The Diamondbacks finalized their shocking six-year free agent deal with Corbin Burnes on Monday. The former Cy Young winner signed a $210MM contract, though deferrals in the $60MM range were known to have knocked down the net present value to an extent.
Jon Heyman of the New York Post reports the deal’s specific breakdown. The contract officially contains $64MM in deferred money. Burnes will collect a $10MM signing bonus up front, which was first reported by USA Today’s Bob Nightengale. $10MM of his $30MM salaries over the next two seasons will be deferred. If he does not trigger an opt-out clause after the ’26 season, he’d be due $35MM annually between 2027-30. $11MM of those salaries will be deferred. According to Heyman, the contract comes with a net present value of roughly $193.76MM.
Burnes will be able to opt out with four years and $140MM remaining. Whether he does so will determine when he receives the deferred money. According to the Associated Press, Burnes would be owed either $10MM or $11MM installments between 2031-36 if he does not trigger the out clause. If he does opt out, he’d receive a pair of $10MM payments after the 2027 and ’28 seasons. (There’d only be $20MM in deferrals if he opts out after two years.) Burnes has full no-trade rights for the first two years. That would drop to a 14-team no-trade list for the final four seasons if he doesn’t opt out, per the AP.
Arizona now has a projected rotation featuring Burnes, Zac Gallen, Merrill Kelly, Brandon Pfaadt and Eduardo Rodriguez. Righty Ryne Nelson has pitched well enough to hold a rotation job as well, so the Snakes could consider a six-man starting staff to open the year. Even that wouldn’t leave room for Jordan Montgomery, whose $22.5MM salary the D-Backs would be happy to offload. Nick Piecoro of the Arizona Republic reported shortly after the Burnes agreement that the Snakes were not on the verge of any rotation trades. That’ll remain a major storyline for the club over the next couple months.
Jon Heyman is a clown.
Kind of funny how he screams at a radio host when he jokes about boras hiring him
If that was Jeff passan or even bob nightengale he would’ve laughed it off
AGREE
Why can’t all contracts just be reported in net present value? Deferred money seems to be a hot issue on this site. Ok, 6/$194. Great money, good for Burnes, good for Arizona.
Because no one cares about “net present value”.
At the end of the day, how much money is the team paying the player for their services, and for how many years is it?
Ok then Joe, 12 years $210 million. Only 6 years of which he is playing for them.
I mean if you want to report it like that sure. But at the end of the day, Burnes is getting paid 210MM for 6 years of playing baseball for the Diamondbacks – unless he opts out.
No need to try to complicate it.
The thing is, it’s very complicated. Just part of that complication is the fact that there are no deductions to the CBT value of his salary for years one and two if he opts out, but since so much is deferred there is if he doesn’t.
So how about we stop with the nonsense relating to the luxury tax and just hit it with the AAV of the contract? Like how it is handled for contracts which pay different amounts for different years.
No need to make it this complicated.
The luxury tax manipulation is my only issue with deferrals.
Whoops, just saw your reply to one of my other comments
They could easily report it as the net present value with X amount deferred with interest but the teams, players, and agent probably want the contract to sound bigger than it really is. By calling Ohtani’s contract $700 million rather than $460, it appeared to beat Lionel Messi’s $674 million contract from total value.
Not able to replay to jacks comment, weird.
But anyways, I do get the concept. It’s not a hard concept. It’s just not really relevant here. How much money is a team paying for a player to play for them for a certain amount of time?
If you want to adjust contracts with deferrals, why not adjust them for inflation as well? Or why not factor in the taxes being taken out?
It’s not in innumeracy, you need to understand the point of the numbers you are looking at. Everything finance related is just a big numbers game, with people trying to find creative ways to get around current restrictions to make the most money.
If a team offered Ohtani 10/460 with no deferrals, he wouldn’t have taken it. For exactly the reason mentioned by Marc. He could invest that money and make the extra money if he’s so inclined.
And the contract isn’t sounding bigger than it really is. He’s getting paid 700MM for 10 years of playing baseball. He’s not getting paid 460MM. If a team offered Ohtani 10/460 with no deferrals and the 10/700MM with deferrals, guess which one he’s going to pick.
Joemo
Because no one cares about “net present value”.
