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Shohei Ohtani

Shohei Ohtani Reads Statement In Relation To Former Interpreter

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Star two-way player Shohei Ohtani of the Dodgers read a statement today in relation to Ippei Mizuhara, his former interpreter and friend. Mizuhara was fired last week amid his involvement with an illegal sports gambling operation.

Ohtani read the statement in Japanese, which was translated into English by Will Ireton, for a period of about 12 minutes. Video of the full thing was relayed by Talkin’ Baseball on X. Chad Jennings of The Athletic transcribed all of Ohtani’s comments, as translated into English by Ireton.

Fabian Ardaya of The Athletic was among those to relay a few days ago that Ireton would be serving as a translator for Ohtani in the wake of Mizuhara’s departure. Ireton served as Kenta Maeda’s translator when he was with the Dodgers and Ireton stayed an employee of the club after Maeda was traded to the Twins in 2020.

Reporting last week highlighted that over $4.5MM had been wired from an account in Ohtani’s name to the gambling ring. Mizuhara said that he racked up that debt by betting on sports other than baseball, then Ohtani wired the money to help him pay it off. Later, Ohtani’s attorneys contradicted the story, saying that Ohtani “had been the victim of a massive theft.” Ohtani’s version of events that he relayed today aligned with the theft story, accusing Mizuhara of using his account to wire the money and then lying about it.

Ohtani said that he was “saddened and shocked that someone who I trusted has done this.” Ohtani stated that he has never bet on baseball or any other sports and has never gone through a bookmaker to bet on sports. “Up until a couple days ago, I didn’t know this was happening.” He also flatly denied the original version of events, wherein he supposedly sent the money to help his friend Mizuhara. “Ippei has been stealing money from my account and has told lies.”

The Dodgers were in Korea last week to play the Padres as part of the Seoul Series as the initial reporting on the story was coming to light. Ohtani stated today that the media in Korea inquired about the story but Ippei never told him about the media inquiry. Ippei then told the media and Ohtani’s representatives the version of events that involved Ohtani paying off the debt. “All of this has been a complete lie,” Ohtani said.

Ohtani says he first found out about Mizuhara’s gambling after the first game of the Seoul Series, when there was a team meeting in the clubhouse. “During the team meeting, obviously, Ippei was speaking English and I didn’t have a translator on my side. But even with that, I kind of understood what was going on and started to feel that there was something amiss.” Ohtani then states that he did not know until that meeting about Mizuhara’s gambling addiction or his debt. “Obviously, I never agreed to pay off the debt or make payments to the bookmaker.”

Ohtani then states that he and Mizuhara met one-on-one in a hotel room after the team meeting. “Ippei admitted that he was sending money, using my account, to the bookmaker.” Ohtani states he contacted his representatives at that point. “When I was finally able to talk to my representatives, that’s when my representatives found out that Ippei has been lying the whole time and that’s when I started contacting the Dodgers and my lawyers.” Ohtani states that his representatives and the Dodgers found out at that point that they were being lied to.

“My lawyers recommended that, since this is theft and fraud, that we have the proper authorities handle this matter.” He concluded by saying that “The season’s going to start so I’m obviously going to let my lawyers handle matters from here on out and I am completely assisting in all investigations that are taking place right now. I’m looking forward to focusing on the season. I’m glad that we had this opportunity to talk and I’m sure there will be continuing investigations moving forward. Thank you very much.”

On Friday, MLB announced that it its department of investigations formally began the process of investigating the matter. This is a developing story that will be updated as more information comes to light.

MLB Opens Investigation Into Allegations Involving Shohei Ohtani, Ippei Mizuhara

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Major League Baseball issued a statement today, which reads as follows: “Major League Baseball has been gathering information since we learned about the allegations involving Shohei Ohtani and Ippei Mizuhari [sic] from the news media. Earlier today, our Department of Investigations (DOI) began their formal process investigating the matter.”

Mizuhara, Ohtani’s long-time interpreter and friend, was fired by the Dodgers on Wednesday. Reports had emerged which connected Mizuhara to an illegal gambling operation in California, where sports betting is not legal. Per those reports, over $4.5MM was wired from an account in Ohtani’s name to the gambling ring. Mizuhara and a spokesperson for Ohtani initially told ESPN that the debts were Mizuhara’s and Ohtani sent the money to help his friend pay them off. But attorneys representing Ohtani later claimed that the player had been “the victim of a massive theft.”

