coming days.
I’m talking money, friend!
Cash, mullah, wampum, G!
If I gain, you gain!
That’s the way it goes!
It’s a fair trade, is it
not, friend?
私にお金をみせて！！！
Gesundheit!
ぎゃはは ! !
Watashi ni okane o misete! ! !
And a Baba Booey to you all
OIC2021: Not only that, but I think Ohtani did what Judge did last off-season. He played one team over another to get what he wanted from the Dodgers, where he intended to go all along: “If you don’t come up with the deal I want, I’m gonna sign with Toronto! I’m not kidding! I mean it! I think I’ll look pretty good in Blue Jays baby blue! I don’t know how many times I said I wanted to play in Canada!” Sorry, Jays fans, but Ohtani played you, too.
Hey now!
Just no. Ohtani is a dodger because the dodgers massively overbid. It’s greets for the dodgers that they got him, but pretending Ohtani was always going to be a dodger is false.
Which is sad because what can you really do more of with that much more money?
He wasn’t going to be a Blue Jay, that’s for sure
A lot. A whole lot.
Transaction approved!
The fun starts from here!
Never fear, I’ll be here!
Kunichiwa!
If you followed Ohtani on the mound he abandoned his splitter this year and was hit harder throughout the season and he wasn’t able to get the swing and miss as much as before! He will regress to a 3 or 4 starter when he returns to the mound in 2025.
The Dodgers big issue will be from the other star players like Betts and Freeman who make 45 million LESS per season! U can try to justify it as marketing revenue generated by having Ohtani on your team but the disparity in paychecks is HUGE and he is not three times more valuable to the team! Muncy’s making 12M per and the DH is being paid 70M. At the end of the day Shohie’s production may be 10 extra homers and 20 more RBI’s than Muncy! Details of his deal being leaked are that the Dodgers upped their offer by 100 million the day Ohtani signed. Like most free agent contracts this one will age poorly and could end up being the worst contract in MLB history when it’s all said and done! He may never pitch effectively again for all anybody knows! The Dodgers just agreed to pay a 29 year old DH $700,000,000 over the next 10 years!
No they did not just agree to pay him 700M over the next 10 years. That money will be spread out over decades. Again, you have to look at the present day value. A dollar today is worth more than a dollar tomorrow is the theory.
None of us have any idea what the payout is at this point but the $70M per season counts towards the salary cap and the Dodgers are at the first level and will end up in the top level which is 110% for every dollar U go over for many years to come!
The Ohtani deal is costing the Dodgers big time in what they have to pay in salary cap penalties for many years to come! 60M spent on pitching this year computes to $110M when U add in the penalty plus they will lose 10 spots in the yearly draft so no first round picks for many years to come!
So it’s not $700M/10yrs? Why it is being reported as such? This deferred money tactic is a loop hole that should be closed. If you sign a contract that pays $700M over 10yrs, then you should be paid that much by the end of 10 years.
Because it is 70 mil. Differed payments are included in aav calculated by term of contract, not term of payments
DBH
You are not correct
The present value of the deferred payments is included
Technically, it’s 70 million dollars in exchange for ten years of service – not 70 million paid over ten years.
Each teams payroll number is calculated yearly based on when the player earned it NOT when they receive the money!
There is NO loophole! Salary cap payroll is calculated on when the player earns the money not when they receive it!
NO. $70M per season won’t be the number. MLB discounts deferred money. It will be around $50M a year.
Someone doesn’t know the definition of loophole!
It’s still 700 million when all is said and done, so his post is completely accurate. Doesn’t matter how you get there, Dodgers guaranteed it.
Cora the Explora2 hours ago
It’s still 700 million when all is said and done, so his post is completely accurate.
=========================
No, it is not. Suppose someone offers you $1M for your house, but is going to pay you $1 per year for a million years. Is your house worth $1M?
Thanks know it all, but you are way off. Check your facts before you make ignorant statements.
Doesn’t it have to be in the time-frame of the contract? If not, then I honestly had no clue that was the case.
Who me? Maybe I was wrong but maybe try to educate others instead of being belligerent. You’re no better if I was truly wrong and misinformed. In fact, you’re probably worse since you address it disrespectfully. To each their own but the real ignorance is how you go about treating people and not really helping or caring about the situation.
If it wasn’t me, same concept applies
Be quite you hypricate, wasn’t even talking to you. You think you are the center of the universe?
The Dodgers already sellout nightly and have a huge fan following around the US so it’s hard to imagine their marketing value being having Ohtani near as significant as Toronto or San Francisco!
RE rbf
The person using HR and RBI to compare Muncy and Ohtani is full of horrible taeks
Quelle suprise
Where’s that guy who was convinced we’d all be so surprised when Ohtani only signed for 400 to 450 million.
I could understand $500 million for Ohtani, but $700 million is out of control, expect a salary cap now die hard baseball fans.
The MLBPA will never agree to a salary cap
I’ve never wanted to be wrong. I can’t tell you how much I want you to be right. Baseball will just be like all other sports now.
MLB can’t pass a cap without the unions approval and they won’t. It’s been shot down so often it’s difficult to believe it would ever get done.
They might agree to a salary floor with a salary ceiling set at high.