======================
I do, and I assume that anyone concerned with their team breaching the tax threshold would care.
I would think the NPV would matter to fans than how a team pays it out. I know the RS have some deferrals, but I don’t have the foggiest idea of what they are.
Smart to include the deferrals. Not sure why so many fans cry about them ruining the sport. If both sides agree on them I don’t see what the problem is.
Burnes is a Boras client, so Heyman’s breakdown is straight from the horse’s mouth.
my dbacks have alot of money coming off the books next year. so we can get alot. We need another hitter. Also Saski would have made sense since we have international pool money. But we would have had to trade nelson or pfaadt. But that’s a pipe dream
At 6 years 194 million i think thats one of the better signings of the offseason.
Could be. However his velocity and K rate have been slowly declining. Sometimes a sign of things to come. There may be a reason why Baltimore didn’t pursue him.
There is a reason why Baltimore didn’t sign him it’s because they are cheap. All big contracts are big risks but relative to the other deals this offseason i like this one.
His k rate has declined for 2 years because he led the league in k rate in 2022. Of course he was going to decline in 2023 he couldn’t get any better he was the best.
I have not yet seen exactly what B’more offered. Contact inside the warehouse or maybe just speculation?
What I read it wasn’t close to what he signed for. But there “biggest offer” in franchise history. They coulda came up w this much thou
That’s not true he led in 2021 at an impressive 12.6 per 9 clip followed by 10.8 in 2022 which is still very good but in 2023 & 2024 he fell to very average levels of 9.3 & 8.4 it’s quite a steep 4 year decline for somebody just entering their 3p’s
Seam, as usual you are wrong.
Cutter Velocity – Up (94.4 mph to 95.3)
Sinker Velocity – Up (95.3 mph to 97.0)
His velocity is the highest of his career.
BB Rate – Down
Pitching Run Value – Up
GB Rate – Up
LD Rate – Down
IFFB Rate – Up
HH Rate – Down (in top 5% of MLB)
Pitching+ Stat – Level at 107
ERA – Down (better)
P/PA – Down
IP/start – Up
Burnes has sacrificed a few strikeouts for better control and to go deeper into games. Last season he went into the 7th inning the highest percentage of starts in his career.
I think this is exactly it. He thinks very hard about his game and a couple of years ago it felt as if he consciously dialled one or two things down with a view to pitching more efficiently as a whole.
K rate turned everyone off. Why he ended up in Arizona. No one gives a it about # of times going 7 innings. If they did he would be a Yankee Dodger or Met. If his k rate was still 12 or 13 he would have gotten 300m easy. If they even thought they could get it back to 12 he would got 300m. I think his K rate can go up. Even think it will. Not to 12 but back to 9 sure. His best year his cy young year he had his lowest walk rate so don’t give a it about his walk rate and innings pitch as it was never a issue. Only stat that’s a problem is strike outs.
Teams are not as stupid as Dream GM’s or other fans.
Teams are far more stupid than I am. Other than a handful of teams it’s not even remotely close. I warn teams all the time yet they make these awful moves. I endorse adding players often that teams pass on and they end up being good adds. Every long time mlbtr member knows this.
Even the fans are smarter than some teams. That’s saying something. Rendon? Baez? Bryant? Boegarts? I’d say majority of fans knew those were awful contracts.
Burnes’s velo hasn’t been declining; in fact, the average velo on his cutter and sinker (his two fastballs) were the highest of his career, at 95.3mph and 96.ph, respectively. His swinging strike rate was lower than it had been in 2022 and earlier, though it did tick up a bit from 2023, and he regained the drop on his cutter around the end of August, which helped his rate start to tick back up. He’s also a tinkerer, with good command, a wide arsenal, a good health history, and his primary pitch (the cutter) is good at inducing weak contact, so he’s at least equipped to age pretty well. I think the K rate will come back up, probably not all the way back into the 30%+ range, but 26-28% seems quite doable.
Seems odd they didn’t make a good effort to keep Walker.