The league opening an investigation was inevitable. Even if Mizuhara was the only one involved, there would be serious grounds for concern. All MLB players and employees are prohibited from betting on baseball, given their access to information that may not be public. They can bet on sports other than baseball and Mizuhara insists that he never did bet on baseball, but the connection to an illegal operation under federal investigation makes it a different matter.

The fact that the sport’s biggest star is involved only gives the league further grounds to look into it. To this point, there’s been nothing to suggest that Ohtani himself did any betting. Per the initial reporting from earlier this week, multiple sources asserted that Ohtani does not gamble. But multiple wire transfers in his name to an illegal operation under federal investigation was clearly going to be grounds for the league to take a look. As recently pointed out by Craig Calcaterra at Cup of Coffee, Ohtani may have violated federal laws and/or league rules just by wiring the money, even if he did no gambling whatsoever.

Per T.J. Quinn of ESPN, the league is expected to request interviews with all parties, including both Ohtani and Mizuhara, though “officials will have no way to compel Mizuhara’s cooperation since he no longer works for baseball.” Quinn adds that Ohtani will have a right to refuse as a member of the MLBPA.

In terms of organizations outside the league, Quinn adds that neither the California Bureau of Investigation nor the FBI are investigating. Stephen Wade, Tong-Hyung Kim and Stefanie Dazio of The Associated Press reported earlier today that Mizuhara is being criminally investigated by the IRS.

Ohtani’s Interpreter Fired; Accused Of Theft And Illegal Gambling

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On Wednesday evening, the Dodgers announced they’d fired Ippei Mizuhara, who was working as Shohei Ohtani’s personal interpreter. Mizuhara has been Ohtani’s friend and interpreter dating back to before his signing with the Angels in 2017.

Gustavo Arellano, Adam Elmahrek, Nathan Fenno and Paul Pringle of the Los Angeles Times first reported the news, which comes amidst a probe into an alleged illegal gambling operation in Southern California. Attorneys for Ohtani told the L.A. Times that the two-way star “had been the victim of a massive theft.” While that statement did not specify who had committed that alleged theft, the evident implication is that Mizuhara did so.

ESPN’s Tisha Thompson reported that upwards of $4.5MM had been wired from a bank account in Ohtani’s name to the alleged gambling ring. Sports gambling remains illegal in California. A spokesperson for Ohtani initially told ESPN that the two-time MVP had wired the money to pay off gambling debts which Mizuhara had accrued. The spokesperson later retracted that and pointed to the attorneys’ statement concerning theft.

Mizuhara and other sources told ESPN that Ohtani does not gamble and that the wire transfers covered losses which the interpreter had racked up. An attorney for Matthew Bowyer, the alleged bookmaker, said in a statement to ESPN that “Mr. Bowyer never met or spoke with Shohei Ohtani.” ESPN reports that Mizuhara had placed bets with Bowyer on various sports, not including baseball, going back to 2021.

On Tuesday, Mizuhara told ESPN that he’d asked Ohtani to pay off his gambling debts. “Obviously, he wasn’t happy about it and said he would help me out to make sure I never do this again,” Mizuhara had said. “He decided to pay it off for me. I want everyone to know Shohei had zero involvement in betting. I want people to know I did not know this was illegal. I learned my lesson the hard way. I will never do sports betting ever again.” Mizuhara had stated that he and Ohtani sent multiple wire transfers to the bookmaker in installments; ESPN observed two transfers at $500K apiece in Ohtani’s name.

Mizuhara disavowed those comments this afternoon, telling ESPN that Ohtani was unaware of the gambling debts and had not transferred any money. “Obviously, this is all my fault, everything I’ve done. I’m ready to face all the consequences,” he said on Wednesday. He reiterated that he did not place any bets on baseball.

Needless to say, MLB players and team employees are prohibited from placing bets on baseball. They are allowed to place bets on other sports, although that obviously only applies in jurisdictions where sports gambling is legal.

“The Dodgers are aware of media reports and are gathering information,” the club said in a statement. “The team can confirm that interpreter Ippei Mizuhara has been terminated. The team has no further comment at this time.” An MLB official told Andy McCullough, Fabian Ardaya, Britt Ghiroli and Sam Blum of the Athletic that Ohtani is not currently facing discipline. A league source tells ESPN that their next step is to “gather facts,” although it’s unclear if they’ll launch an official investigation.