99: No it won’t. Like the article said, the Dodgers will make that $700m back not only here but around the world. It’s nothing to me if a team pays that kind of money. I’m not paying it. I just get to watch him play. However, it is is kind of interesting that he wanted that kind of money. On the one hand, he’s already got enough money so that his great great grand children will never have to work. On the other hand, he wanted to be paid what someone of his status should make. I mean, no one grumbles when a player signs for one year (7 months) for $8m. I would love to have that kind of money.
Amen, brother.
Of course not. People are overreacting. They aren’t paying him 70M every season. It may take 20 or more years to pay it out.
Teams will probably have to go under at this point for the union to change course and before that happens they would probably move to Nashville, Montreal or Portland. As long as the league is still talking about expansion to get to 32 teams, the union will also reject changes other than to increase the tax threshold layers so that big market teams can continue to spend.
avenger65-but if you go to the games your paying for it though. If Soto signs for $75 million a year, for 12 or 13 years, the best thing to do is stop buying jerseys, food, drinks, and merchandise at the games. I agree what you said with making $8 million in 7 months is all you need. Basically you are keeping half of that $ for retirement, and your set for life. Excellent point!
You’re about 10 “greats” shy!
In order for mlb to pass a salary cap they’d need to offer a salary floor.
As much as ohtani getting 700 mill and deferring it idk how much or how long (reports are alot of $$$ deferred).
It’s just as outrageous billions refuse to spend to put a a decent product on the field.
Personally I’d like to see some changes such as
We reward teams now for rookies finishing in rookie voting I think we should encourage teams to sign guys they develop and say if a player you developed has (post arb years of service) and wins /finishes in mvp voting you get draft picks or more international spending money or both. Or if they win gold gloves, silver slugger, etc etc. Think we need to reward teams for keeping their cornerstone players and not trading them when they get too expensive.
MLB revenue is continuing to climb. 2023 was the highest in history even with the RSN bankruptcies.
As long as revenue is going up, player salaries should too.
While Ohtani’s contact is huge the Dodgers will make money from it or they wouldn’t have done it. Guggenheim made its money by investing money. They did not invest in Ohtani to lose money, so it won’t be hurting them or the sport.
Ohtani’s contract also barely budges the MLB average salary. Players are still making only 40% of the revenue the sport produces, so there is room for more Ohtani-like contracts and hundreds more that go up 10% before MLB owners are paying out the same 50% of revenue to players that is standard in other major sports.
If $8 million is all you need, should the value of the teams be capped and the amount of money the owners make be limited too?
MLB would first have to open the books of all teams before the union would even discuss a salary cap or floor.
So far the owners have steadfastly refused to even discuss opening their books.
There are 2 teams that are owned by publicly traded companies that have to reveal revenue and expenses.
From those teams we know that MLB teams are bringing in much more than previously thought. The Braves revenue was $576 million and we learned from comments by Manfred during the CBA negotiations that they are not in the top 5. They are barely in the top 10.
We also learned from Manfred in those CBA negotiations that all MLB teams were over $250 million in revenue and the average was $416 million. Even teams like the Marlins, Rays, and A’s are making more than $250 million.
How much do the Yankees, Dodgers, Red Sox, Phillies, Cubs, and Angels make? We don’t know, but certainly enough that all of them can spend like Cohen did, over $300 million, and still turn a profit.
Every other major sport in the US guarantees the players between 48-51% of total revenue.
So if a salary cap is agreed upon for MLB, to achieve that it logically seems that it would have to be at a level that is higher than what the CBT threshold is today by a large margin.
With all teams over $250 million in revenue, the floor would have to be higher than $125 million. There were a half dozen teams that didn’t surpass that in CBT payroll.
Then the question becomes how do you force owners like Fisher to spend that money on player salaries?
Very complicated issues. Issues that can’t even be intelligently discussed until the owners agree to open their books fully to the union.
Don’t kid yourself U R paying for these crazy contracts! Parking, concessions, ticket prices!
u have no idea if Guggenheim is making money from Ohtani’s contract! when its all said and done the Dodgers will be in the highest salary cap penalty level at 110% meaning every dollar spent is taxed at $1.10 so spend $50M pay a $55M tax penalty!
If Soto signs for $75 million a year, for 12 or 13 years, the best thing to do is stop buying jerseys, food, drinks, and merchandise at the games.
============================
But why would Soto’s salary be the determinant of whether or not I go to a game? My concern is how much the Yankees charge me, not how much they pay their vendors.
How much do the Yankees, Dodgers, Red Sox, Phillies, Cubs, and Angels make? We don’t know, but certainly enough that all of them can spend like Cohen did, over $300 million, and still turn a profit.
=======================
No they can’t, and it is not even close. According to Forbes, the Mets lost $138M in 2022. The NYM revenue in 2022 was $374M. The NYM payroll in 2022 was about $288-299M, before the CBT tax, stadium expenses, non-player payroll, etc.
Manfred, who knows all the teams revenue, said that the Braves and Blue Jays were not in the top 5 in revenue in 2022. We know what their revenue was. Are you really trying to say that it was $200 million more than the Mets?
That the Padres, who are now a revenue sharing payer, has a $100 million higher revenue than the Mets? If you do, I have a bridge I would like to sell you.
Money today is worth less than money tomorrow.
Remember how cheap everything was in 2021 compared to now. Eggs, milk nearly doubled in price.
To that end, ohtanis deferrals mean that future money is not as high as you think.
The Yankees got megalomaniac Soto, a nice club house cyst, and the Dodgers got Ohtani.