I like burnes better
Nothing odd about it. They got a free draft pick. Instantly replaced him. Will get another free draft pick next year.
it’d been really nice to get Grichuk to re-sign with the diamondbacks. could be had for a lower salary and a two-year contract. we need to get Hasley to come over for Yilber Diaz. We have this year to compete with that rotation and Suarez. Then we can keep building pieces for 2026 or sign Hasley to an extension if Martinez doesn’t end up showing he can hold the closer mantle. Miss it when Papa Grande was closing games.
Poor Paul Sewald doesn’t even have a team.
He’s holding out for a multi year deal from the Mets that he thinks he deserved a long time ago. It’s a thing.
Hasley? You mean Helsley with St. Louis?
yeah. maybe they could trade McCarthy/Thomas and Montgomery for Munoz and Garver.
Why would Seattle do that?
And 17 of 36 will be 42 unless an option is declined to be vested through a signing bonus that would be paid as the buy out of a deferred option in 2037 unless a player option is triggered for 2047 in which case 6 is 9 and Corbin Burnes is revealed to be Corbin Dallas, savior of the universe, who must get the final stone from the Diva Plavalaguna.
In all seriousness, these deferrals, buyouts and signing bonuses are genuinely becoming more and more complicated and more prominent than the ‘net present value’ of the actual annual salaries.
I understand why teams do this, I get why players agree to this, but its odd that its such a relatively recent application toward salary and contract structures.
It used to be “The Bobby Bonilla Deal” and be this rare oddity and now its close to becoming Standard Operation Procedure.
These are tax dodges for the players. They only pay tax on the $2 million or whatever the contract is. They take out loans against the income but aren’t taxed.
They pay taxes on it when they receive the income. You can’t dodge taxes unless the federal and state governments lower the rates. Since the Us government has tax treaties with most nations, the players are taxed where they played the games (earned the money) regardless of when they are paid the money.
It’s apparently not as new or as historically rare of a phenomenon as it seems. They did a segment on the Effectively Wild podcast a few weeks ago on the history of contract deferrals and such. They’ve been around a long time, but maybe not as widely reported as they are now.
Some of these owners can’t balance their books from season to season I worry deferred money will allow some to mortgage their future to the point where they may not have much of a future. The situation with the Padres made me realize not all of these owners are Cohen level rich. The Padres had to practically give some guys away in a hurry to make payroll. That’s not good for anyone. Sometimes rules have to be put in place to protect the owners from themselves. I’m not saying it should or shouldn’t be allowed but to me it’s more complicated than being a team/player agreement
The second richest owner that is Rogers of the Blue Jays isn’t even close to Cohen’s net worth. His Mets’ ownership compromise less than 15% of total net worth. With that said, MLB owners will be fine financially as MLB has a checks-and-balance system. Franchise ownership isn’t a zero-sum game. It’s in every owners’ best interest that every team succeeds more or less. There’s a reason why no other owner has commented on the A’s and Rays’ situations.
Cohen is one of the few “owners” that actually owns nearly all of a team. Cohen owns 97% of the Mets. In the Padres case its spread between 11 general partners.
The 11 people (including Peter Seidler’s estate) that make up the ownership of the Padres are worth $15 billion combined.
Because the team is held as a general partnership, the books need to be balanced each year. General partnerships are pass-through entities where profits or losses are passed directly to partners and then each partner either pays income on their personal tax return or writes off losses on their personal tax return. If there is a deficit, a cash call will be issued to the partners.
Just wait until state and federal tax codes catch up and start taking a big old bite out of that deferred money pie. If anybody really believes that the players signing contracts with deferred money are doing it out of the kindness of their heart you’re living in a fantasy world the only reason 99% of the players who agreed to deferred money do so it’s because it benefits them in some way down the road , can you say loophole legal tax evasion?
You can take off your tinfoil hat. Business get bought and sold everyday and purchase payments are commonly deferred with much more complex structuring.
Actually the Ohtani deal was explicitly structured to avoid US taxes literally to the letter of the US tax code. Prior to 2017 whomever you were, wherever you were if you made $ working in the US you paid US taxes offset by any taxes you paid where you resided. The same applied if you were a US citizen working abroad. In 2017 that changed.
Yes business deals are constructed for tax efficiency, No one has the same fact set of Ohtani who in theory could retires to Japan. If I’m in those cities, states that have “work performed” I send Ontani a current year bill and a future year tax bill for “work performed”: His problem will be the very public nature of his contract, specifically how the cash flows are explicitly laid out for year work to year paid. In fact don’t be surprised if taxing authorities seek withholdings from the LAD and put additional burden on them. The contract was written specifically to avoid US federal taxes.