Agent Nez Balelo Discusses Shohei Ohtani’s Free Agency

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With Shohei Ohtani now officially a member of the Dodgers and in possession of a record-setting 10-year, $700MM contract, agent Nez Balelo pulled back the curtain a bit on Ohtani’s very secretive free agent explorations in an interview with USA Today’s Bob Nightengale.

The purposeful lack of direct information about the Ohtani sweepstakes only added to the firestorm of media speculation about where the two-way superstar might land, and the tight hand that Balelo reportedly kept on the proceedings drew some criticism for its perceived over-the-top nature.  However, the CAA agent unsurprisingly didn’t have any regrets about the tactics.

“I’m so glad we did it this way, and I would do the same thing over and over again.  There’s not even a question in my mind,” Balelo said.  “The clubs appreciated it and respected it.  There wasn’t a team that said, ’You know what, let’s just get this out.’  Shohei and I wanted to be able to control the narrative, and teams were on board with it.  I heard that some media members felt that I needed to share information because this is a historical moment, but I 100% disagree.  I can’t even begin to even think how that makes sense.  There has to be a level of confidentiality….This was arguably the most highly exposed free agent ever on the market, and ultimately, I got the best result.  So how can you judge and criticize the way that I approached this?“

That said, Balelo also seemed to push back against reports that suggested any public acknowledgement by a team of its interest in Ohtani could or would detract from the team’s chances.  “That was ridiculous.  Those words never came out of my mouth,” Balelo said, pointing out that Dodgers manager Dave Roberts’ admission at the Winter Meetings that L.A. was in on Ohtani “sure didn’t have an effect, did it?”

Ohtani said during Spring Training that he wanted to test free agency and not discuss an extension with the Angels during the season, allowing Balelo and the CAA team to craft “a well thought-out approach” months in advance of Ohtani’s official entry into the market.  Balelo met with executives from several teams during the GM Meetings, which the agent viewed as “a good gauge of where the interest level was, to understand who was serious, and who really who was just kicking the tires.  There were a lot of teams that weren’t going to be in play because of the level of [money] where they all felt this was going to go.  So that that pretty much eliminated half the field.”

As more and more teams fell out of the race, the five finalists were the Dodgers, Angels, Giants, Cubs, and Blue Jays.  “The Dodgers were always at the forefront in talks,” Nightengale writes, and Balelo similarly wasn’t surprised when Ohtani informed his agent late in the afternoon on December 8 that he had decided to sign with Los Angeles.

This happened to be the same day that multiple reports suggested Ohtani had agreed to a deal with the Jays, and was en route to Toronto in a private jet.  Balelo described the situation as “about the most reckless reporting I’ve ever experienced in this game,” as “I felt really, really bad for the country of Canada.  And I felt really, really bad for the Toronto Blue Jays organization.  They are really good people.  What they had to endure, and the pain, wasn’t right.  I felt so bad for all of them that they had to go through that because it was the extreme emotional roller coaster of thinking that they had him and then finding out they didn’t.”

The Dodgers weren’t officially told Ohtani’s decision until the next day, and Balelo then called the Jays, Giants, Cubs, and Angels in turn to also break the news before Ohtani officially announced his choice via Instagram.  Dodgers president of baseball operations Andrew Friedman already had some inkling of Ohtani’s choice on December 8 when Balelo inquired whether the Dodgers would agree to Ohtani’s desire to defer the vast majority of his $700MM deal until 2034 and beyond.  This offer was already on the table, so the Dodgers made no late increase to convince Ohtani to sign.

Though deferrals have been a common part of baseball contracts for years, Ohtani’s choice to defer $680MM of his salary drew almost as many headlines as his decision itself.  In discussing the deferred money, Balelo noted that Ohtani is “in such a unique position because he’s going to make so much money off the field….Basically, he’s in the most unique position of any player in the history of the game to be able to do this.  It’s not like we’re setting a precedent that every player now is going to defer everything out in his contract.”