Go Blue ^_^
Lol
No, money today IS worth more than money tomorrow. The article is correct. In your example with food prices doubling, that means in the future your dollar will be worth less than it is today. A dollar that bought six eggs in 2021 buys three eggs now. This is a very basic economic premise.
If money in the future was worth more you could borrow $700k to buy a house and then only pay back perhaps $360k because each dollar would be “worth” more.
And the Blue Jays fans said they were getting both and acquired neither……
Its far from out of control
Hard salary cap will Never happen, mlbpa is way stronger than other sports unions ..especially with so many big markets unwilling to restrict themselves
Poolhalljunkies: It wasn’t exactly a cap, but a few decades ago the owners got together and decided to watch their spending. Not surprisingly, George Steinbrenner ignored it and spent like mad for players like Reggie Jackson, Jason Giambi, etc. The other owners were like, “If he’s spending a lot, we’re going to spend a lot.” And now you see teams like the Twins, a division winner this season, the Mariners, the White Sox, who began their cut-back three years ago, and others dumping salary by getting rid of some major players they’d rather keep. They may have to realign into three divisions: The Big Spenders, the medium spenders, and the ones that won’t or can’t spend. Each league would have its own PO and champion so the have nots could get something out of their season.
You mean the first or tyne second time the owners were found guilty of collusion on salaries? That is against federal labor law.
If you choose to own a professional sports team you should be capable of spending on the team and its needs. Don’t blame the dodgers because they the owners are doing what they need to do to fill seats. If you win, the money follows.
This is such a red herring.
Obviously, all owners and markets are not equal, The owner of the Reds can spend virtually every last dollar he has and Steve Cohen can still out spend him.
It amazes me how fans support an unequal system. We don’t allow one team to play an extra player on the field or get four outs an inning; why should we accept the idea that one team can spend two, three or four times what another can? Sure, some small market teams COULD spend more, but why should they? The deep pocket teams would just raise the ante and spend more themselves. It’s like you going to an auction with Bill Gates and Elon Musk and thinking you’re going to outbid them..
Large market fans may enjoy this disparity but it’s a little like playing a game as kids with your much younger sibling; the odds are stacked in your favor. The NFL and NHL have salary caps; there’s no reason MLB shouldn’t as well. A hard cap (and floor) would level the playing field and allow fans to truly assess just how good their front office is while giving ALL fans the chance to dream of winning.
Sorry, kind of hard not to blame them when they are willing to be completely reckless with their spending, to the point where you would bankrupt some of these other teams. It took 100 million more to get him, sounds to me like he really didn’t want to be a Dodger. Money talks though.
@Devlsh I’m obviously biased and disagree with a hard cap but this is very well-said. The MLBPA has the strongest union in all pro sports so they will never allow it to happen unless it gets to the point where teams become insolvent and threaten contraction.
The dodger current attendance is at 89% capacity and there road attendance is second only to the Yankees so selling additional seats is limited at best!
Lol good luck. The players union would never allow it.
Never happening. Players Union has basically said it would be spitting in the face of players who came before to agree to a cap
I was thinking 500 or 600 but 700 is insane.
Ohtani’s deal would theoretically pay itself back if he continues to play at MVP level caliber, but can you expect that for 5 more years? 7 more years?
Exactly, he’ll be in his age 35-39 seasons for half of it. He may be great for the first half of the contract, but hard to see how the back half will work out well. That’s just a ton of years for 70M per.
If Yamamoto turns out to be a phenom, Ohtani’s popularity will be halved, if not worse. Especially if he’s a long term DH, and nothing more (which is highly likely).
@Alastair
Can’t even expect it next year, with the injury.
stymeedone: It’s possible his repaired arm might not be able to handle a full season of DHing. It might get sore and he’d have to sit out. Not all of these kind of injuries work out as well as Harper’s has
Obviously the Dodgers never considered any of this. You guys need to get on the phone to them right away, before they sign the contract. Only you can save them from their own folly!
I just wish I could see Blue Jays faces right now. Close but not cigar, still a lot of $ for someone without a position in 2024. Hard pass.
Ohtani was more a culture phenomenon than a big piece to the Jays. Blue Jays have holes to fill. Sticking Ohtani at DH when Springer will need to DH more in 2024 would have caused a few more problems than they realize.
The Braves have a very good catcher, Travis d’Arnaud, who has a WS ring. Then they add Murphy, who they didn’t need but why pass up on a guy with his talent and his youth. I wondered how they would manage two starting catchers on their roster. d’Arnaud definitely got the short end because he is not a back-up. (I know I’m responding to a lot of posts but once the number exceeds 1000, no one’s gonna read past 400.)
Smart move by both sides to defer a lot of the money to give the team room to maneuver around the threshold to get other players. I am intrigued to see what the per annum will be.
No. For threashold, it is $70 million per year. Nothing less.
Actually, you’re wrong. The deferred money will lower the luxury tax hit.
No, you are wrong. Article 13, section E specifically states that deferred payments are INCLUDED.
Look it up yourself
Max Scherzer’s Nats contract was heavily deferred effectively dropping down his ~$30MM/yr. salary to ~$26MM AAV for payroll luxury tax purposes. We just don’t know how much of Ohtani’s money is being deferred and for how long. It won’t be a $70MM/yr. tax hit.
That’s false! When it’s paid is irrelevant. Everyone would defer if it lowered their cap hit! As for cap calculations it’s 70M per year!
