Shohei Ohtani

Shohei Ohtani created plenty of speculation when he recently revealed that there’d been no extension talks with the Angels front office and added that above all else, his priority moving forward is “to win.” With the Angels now officially posting a losing record in six straight seasons, fans and pundits alike have wondered about Ohtani’s future in Anaheim. The likely American League MVP emphasized following the conclusion of the Halos’ 2021 season, however, that he’d carry an open mind into any discussions regarding a long-term extension (link via Jack Harris of the Los Angeles Times).

“I think I would, of course, talk to them with feelings of openness,” Ohtani said via his interpreter. “Regardless of whether that leads to anything, I individually want to have a solid offseason to make sure we can win next year.”

The matter of Ohtani’s contract for the 2022 season is already settled. Back in February, he signed a two-year, $8.5MM contract that covered his first two arbitration seasons (2021 and 2022) — a decision for the Angels surely have to be thankful in retrospect. Ohtani’s outstanding season on both sides of the ball would have surely led to a much larger salary in arbitration than the $5.5MM he’ll receive next year under that two-year pact.

It was a historic season for Ohtani, who tallied 639 plate appearances as a hitter and also logged 130 1/3 innings on the mound. His 46 home runs at the plate were third in all of baseball, trailing only Vladimir Guerrero Jr. and Salvador Perez. Ohtani hit .257/.372/.592 with 46 long balls, 26 doubles, eight triples and 26 steals. He scored 103 runs, plated another 100 and posted the fourth-best walk rate among qualified hitters.

On the mound, his 29.3 percent strikeout rate on the mound was tied for 12th among the 96 pitchers who tossed at least 120 innings, and his 3.18 ERA ranked 22nd. Ohtani’s 8.3 percent walk rate was a half-percent higher than the average starting pitcher but his huge strikeout rate and above-average ground-ball rate (45 percent) helped to make him one of the more effective starting pitchers in the game on a per-inning basis.

If Ohtani proves at all capable of approximating that production in 2022, he’d set himself up for perhaps the most fascinating and complex arbitration case in Major League history. An extension, of course, would preclude that headache for the Angels — but his brilliant 2021 season has also made any potential negotiations as complicated as an arbitration hearing would be.

Ohtani has rather clearly cemented himself as one of the game’s greatest pure talents. He’s two years from free agency, so the first couple seasons of a theoretical extension wouldn’t pay him full market value (although a new deal could theoretically begin next season and replace his $5.5MM salary in favor of a larger sum). Beyond that, the question is just how highly the would-be free agent seasons might be priced. Ohtani’s teammate, Mike Trout, and Yankees right-hander Gerrit Cole received the largest average annual salaries in MLB history, $36MM per season, when signing their respective deals. (While Trout’s contract was technically restructured as a 12-year, $426.5MM deal, that includes the two years and $66.5MM he was already guaranteed at the time of his extension, which paid him $360MM in new money over 10 years — hence the $36MM AAV figure.)

Free-agent seasons that are bought out this far in advance are typically (but not always) discounted to some extent, but the inherent difficulty in assigning a value to Ohtani’s free-agent campaigns is multi-faceted. Not only is he two years from the market, he’s also only had one full, healthy season on the mound. It’s clear that he’s of top-of-the-rotation caliber from a pure talent perspective, but he pitched just 53 1/3 innings combined in his first three MLB seasons (thanks largely to Tommy John surgery).

That lack of durability is an obvious red flag and strike against him. At the same time, if the Angels wait another year to determine whether Ohtani can replicate or exceed that workload on the mound, he’ll only further drive up his price tag — both by proving his durability and moving closer to free agency. There’s also no precedent for a player with this skill set, so his representatives at CAA could argue that any valuations based on comparisons to other players and/or contracts are generally irrelevant.

Stepping back a bit, the Angels’ entire payroll needs to be considered when looking at the prospect of retaining Ohtani on what would presumably be a massive commitment. The Angels will have Justin Upton’s contract come off the books following the 2022 season — which is no small sum given next year’s $28MM salary.

However, the Halos are already paying Trout a $35.45MM salary every year from 2022-30, and they’ll also pay Anthony Rendon $36MM in 2022 before paying him $38MM annually from 2023-26 under his backloaded $245MM contract. Trout and Rendon, like Ohtani, have proven to be MVP-caliber talents at their best. Trout has three MVPs and arguably ought to have more, and Rendon has a pair of top-five finishes, including a third-place finish as recently as 2019. We can’t know precisely what value would be placed on Ohtani’s free-agent seasons — the first of which would be his age-29 campaign — but that an extension would likely mean paying out more than $100MM annually to just three players, at least from 2024-26.

The Angels are a large-market club, but they also haven’t traditionally spent at the same level as other big-market teams like the Dodgers, Giants, Yankees, Red Sox, etc. This year’s $182MM Opening Day payroll was the largest in franchise history, and owner Arte Moreno hasn’t given his front office the green-light on exceeding the luxury tax threshold since way back in 2004 — his first full season as owner after purchasing the club in May 2003.

There’s no way of knowing just yet what will happen to the luxury tax system in the future, as it’ll be a hotly contested topic during ongoing collective bargaining talks between the league and the players association. Whatever alterations do come about will be key factors for Moreno and second-year general manager Perry Minasian to consider in negotiations with Ohtani’s camp, as paying Trout, Rendon and Ohtani on long-term arrangements would make filling out a roster behind that trio all the more difficult.

All of that comes before even considering other needs in the rotation and the absence of proven, cost-controlled starters on a team that has perennial rotation issues. The Angels have a handful of interesting young arms (e.g. Patrick Sandoval, Reid Detmers, Griffin Canning, Jaime Barria), but they’ll likely need to bring in some veteran arms as well. There’s also the matter of a lack of a long-term solution at shortstop and the looming, star-studded crop of free-agent shortstops to consider. It all makes for a fascinating long-term outlook in Anaheim, as should be expected with a talent as unique as Ohtani and a big-market club as starved for a postseason berth as the Angels, who haven’t appeared in a playoff game since 2014.

The original version of this post cited an Associated Press translation of Ohtani’s quote, which indicated he is “very open” to discussing an extension. Our post has since been updated to reflect what we are told is a more accurate but slightly different translation of his response, from the Los Angeles Times, that he would talk to the Angels “with feelings of openness.”