With Ohtani’s deferrals lowering his luxury tax hit to $46MM (rather than $70MM) per season, the Dodgers will very significantly benefit from a Competitive Balance Tax standpoint, and Ohtani will cost himself some overall money due to inflation and the value of money today against money earned in a decade’s time.  Balelo described Ohtani’s decision as “the most incredible act of unselfishness and willingness to win that I’ve ever experienced in my life, or ever will. He did not care at all about the present value inflation.  And you know what, neither did I.  He should be praised for this.  He did not want to handcuff a team with his salary.  He said, ’How can I contribute to a team and allow them to stay competitive?’  So he took the most unselfish approach possible and deferred everything.”

Report: Angels Did Not Match Dodgers’ Offer For Ohtani

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The Dodgers recently signed Shohei Ohtani to a 10-year, $700MM contract, though with heavy deferrals that make the net present value significantly less than that. He was reportedly discussing similar deals with clubs like the Giants and Blue Jays but Jack Harris of the Los Angeles Times reports that Angels’ owner Arte Moreno did not want to match those offers.

As mentioned, the deal with the Dodgers is heavily deferred, with Ohtani set to make just $2MM annually during the course of the deal. He will then received $68MM per year for the 10 years after he has played the seasons covered by the contract. That brings down the net present value, with the league valuing it at just over $460MM while the MLBPA has it at $437,830,563. Farhan Zaidi, the president of baseball operations of the Giants, recently revealed that the club offered Ohtani essentially the same deal he accepted from the Dodgers. The Blue Jays were “right there,” according to a report from Ben Nicholson-Smith of Sportsnet.

All reports indicated that Ohtani and his reps were driving a lot of the negotiations. It was apparently Ohtani’s idea to have such an unusual contract structure, which he proposed as it would allow the signing club more financial freedom in the short term to build a winning club around him. The Dodgers, Giants and Blue Jays were all seemingly willing to meet his ask in comparable ways, but he chose the Dodgers and their unparalleled track record of recent success.

The Angels, however, don’t appear to have been at the final table. Per the report from Harris, Ohtani’s agent Nez Balelo reached out to them towards the end of the process and gave them a chance to convince Ohtani to stay. But Moreno was reportedly unwilling to match the offer Ohtani eventually signed. “It’s a place that he really loved to play. He loved the people there, everything. So we didn’t want to miss the idea of giving them an opportunity,” Balelo said “But at the end, it just wasn’t going to work.”

As Harris points out, it’s not clear Ohtani would have seriously considered a return to Anaheim even if they were willing to match the asking price. But the fact that they were not willing to do so seems to eliminated any chances of a reunion. It’s unknown what kind of final offer the Angels did make.

Moreno has generally been unafraid to spend big on star players, giving big deals to players like Mike Trout, Albert Pujols and Anthony Rendon. It’s interesting that he decided to pull the reins on the Ohtani chase, though it’s unknown exactly why or how close they were.

The club will now have to enter a post-Ohtani world and try to chart a course forward without him. General manager Perry Minasian has made it clear that the club is not rebuilding and is not trading Trout. In 2023, they ran their payroll up against the competitive balance tax, ultimately staying narrowly beneath it. Roster Resource pegs their 2024 CBT number at $168MM at the moment, almost $70MM below next year’s base threshold. That should give them plenty of room to make some bold strikes, likely to upgrade the pitching staff. Despite having both Ohtani and Trout on the roster for the past six years, the Angels haven’t finished above .500 since 2015, made the playoffs since 2014 or won a postseason game since 2009.

Ohtani Contract Contains Conditional Opt-Out Clause Based On Ownership, Front Office

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Shohei Ohtani’s landmark contract with the Dodgers has prompted endless discussion, debate and criticism due to the unprecedented scope of the deferrals it contains, but that’s far from the only fascinating wrinkle of the 10-year deal.

Sports Illustrated’s Tom Verducci reports that the contract contains language “that assures the club will make good on its promise to use the savings he created to build a competitive team around him.” Ohtani’s agent, Nez Balelo of CAA Sports, tells Verducci that Ohtani asked him early in the free-agent process about whether it was possible to defer the majority or entirety of his salary in order to give his club more present-day payroll flexibility.

As far as we at MLBTR can tell, that’s the first clause of its nature in any player contract. Further specifics of the clause and the manner in which it will be enforced remain unclear. The Dodgers’ reported pursuits of a trade involving Tyler Glasnow and Manuel Margot, plus their recent meeting with Yoshinobu Yamamoto, seem to signal that the team is indeed taking steps to satisfy that condition, though.