It was lowered because he was traded and Mets are paying a portion
Sorry, thinking of the wrong contract. The Nats contract was backlogged, but they still.paid the average against the CBT.
Everyone can defer but that doesn’t mean they agree to deferring. It’s true and not disinformation.
DBH… we’re not talking about Max’ Mets deal. It was with the Nats.
freep.com/story/sports/mlb/tigers/2015/01/22/max-s…
K. Copy and paste the contract language that says deferred money will lower luxury tax hit coop.
Coop, its $70 million. Deferring money didn’t have any effect on how much is counted towards the CBT payroll.
“and then reducing such payments back to their present value by
applying as a discount rate the Imputed Loan Interest Rate for the
first Contract Year covered by the Contract”
That’s the language. The deferred is discounted.
Everyone would defer if it lowered their cap hit!
==============================
Absolutely wrong. You can only defer the salary if the player agrees to it. And the player would only agree to it if they got paid more. That’s why it is discounted. For Betts’ contract:
“deferred money to be paid each July 1, 2033-44: $8M/year in 2033-37, $10M/year in 2038-39, $11M/year in 2040-44.
deferrals reduce present-day value to $306,657,882 (per MLBPA)”
Jobu Needs A Refill6 hours ago
K. Copy and paste the contract language that says deferred money will lower luxury tax hit coop.
============================
“and then reducing such payments back to their present value by
applying as a discount rate the Imputed Loan Interest Rate for the
first Contract Year covered by the Contract”
ARTICLE XXIII—Competitive Balance Tax , Section E(6) b ii
registration.mlbpa.org/pdf/MLB%20Basic%20Agreement…
Now say what that refers to. Its if there is interest on the deferred part and it reduces INTEREST payments back to their present value. That makes the AAV higher, not lower.
Its about the interest, not the salary.
$70 million. They deferred payments to save actual money, not monopoly salary cap money.
Wishful thinking but 70 mill is 70.
Dodgers could pay him 5 mill a year but his 70 mill aav counts towards tax penalties if they go over.
Him taking less during the 10 years mean dodgers can spend to add guys but their salaries will all add against their tax penalties.
From dodgers perspective deferring the money means they’ll pay less than whatever they defer per year in salaries and tax penalties, ideally..
MLBTR
Read though this and tell me that your readers are informed. They are clearly not
You’ve got them here. You could inform them.
Deferred money can absolutely lower the AAV for CBT calculations because it is the present value of the deferred potions that count.
Present value is based on year
If dodgers defer 65 millin 2024 its 2024 present value
If dodgers defer 25 mill in 2025 it’s 2025 present value.
Dodgers can’t defer 650 mill in 2024 and count that towards 2024 2025 etc etc etc. They defer a portion of his salary each year
Every team would defer every 9 figure contract into the future the 1st year if it meant lowering current payments on taxes and stuff for entirety of the contract.
But everyone’s wrong.
Or everyone’s right.
Depends how you look at it
If a contract does include interest on deferred money. Aav is not lowered. Most deferred money includes interest to compensate the player for taking less money upfront during life of the contract
Max’s aav was lowered because he had interest free deferred payments.
So didn’t have anything to do with deferred money. Had to do with the interest really.
We will know which route ohtani took once contract details emerge.
But interest free payments will change his aav from 70 to 60 something. With interest it stays at 70.
Deferring when the Dodgers pay his salary does not affect the CBT payroll in any way. Its a 10 year deal for $700 million so the AAV for CBT purposes is $70 million.
That has been discussed ad nauseum on the previous thread about Ohtani.
If you want to read more go to the MLBPA site and read Article XXIII of the CBA. Specifically Section E of that article. Its where everything that has to do with the CBT is layed out.
If interest on deferred payments is applied yes. Which there probably is.
If ohtani has interest free payments like Scherzer it’s lowered slightly. Youre talking 65 66 67 68 mill instead of 70. Not really saving significant amounts each year against luxury threshold.
Unless the recent cba they signed got rid of that loophole (interest vs no interest).
The interest is then added by a schedule from MLB and its assigned to a particular season. Ohtani will count $70 million towards the Dodgers CBT payroll plus the interest if any is scheduled to be paid.
Good explanation from Jeff Passan:”Typically, a CBT number is the average annual value of a deal — in this case $70 million. But depending on the size and length of the deferrals, Ohtani’s CBT number is likelier to wind up in the $40-50 million-a-year range, an enormous benefit for the Dodgers.”
Read. The. CBA.
Passan got it wrong.
Maybe, they should have given Ohtani part ownership of the Dodgers
Also, will he ever be Kirk Gibson like in the Post Season./World Series? and a Fearless Leader in the Locker Room
Players can’t have an ownership stake.
They can with approval of the office of the commissioner. It’d have to be an extraordinary circumstance.
@Lefty_Orioles_Fan: It’s amazing how much mileage Gibson, to say nothing of Jack Buck and the TV networks, got from one at-bat in a World Series game 35 years ago.
Well, he also was a leader in the clubhouse
He was brought in specifically to give a sense of direction and leadership
Ohtani not about the money.
Dodger fans: he isn’t he deferred a bunch of money.
He did that so he could get the most amount of money.
He did that so his team could still be competitive.
Sure he did, nobody was giving him 70m with the tax it would have been way more. If he didn’t want the most amount of money possible he could of took way less
Money.