Ohtani will pay takes on where the money was earned, each city, state, and province where the games were played plus the US federal taxes. It doesn’t matter when the payout is on the work performed. The US has a tax treaty with Japan so he will not avoid any taxes.
In the US he will pay at the highest level for that municipality, state, or federal return minus any deductions allowed.
In Japan he would pay 45% on all of his annual earnings since he is above 400 million yen or about $2.5 million USD.
In Japan he will also pay for Kenko-Hoken, Kosei Nenkin, and Koyo Hoken. A total of 14.65% up to a certain level of income. I don’t remember what that level of income is.
My apologies, while it was written in adherence with US tax laws it’s specifically designed to provide Ohtani with an avenue to not pay CA state tax despite “earning” that income in CA should he retire outside of CA post his playing career.
The contract is written as to mimic retirement income. The deferred income every day people set aside in 401k/IRA even though “earned’ in one state, the tax burden will NOT follow you to another state if you move in your retirement and start drawing that cash (income) there. If you leave a high tax state for a low/no tax state in retirement you benefit paying that low/no tax for the state you now reside.
abovethelaw.com/2024/01/shohei-ohtanis-700m-contra…
Tax optimization is big thing for these contracts including
when players take a signing bonus which is typically is done in the off-season and taxable in the state of their residence. As hosts of MLB spring training as well as nice place to “winter”, many players for their playing careers live in AZ (flat 2.5%)and FL (0%) state income tax.
While this is new to athletes apparently this has been used commonly in structured deals in business. No doubt those business people are pissed that Ohtani/his agents brought so much public attention to this loop hole. Ohtani isn’t the first wealthy guy to see tax law written everyday worker in mind and exploit it.
marketwatch.com/story/how-peter-thiel-turned-2-000…
That is great if Ohtani moves within the US. If he moves back to Japan he will be taxed at 45%.
California’s highest tax bracket is not 14.4% like this article claims, its 12.3%
Under 4 U.S. Code § 114 Ohtani’s deferred income does not apply because it does not fit the following definitions of retirement income in the statute.
(b)For purposes of this section—
(1)The term “retirement income” means any income from—
(A)a qualified trust under section 401(a) of the Internal Revenue Code of 1986 that is exempt under section 501(a) from taxation;
(B)a simplified employee pension as defined in section 408(k) of such Code;
(C)an annuity plan described in section 403(a) of such Code;
(D)an annuity contract described in section 403(b) of such Code;
(E)an individual retirement plan described in section 7701(a)(37) of such Code;
(F)an eligible deferred compensation plan (as defined in section 457 of such Code);
(G)a governmental plan (as defined in section 414(d) of such Code);
(H)a trust described in section 501(c)(18) of such Code
It also does not qualify under this section:
(ii)is a payment received after termination of employment and under a plan, program, or arrangement (to which such employment relates) maintained solely for the purpose of providing retirement benefits for employees in excess of the limitations imposed by 1 or more of sections 401(a)(17), 401(k), 401(m), 402(g), 403(b), 408(k), or 415 of such Code or any other limitation on contributions or benefits in such Code on plans to which any of such sections apply.
Ohtani will pay taxes on the income. Either the lower state tax where he earned the income or the tax in Japan which is much higher.
The State.of CA was concerned enough to propose to the US Govt/IRS for a rule change/clarification. Given their substsntantial financial interest in this matter they believe the code as written is NOT as black and white and in practice is gray or subject to interpretation. This is commonly how code is written and subsequent rulings are issued to cover real world use cases. You can have all the certainty you wish, in this instance I’m going to side with the taxing authority directly involved.
What on earth are you talking about? You don’t think they are getting taxed on deferred money? How do you think they are getting paid? Under the table with millions in cash in a briefcase?