The luxury-tax hit associated with Ohtani’s contract is $46.06MM, according to Verducci, which sits roughly in line with expectations at the outset of his free agency. But, the manner in which the contract was announced has created substantial criticism. It’s fair to wonder if, had the contract been announced as 10 years and $460MM deferred with interest, it would have invited the same backlash as the initial announcement of a $700MM deal … which was later reported to be 97% deferred.

The initial $700MM figure looks good in a recruiting pitch for future CAA clients, but the league’s approximate $460MM valuation of the net present value is a different story entirely. The MLBPA’s valuations are a bit lower yet; Jon Heyman of the New York Post tweets that the union values the contract at $437,830,563, but the luxury-tax hit will be based upon the league’s calculations.

There’s been plenty of talk about the contract as a means of gaming the luxury tax system, although the $46.06MM CBT hit is in line with the league’s valuation of the deal. If anything, the contract is less about circumventing the luxury tax and more about artificially tamping down the team’s actual, bottom-line payrolls from 2024-33.

Unprecedented contractual language doesn’t stop with the competitive team clause. Ken Rosenthal of The Athletic reports that the contract states the following: “If specific change in Dodger personnel, player may opt out of contract at end of season the change occurs.”

The conditional opt-out is applicable to controlling owner Mark Walter and president of baseball operations Andrew Friedman, per a report from Beth Harris and Ronald Blum of the Associated Press. If either Walter or Friedman leave the organization, Ohtani would gain the opt-out possibility. Alden González of ESPN tweets that would go into effect at the end of any season in which Walter or Friedman departed, so there’s no possibility of Ohtani opting out midseason.

It’s nevertheless a noteworthy inclusion, particularly in the case of Friedman. While the front office leader isn’t in any immediate jeopardy based on the team’s excellence over the course of his decade-long run, tying his contractual status to that of the team’s best player for the next 10 years is a bold move by ownership. Friedman signed an extension of undisclosed length in November 2019. It isn’t clear if he has signed any subsequent deals, though it’s hard to envision him departing the organization any time soon.

Given the massive slate of deferred money — Ohtani will be paid just $2MM annually from 2024-33, with the remaining $680MM paid out from 2034-43 — it’s difficult to see Ohtani opting out at any juncture, unless there’s language that allows a portion of those deferrals to be paid out in conjunction with the opt-out.

It’s technically feasible that if Ohtani is able to return to the mound in 2025, he could reestablish himself as a viable top-of-the-rotation starter and have even greater earning power than the ~$460MM net present value of his current contract. However, if he’s only been paid out around 1-2% of the overall guarantee at the time of a theoretical opt-out opportunity, it’d still be difficult to walk away from the deal.

Then again, Ohtani showed with his original move to MLB (and to a lesser extent with the eye-popping nature of his current deferrals) that money is not necessarily his top priority in any contract. He’s also reportedly earning as much as $50MM annually in terms of endorsements and other marketing opportunities, so the notion that he’d leave a staggering portion of his record contract on the table in order to pursue a return to free agency isn’t as far-fetched as it would be for many other players.

News of the (as we know it) unprecedented out clause in Ohtani’s contract will invite ample speculation. Fans on social media have already wondered about ownership changes, front office changes, managerial changes or perhaps even trades of star teammates like Mookie Betts and Freddie Freeman. With the contract itself not plainly spelling out the nature of the change, there’s no way of knowing the specific nature of personnel change that would trigger this right for Ohtani, however. The clause is further proof of the lengths to which the Dodgers — and presumably other teams — were willing to go in order to secure the two-way star’s generational talents.

Giants president of baseball operations Farhan Zaidi has already indicated that the terms of Ohtani’s contract with the Dodgers were proposed by Ohtani and his agents, and that the Giants were comfortable effectively matching them. Presumably if Ohtani’s camp included the stipulations about investing the present-day savings and the conditional out clause in the terms with the Dodgers, those factors were also present in discussions with the Giants, Blue Jays and other finalists for his services.

One other note from the AP: while the Dodgers have already announced the contract, it has not yet gone to MLB for official approval. As of Wednesday evening, the deal still takes the form of a letter of agreement between Ohtani and the Dodgers.

MLBTR Podcast: Shohei Ohtani, Juan Soto and Deferred Money

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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…

Check out our past episodes!