He took defers to get the max amount of money from a team. He deferred it some a team could pay him that amount of money. If he was worried about the team he could have taken far less money. Reports are he got the dodgers to spend 100m more by deferring money.
He is just as greedy as the other guys. Don’t fool yourself otherwise.
Greed is good.
Let the man get his bag. The owners have enough money.
I have no problem with him getting every last dodger dollar possible. Let’s just not let him spin in like he was taking a discount.
RE Simm
Here’s a person who doesn’t seem to understand present value
Deferring the payments reduces the value that he gets.
700 million with defferels might be worth 600 million over 10.
All these types of contracts should be reported with present value included. It’s lazy not to do so.
Even in this case, where we don’t know yet, it would be better to report the PV as if it were a straight 10 year $70 million per year contract.
Every single 10 year contract has less value. He isn’t getting the 700m in one year either way. Sure it reduces it even further spreading it out but it’s money he wouldnt get other wise because he wont be playing 15 years from
Now.
You sound like a guy who thinks he gave the dodgers a discount.
Simm
As the newest article here says, depending on the exact structure, this could be equivalent to a 10 year $50 million contact.
In a way it’s “more money” since 700 is more than 500. But it’s not more value. And people who have the slightest understanding of finance worry more about value than finance.
Theoretically, Soto could sign a billion dollar contract that was worth less than Ohtani’s deal.
Good for them, they will recoup at least half back through marketing but don’t be surprised if he only pitches half of that contract
Don’t be surprised if he could still rake throughout the length of the contract. Its like getting two players with one contract.
Yes, the one you hoped to get, and the one you actually do get. See Angels and Pujols.
Maybe he could still hit throughout the length of the contract but I wouldn’t count on more than a handful of good pitching years.
The back half of that contract will be for his age 35-39 seasons, which could wind up being “yikes”. Will he be fully 100 percent healthy as a hitter in 2024 coming off that surgery? He is a generational other worldly talent when fully healthy, undoubtedly. But with the uncertainty of how much pitching he will wind up doing, and whether he will be in normal age related decline for the back end of it… I think a big case of buyer’s remorse is possible. Dodgers better win a World Series in the first 3-4 years of his deal if they want to get their money’s worth that way.
Look at what Max and Justin Verlander are doing. With Ohtanis focus and preparation they’re banking on at least somewhere close to that production.
This isn’t Manny Machado or Juan Soto we’re talking about. Those dudes are megalomaniacs.
But those two pitchers had TJ surgery once and in their late 30s, not at 25 and now, at 29, another surgery,.
I don’t remember Max having TJ surgery.
He’s in the midst of that evaluation having gone out in September, but I think he’s going to try to avoid it.
We don’t know exactly how much his performance will decline in those years, but the average for MLB hitters is 15% decline in BA and OPS after age 35.
Usually teams rely on a surplus value early in the contract to carry those years of very steep decline as players pass 35 years old. In this case Ohtani will not pitch and as a DH will not rack up a large value to the team.
In terms of on the field performance this contract will be a huge loser the first year.
They can’t do any maneuvering. AAV against the luxury tax is $70M. Every year. For 10 years. There’s no room given to acquire other players by deferring.
It will be easier to absorb tax penalties if they aren’t actually shelling out as much cash.
LeeJPC
This is not correct
Deferred payments use present value to determine the AAV.
I wish you people would actually do some of your own reading instead of just repeating what idiots post!
Article 13, election E. Differed money on INCLUDED in the aav which determines CBT.
LA’s cbt hit 70 million for next 10 years regardless ilof when LA cuts the checks.
DBH
“I wish you people would actually do some of your own reading instead of just repeating what idiots post!
Article 13, election E. Differed money on INCLUDED in the aav which determines CBT.
LA’s cbt hit 70 million for next 10 years regardless ilof when LA cuts the checks.”
Sigh
I wish people would understand what they read before they went and told people what it means
Yes. The deferred money is included. It’s not like the team can just defer the entire contract and pay 0 dollars.
But, it’s the PRESENT VALUE of the payments. Not just $700,000,000 / 10.
Ohtani’s AAV will be something less than $70 million per year.
It’s right in the CBA that people are posting and not understanding.
The I apologize, man, because I seem to be one of the idiots not getting this. It seems very black an white to me. But I am not a lawyer.
I know what the definition of is, is and what ‘all’ means. But I guess it is different in legalese.
This type stuff is why all lawyers should be burned alive and mean real ‘all’, not deferred ‘all’
They’re deferring a large amount of it. That means that the AAV being applied towards the luxury tax will certainly be less than $70M for the 10 years of the contract.
Pimp, the AAV towards the CBT will be $70 million.
I feel bad for Anaheim & Toronto, but hopefully a winning Ohtani ends up driving attention and being incredibly good for the sport of baseball.
Why feel bad for Anaheim? They had two generational players and failed to build a team around them that could make the playoffs. If anything, people should be angry the Angels have incompetent leadership.
This will be the worst contract in sports history in 3 years. 700m for a DH that may pitch again, and even if he does, can give you maybe 120 innings, and will be injured again in short order. Not to mention he’s a primadona and pain in the a**. Good for him but bad for baseball IMHO.
He has avg 66 innings, 120 is generous
So the Marketing revenue likely will equal out the additional payroll tax the Dodgers will be paying to have him on the roster and likely in year 8-10 there will be another superstar more popular causing Marking revenue to decrease.