He passed up on more money and no deferrals to not play in Toronto. MLB needs to create fair play for Jays with profit sharing dollars. Play anyone who signs with jays and extra 10%
Judge passed up more money to stay in NY
Burnes passed up more money because he really wanted to play in AZ
If the Jays offered 10 cents more than Cohen to Soto, Soto would be wearing a Jays jersey. Players have their preferences
That’s not accurate. There was 0 information out that burnes wanted to play for Arizona until after the contract was signed – lip service
I thought only the Dodgers deferred money huh? Where are all the crybabies now?
It’s not differed payments per se that they cry about’ It’s Ohtani’s differed payments that has caused all the water works. That and it being the Dodgers.
Idk I saw people complain about Hernandez, Edman and Snell just to name a few
It’s not “deferrals” in general, Nationals had been handing them out regularly while they fought with Baltimore on RSN fees. In 2015, Scherzer signed a seven-year, $210 million contract with the Nationals that included a $105 million deferral. The Nationals will continue to pay Scherzer $15 million annually through 2027, and then the final payment is due in 2028 to paid by LAD agreed upon when he was traded to LA..
It was the scope of the deferrals that got people pissed at LAD as it was also looked at as being a work-around to CBT tax as well. Let’s be honest, LAD bought that WS and they still need NYY to give them 2 games to finally get their first parade since 1988, 2020*
Deferrals likely get addressed in the next CBA, I suspect there will be a cap on deferral % of a individual contract and on overall payroll. MLB has rules (debt covenants) for how indebted a team can be . They’ve had two teams go bankrupt (Baltimore, pre Angelos) and then (McCourt Dodgers) semi-recently and they don’t want it. This RSN debacle has them further hyper-sensitive to the financial health of their franchises.
What will likely happen is teams will likely have some minimum % funding requirements for those deferrals in the year services were performed. So in Ohtani’s case maybe that min % is 25%, LAD would need to set aside in a 3rd party account $17M. as well. LA is likely doing this already anyway’s Ohtani took no interest on his deferral however that doesn’ t mean LAD can’t take advantage of some compound interest to benefit this future obligation.
Not sure what the hell Cashman was thinking. I’ll take this pitcher and this deal over Max Fried all day long.
Burnes has to want to play in NY first. I’d be pretty surprise if this was his best offer. He choose to be close to home.
I think this is a well thought out response, I’d like to respond to everything but I don’t want to, so I’ll just say this; you can say whatever you like about Ohtani’s deferrals dodging the CBA, however most people elect to ignore that his cap hit is 46.06 million, AKA the highest AAV in MLB prior to Soto’s contract.
Secondly,I don’t understand why people are so worked up about the Dodgers “buying” a title. The Rangers last year? ABSOLUTELY bought that title if you go by those parameters. A 200 million dollar team with many of the best players (Semien, Seager, DeGrom, Eovaldi) being out of organization players who cost lots of money.
2022 Astros? 202 million AKA one of the highest. Their opponent? The Phillies, who are notoriously one of the highest spenders in baseball with a mostly bought roster (Realmuto, Harper, Segura, Schwarber, Castellanos, Wheeler)
I just don’t understand how people give the Dodgers so much crap when there’s other teams attempting to buy a championship. Are we forgetting that the Dodgers only have two world series in the last 12 years of ownership? It would be nice if people actually got the facts before they start bawling their eyes out
Good post! There are a subset of discontent fans here whose teams haven’t competed in a long time and spend a lot time venting their frustrations. Trash other teams to make yourself feel better. Misery loves company. Cheers, dude!
He might have had a preferred destination where he’d want top dollar and when that didn’t materialize there or anywhere else, he pivoted to going “home”. Burnes instructed his agent to go to AZ to hammer out a deal.
When you sign with Boras you are mostly telling the market you want top dollar and historically he’s gotten his clients just that, you can even argue over paid.
Opt-outs and a concentration of top players with Boras IMO is causing problems for Boras it appears for a 3rd year in a row his clients end up in a game of musical chairs, the loser(s) having to accept placeholder contracts. In the case of Bellinger, you can say with some certainty he left some $ on the table on a contract he turned down that to date he’s yet to recoup. For the 2nd time in ~ 4 months it should be noted a player (Chapman) went to Boras and said “I want to play there, get the deal done.”
Boras will take the commission, it’s not his business model. He’s about pushing the market higher either in overall contract value or AVV. That he’s been unable to sort this RSN troubled FA market is bewildering.