The podcast intro and outro song “So Long” is provided courtesy of the band Showoff.  Check out their Facebook page here!

Zaidi: Giants Offered Same Deal That Ohtani Accepted From Dodgers

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Giants president of baseball operations Farhan Zaidi conducted a conference call with reporters on Tuesday evening. San Francisco’s baseball operations leader touched on the club’s pursuit of new division rival Shohei Ohtani now that he’s free to speak about that process publicly.

Zaidi told the media the Giants offered essentially the same contract terms as Ohtani wound up accepting with the Dodgers. The defending AL MVP is guaranteed $700MM on a 10-year contract, but $680MM of that money is deferred to be paid between 2034-43. MLB calculates the deal’s actual value around $460MM for competitive balance tax purposes. According to Zaidi, the Giants made clear they were willing to do the same thing.

“The proposal that was made was very comparable if not identical to what he wound up agreeing to,” the Giants baseball ops president said (relayed by Janie McCauley of the Associated Press). “We offered what would have been the biggest contract in major league history. I’m guessing we weren’t the only team that did that.”

Zaidi confirmed that Ohtani’s camp also lobbied for a heavily deferred contract in their negotiations (something he reportedly pursued with every team). “It was pitched to us in a similar way, the notion that he’s a player who’s got a ton of endorsement deals, makes a lot of money off the field, and it was sort of a vehicle to create some flexibility for the team — but also get to a really big number on the overall value of the contract, which is important in its own way,” he said (via Susan Slusser of the San Francisco Chronicle).

“But yeah, I mean, it’s certainly advantageous and you can understand why it was done. … The CBA is very clear there is no maximum or no limitations on deferring salary, that’s very black and white, so I don’t really have editorial comment. It’s something that if it’s pitched to us in a way that we think makes sense for the player and the team we would be open to it, and we certainly were in this case.”

Despite the “comparable if not identical” offer, Ohtani chose the Dodgers. Zaidi suggested that was likely due to a preference for remaining in Southern California, where the superstar has spent his entire career. It also seems fair to presume Ohtani viewed the Dodgers as better positioned than the Giants for sustained competitiveness over the coming decade.

The Giants have moved quickly in the wake of the Ohtani decision. They agreed to terms on a six-year, $113MM deal with KBO star Jung Hoo Lee to man center field. (The team has yet to confirm that deal.) Evenly distributing the salaries on Lee’s contract would bring San Francisco’s 2024 payroll projection to roughly $166MM, per Roster Resource. That’s about $22MM shy of last year’s season-opening payroll. They’re roughly $48MM below next year’s base luxury tax threshold.

There’s clearly still room for further acquisitions. Zaidi reiterated his desire to add another starting pitcher and a complement to 22-year-old Marco Luciano at shortstop (via Alex Pavlovic of NBC Sports Bay Area). San Francisco is among the teams to meet with NPB ace Yoshinobu Yamamoto in recent days.

Why Shohei Ohtani’s Contract Structure Is Not A Luxury Tax Dodge

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Earlier today, we learned that Shohei Ohtani’s $700MM contract with the Dodgers has a stunning deferral structure: he’ll earn a mere $2MM in each of the ten seasons he’s agreed to play baseball for the club, and then $68MM per year from 2034-43.

Based on what I’ve seen on social media tonight, a lot of baseball fans think the purpose of these deferrals is for the Dodgers to “dodge” the competitive balance tax (yes, t-shirts are already being drawn up).  Here’s why that’s wrong.

The collective bargaining agreement has a section for calculating the CBT hit for a contract that includes deferred money.  According to reports, that calculation works out to a $46MM average annual value and accompanying CBT hit for the Dodgers and Ohtani.  As you can see here, $46MM tops Max Scherzer’s previous AAV record of $43,333,333.33.  It’s $6MM beyond Aaron Judge’s $40MM AAV, which was the highest for a player on a deal of more than three years.

Not only is $46MM a record AAV, but it’s entirely in line with expectations.  MLBTR predicted a $44MM AAV for Ohtani.  Most other prognosticators were in that range.  In fact, the median Ohtani AAV prediction of the other six outlets we’re tracking was $45,984,849.  It would be almost impossible for Ohtani’s luxury tax AAV to have met expectations any harder.