It was Ichiro then. Now it’s Ohtani. Those ad dollars always have to be spent somewhere. Hokkaido (Ham Fighters). Anaheim. Toronto? SF? LA? It follows Ohtani. Folks acting like the Dodgers haven’t done a complete cost-benefit analysis and don’t know their own brand and market potential.
Leo – Why on earth are you referencing Hoornstra?? The same guy who reported as fact that Ohtani signed with the Jays?
Whatever he writes is worthless, it’s mindboggling that you are still quoting him.
Expect a $900 million dollar contract for Juan Soto now as a free agent in 2025. A man with a position, but not that great at it. Thank you, Shohei!
Not 900 but Ohtani did just get Soto more money.
$900 million or more for 12 years for Juan Soto. Mark it.
No need to mark it other than to laugh even harder at how wrong you are a year or so from now.
If you think that Soto isn’t getting $75 mill a year, you are just playing yourself. Not out of the question of 13 or 14 years either. Keep in mind he’s only 25 years old also. Smh
@99CaptainJudge99 You are clueless as to how this kind of stuff works. Ohtani (and his combination of production & marketability) is a unicorn amongst MLB players. His contract has in no way become the new baseline for superstars.
So….shall I “mark this” comment of yours to come back to in a year or so and laugh in your face or is one round of that going to be plenty for you?
Is Soto pitching next year? I know Ohtani won’t be either, but he will for likely large portions of the contract. They’re estimating $35M in advertising revenue, paying for half the contract right there. This is a one-off contract. An outlier. Nobody is getting close to $700M in the next few years. $500M is the next threshold to be reached.
No he doesn’t have to pitch(Soto) $975 million for 13 years($75 million a year) is not out of the question now for Mr. Soto, especially with Stevie Cohen involved in the sweepstakes. Smh
Ohtani got 70/year because he is two players. Ohtani’s avg WAR the past 3 years is 9 compared to 6 for Soto. Soto is a great hitter and 4 years younger, but he isn’t Ohtani, and won’t get a bigger annual salary. No way whatsoever. He isn’t as big a marketing gimmick as Ohtani either, by a long shot. If he got 50M per for 13 years that gets him 650. I doubt he gets that. More likely a 500-550M 10-12 year deal or something. Which is bonkers compared to all other deals in history aside from Ohtani.
@99 Soto is not getting more than Ohtani bc he doesn’t have his marketability. One year in New York City won’t change that. As a matter of fact, he should be hiring PR/branding consultants to try to help increase his own value next winter.
Captain is on his third account with a similar name. He’s a troll. Don’t feed him.
Who’s the next domino?
The Korean players. They have a 30 window to sign.
Ugh
Because I’m convinced I’m not being paid what I’m worth, I’ve decided to do something about it. I’m changing my name to Shohei Ohtani.
Buy a Baseball team and you become stupid!!!
It would be funny if they traded Gavin Lux now.
Send 3 to the Brewers for Burnes. Easy peasy.
Seems like (Wisconsin native) Gavin Lux, Michael Busch, Gavin Stone and River Ryan could bring back Burnes and Adames. The deal could even be expanded to include one of Milwaukee’s surplus OFs for an additional give on LA’s part.
Provides Dodgers with an Ace and upgrade at SS while giving Brewers financial relief and potential starters at 1B (Busch), middle infield (Lux competing with Turang to see who plays where) and the rotation. Brewers seem headed for a rebuild and this could expedite it.. They’re unlikely to resign either Burnes or Adames.
Just glad Ive been hoarding Ohtani RC’s the past 3 years…
Except he’s in every single product. He’s got millions of rc’s when you look at production run, parallels, inserts & parallels of inserts.
Theyre all either numbered or graded to 10… or both. Ive been around the block a few times when it comes to this. Ive also been stocking up on Roki RC’s fwiw.
These are facts. Ohtani’s pitching season ended with a major arm injury. Ohtani’s hitting season ended with an oblique injury. And for two years after his TJ surgery, his OPS+ was 109.
Best case scenario, he’ll lock up a DH spot for ten years, and force a team to go to a six man rotation for nine.
Oh, and you are paying him 70 million dollars with at least 50 a year AAV. Fangraphs estimates 60.
Things will have to break right for this to work out. Few teams could pull it off, but the Dodgers might. No way the Angels could.
Like play and win in the WS a few times.
Basic math this works out to over $432,000 per game for the next 10 years. Not $432,000 per game played, $432,000 whether he plays, sits on the bench, is injured, is in rehab……. Ohtani will have to take a pay cut for every playoff/post-season game the Dodgers play!
Sad truth is he’s worth far more to the Dodgers than he is/was to any of the other 29 teams, (try to imagine him signing with the Royals)
Baseball’s going to have to find a way to address this issue and with all of the media-based marketing plus gambling going on, that’s gonna be a hard row to hoe…
Taylor Swift is also worth a lot more to teenage girls than Mick Jagger, how can this be resolved?
MLB partnered with gambling…. It’s obvious they don’t want it resolved.
Yeah, I’ll probably never listen to anything Hoornstra says again. Morosi, Nightengale, Heyman, all clowns. These guys are just like the political hack reporters that work for MSNBC, CNN, and FoxNews. In the rush to be first, they will report anything, true or false, and when it’s proven to be false, they just move on to the next story. The spreading of misinformation is big business now. If it ain’t Passan or Rosenthal, I’m skeptical. They are about the only 2 pros left.
MLBTR
Thank you for including this
“However, it is critical to remember that Ohtani’s deal is not worth $700MM in present-day value, due to the deferred payments in the contract. As Jeff Passan of ESPN eloquently explained, “Money today is more valuable than money tomorrow, inflation being what it is.” Thus, the other finalists for Ohtani might not have offered him anywhere close to $700MM total, but that doesn’t mean the Dodgers blew any other offer out of the water in terms of present-day value.”
If anyone is paying attention to the comments, someone should do a primer on how present value works
Shamefully, most people here have zero clue.
Might also be good to clear up how AAV of contracts with deferred money work. The vast majority of your readers are confused about that, too.
These are useful things to know, not only in baseball, but in life.
Imagine if you could not only get paid to have people read your content, but also to help fans and citizens be more informed. Wouldn’t that be awesome?
People have a clue. You think because they don’t see it all in the best possible light they don’t have a clue.
If 400 million is deferred, it’s possible Ohtani will be paid the same salary next year as last year. But it’s going to be an AAV of at least 45 million dollars, likely more, and the Dodgers are going to have a heck of a time staying under that cap, which will likely cost them hundreds of million more.
Maybe they’ll pull it off, maybe they won’t.
H11F
“People have a clue.”
A few do. A lot don’t
“You think because they don’t see it all in the best possible light they don’t have a clue.”
No, I think because they don’t have a basic understanding of how PV works, they don’t have a basic understanding of how PV works.
It has nothing to do with whether they think it’s good or bad.
Until yesterday, I didn’t understand how AAV could be manipulated using deferred payments.
Here is what none of us knows, the AAV, his current salary, or how this contract will eventually affect salary cap penalties.
We also don’t know how the two injuries will affect his hitting. The last time he had arm surgery, his OPS+ dropped to less than 110. He also is recovering from an oblique injury.
It will be what it will be. At this point, there is not enough data for us fans to actually have speculations worth reading.
And it may be two or three years until we do.
Huh?
I think (hope) a good percentage of people understand deferred value but where’s the fun in that when you can talk about a number like $700,000,000?
Dodgers are the smartest team in mlb by far. For any team too dumb to come up with the deferred money plan I say you should be ashamed and everyone in your front office should be canned. Money will be coming in so fast for the Dodgers their profits might double over the length of the contract.
MLB is a large entertainment entity. The teams are components of the entity. MLB decided where Ohtani went to maximize the entity. Don’t be confused.
Ha, many said Trout should go to a bigger market team to earn more ad dollars! Fools!
The only larger market would be NYC….
None of that NY stars reached that figure. Not Judge or anyone else.
As Jeff Passan of ESPN eloquently explained, “Money today is more valuable than money tomorrow, inflation being what it is.”
There’s economic inflation, relatively easy to measure. Then there’s baseball player salary inflation, which is higher, also relatively easy to measure. That creates the possibility of opportunity cost, what you could have spent your money on instead. Finally, if inflation is not existent, money doesn’t change value a whole lot. But most of our mechanisms lead to increases over time such that inflation is rarely nonexistent. And so it goes, time value of money.
Right. This is also an important concept in investing. By putting your money into an investment for a given return you may have missed out on another investment opportunity at a higher return rate.
Shohei can now afford authentic “Kraft American Singles” cheese slices, and will not have to buy the generic brands that stick to the wrapper. I was so worried that the man was having to make those sort of purchasing decisions…
MLB is becoming a spend-a-thon and its only 5-7 teams that can afford to play along. I truly was hoping that TOR would sign him just to keep him away from teams like LAD and NYY, amongst others. The playing field is so uneven in the sport, and it’s getting worse not better. This is why the NFL is by far America’s greatest pastime, period.
Have you watched the NFL this year? The on-field product has been incredibly mediocre with the exception of like 3 games. Not to mention the absurd injury rate. NFL ratings are dropping, and the problem would be a lot worse if they couldn’t lean on gambling and Taylor Swift to keep them afloat.
Between the pitch clock and this contract, MLB is finally back on the way up. The ability for players to make money like this is good for the game – this kind of guaranteed earning potential is going to bring the best athletes back to baseball. All a salary cap would do is save the cheap owners a couple bucks.
The three highest payroll teams all missed the playoffs in 2023. The biggest spender ended up a good 15 games under .500 and numbers 2 & 3, barely made it to .500 with 82-80 records.
All while numerous teams with bottom 10 payrolls far exceeded their regular season productions and made the playoffs.
There is so much more to baseball then being the high bidder on a few players. Of anything I think the teams giving out the monster deals force the lesser spending teams to be at their A game and not looking at or counting on a quick fix.
I’ve been saying for years, the Tigers should operate like a farm team to.the Dodgers, Yankees,and Mets or whatever team thinks they are “all in” this year…..
Continue to stack up top prospects by trading FAs and your older drafts until all you have is a bunch of top prospects and no more room on the 25 or 40 for tradable FAs…….beats the heck out of tanking….and keeps the fans entertained, instead of letting our summers stink.
I blame Christopher Illich for wasting 10 years of Tiger life for NOTHING.
No real reason for them not to be more aggressive. The Illiches make thier money selling pizza. There is very LITTLE public service aspect to the way the Tigers have been run recently. It’s purely about profit. How sad. What a facade. IF they really cared about Detroit, they would have went for it. It is more like, the sack and slow destruction of the phyche of an American city. If it is stagnant, they maintain control.
There was a fair amount of speculation during negotiations with the Dodgers and other teams, that the final agreement would be very complicated.
One complexity discussed at length in numerous platforms and journals was Ohtani’s injury, and the need for teams to protect themselves under a scenario where Shohei is unable to pitch or pitch at a major league level following his recovery from this second surgery. A question I have and perhaps it’s been answered somewhere, I just haven’t seen it detailed or explained in anyway: are there any incentives built into this contract that require Shohei to pitch at a major league level in order to earn the full $700 million?
There has been quite a bit of angst surrounding the deferrals. That’s pretty straightforward actually and it works to the benefit of the Dodgers.
I feel pretty confident that this is a fair deal if Shohei actually returns to form and pitches at a high-level for 4–5 years.
Norcal
I have not seen anything regarding any incentives.
It’s $700 million payed out over … No one knows
Thanks. That’s what I thought, I was just hoping one of the more knowledgeable people here might have seen something in writing elsewhere.
>J.P. Hoornstra of Dodgers Nation reports
WHO? That person should not be cited anymore — ever.
He’s not as marketable as people think. First, he’s a baseball player. How many mlb players can you name that companies use to market their products? That you ever see on a commercial? Maybe Jeter and he hasn’t played since 14’. Second, he’s from Japan and has zero personality. Marketable athletes come from the NBA or NFL. The Shaqs, The Tom Brady’s, even Snoop Dogg is more marketable than this trinket. He’d have to date Taylor Swift to make an impact but she’s taken. At least this month
Took Harper a while to start hitting again after his TJ operation. As another poster noted, Ohtani himself didn’t really rake for a while after his first TJ.
Let’s say Ohtani starts with, oh, a .750 OPS for the first half of 2024. I can hear the yelps already about the contract, especially if the team overall gets off to a mediocre start. This could be fun.
In the short term, this site is the real winner of this 700 million dollar deal. So much traffic, it’s wonderful.
Kodiak
“In the short term, this site is the real winner of this 700 million dollar deal. So much traffic, it’s wonderful.”
Good point
All this traffic and they are satisfied with clicks and less satisfied with informing their readers
Look at all the confusion and bad information about AAV
Look at all the non-understanding of present value.
MLBTR could use this opportunity to help educate their readers. But, they are not.
This guy is Mickey Mantle, he’s Willie Mays, he may be bigger globally – the aura of those guys are still making money for their teams and mlb today. As a Giants fan, you know cool it is to say hey to the Say Hey Kid at spring training every year? And see his statue at the park? He’s indelible! This is not a ten year deal, the Dodgers will be cashing in on this forever.
Can’t be mad at having Ohtani. But man, the money scares me. Here is how I’m figuring it makes sense – rough, back of the envelope style:
1. Jersey Patch:
Red Sox – $17 million/year
Yankees – $20 million/year
Dodgers – Will now stand to get 25-30 million/year
2. Japanese Broadcast Rights:
10 million/year? Hard to say if MLB app makes everything by available in Japan anyway – but discounting for that.
3. Ads/Sponsorship Dollars:
$20 million/year bump
4. Stadium Naming Rights?
5. Sell 250,000 more tickets a year – roughly 3,000 more per home game (I’m not counting increased take from away games). Figure average of $80/person, that’s $20million more.
That’s about $50 million more in incremental revenue per year. And maybe more.
Plus, the value of the franchise increases.
The key is no opt-outs. That lets the Dodgers look at ten year deals on all this stuff.
And if they win a few World Series, add a few hundred million more in revenue.
I thought the Dodgers patch is already locked in for 12 years.
MLB owns all international broadcast rights so any Japanese broadcast would be split with all teams.
If I can’t sleep, and west coast games are on, I will certainly be tuning into the Dodgers games. Betts, Freeman and Ohtani, that’s one helluva lineup to navigate through.
If Kershaw is back with the Dodgers, we could see games where four former or current MVPs play for the same team in the same game. That would be interesting to watch.
It will also be interesting to see how the deferred payments work in terms of duration risk, discount, etc. That being said, this feels like an overpay to me in terms of on-field returns and off-field returns. How much more revenue will go to the Dodgers as a result of this deal and could that much revenue be accrued with other spending decisions?
Seriously how does Hoornstra even have a job today?
The deal is a bad deal period and will not age well. He is a great great player with an injury history that you just overpaid for to a point that it will cripple you for sure in that back end and very possibly in the front end since he very likely will continue to miss chunks of time hurt.
Can I borrow that crystal ball of yours? I’d really like some sure thing stock tips.
The unconfirmed contract offer I heard from a source who wishes to remain anonymous in the Front Office of the Minnesota Twins disclosed that their offer to Ontani’s representation was a 20 year contract at $30MM per year plus a $100MM signing bonus plus 50 player option years at 6MM per year for a total contract value
(in present day dollars) of:
ONE BILLION DOLLARS. !!
MLBTR was better when it questioned the MLB lies about finances. The fact that 70M is essentially the break even point (based on WAR value + this articles speculation about marketing revenue) for Ohtani AND no billionaire spends billions to lose money should clue anyone in that MLB is profitable as hell.
I really think the Dodgers were showing off by giving Ohtani so much money. They just want to be recognized as the best team with the most money, but we will see if that transfers to World Series wins.
Well written, Leo.