The problem is the initially reported $70MM AAV.  That was the first number people saw, and it gets ingrained for fans after being seen in thousands of headlines.  The agent certainly didn’t mind.  Though news of significant deferred money quickly followed and ESPN’s Jeff Passan narrowed it down to $40-50MM yesterday, more precise numbers weren’t known until today.

There was enough time for the shocking $700MM and $70MM figures to take hold.  So it’s logical for some fans to say the Dodgers are paying Ohtani $70MM a year but “getting away with” just a $46MM CBT hit.  However, I’d argue that the $70MM figure was never “real,” in that it dwarfs expectations and there’s no current indication that any team offered anything close to that AAV without huge deferrals.  The $46MM AAV is what matters.  Ohtani moved the AAV record forward as expected, but only by about six percent rather than an insane 62%.

MLB does have the power to stop teams from circumventing the CBT, but this doesn’t qualify.  In fact, it is explicitly allowed.  As Passan explained tonight, the CBA specifically says, “There shall be no limitations on either the amount of deferred compensation or the percentage of total compensation attributable to deferred compensation for which a Uniform Player’s Contract may provide.”  This is just my opinion, but perhaps if the deferrals led to a luxury tax AAV below $35MM or so on Ohtani, MLB might have considered it a tax dodge, but not for a record $46MM.

Ah, but what about Jon Heyman’s report a year ago about how the Padres “were contemplating” a 14-year offer for Aaron Judge that would’ve taken him through age 44?  About that, Heyman noted, “sources say they would not have been allowed, as MLB would have seen the additional years as only an attempt to lower their official payroll to lessen the tax.”

MLB would’ve been right – there would be no other reason to pay Judge through age 44.  Teams are loathe to pay players that far into their careers, and of course the vast majority of players do not have MLB careers at age 44.  Our MLB contract tracker goes back to 10-1-10, and the only contracts of three or move years that even went through age 41 were for Albert Pujols and Yu Darvish.  So there’s simply no precedent for paying Judge three years longer than that.  Furthermore, even based on Heyman’s reporting, none of this actually happened: Heyman did not report that the Padres made a 14-year offer or that MLB actually tried to stop something.  Just that they would (I’d say “might”) have stopped it.  As I was contemplating how long Ohtani’s contract might go, I think you could at least make a case to go through age 42.

All that said, Ohtani’s contract structure does present a big advantage to the Dodgers.  I mean, they’re actually paying him $2MM a year.  Many arbitration eligible utility players or relievers make more.  Paying Ohtani so little seems ludicrous in that sense, even if it is within the rules.  A team’s CBT payroll uses the average annual value of each contract, and that determines their luxury taxes.  But teams also operate off real payrolls, where a player on a two-year, $20MM deal might actually be paid $5MM in the first year and $15MM in the second despite his $10MM CBT hit.

The Dodgers have a certain budget or target with that real payroll, and instead of paying Ohtani $46MM on that payroll, they’re actually paying him less than Austin Barnes.  That means, in theory, the Dodgers can more easily afford to add more quality players, such as Yoshinobu Yamamoto.

So, is this a problem?  Does deferring 97.1% of a huge contract mean baseball is broken, and does it represent a major point of contention when the CBA expires after the 2026 season?  Lindsey Adler of the Wall Street Journal wrote tonight, “According to league and union sources, MLB has proposed limiting deferrals in prior CBA negotiations, but the MLBPA has declined those limits because deferrals allow a player flexibility that allows a contract to be worth, let’s say, $700 million instead of $460 million.”

When this came up previously in CBA talks, it was probably more of a “nice to have” for MLB, but not something for which they’d actually make a concession to the MLBPA.  The MLBPA won’t want to give this up, for the handful of players who actually want their payment deferred 20 years into the future.  As you know, money is worth more now than it is in the future, so players have not exactly been clamoring to wait until retirement age to receive 97.1% of their contract.  I’m sure deferred money will come up in the next CBA talks, and may even be eliminated, but one player doing it does not translate to a hot button issue or something where billions of dollars hang in the balance.  They’ll find more consequential things to fight about.

Ohtani can do this because he is not a normal MLB player, and he rakes in significant endorsement money every year.  And as The Athletic’s Fabian Ardaya and Evan Drellich explain, Ohtani’s choice on deferrals gives the Dodgers payroll flexibility to add other players and may give him a tax benefit if he isn’t living in California when the $68MM salaries start rolling in.

As Jack Harris of the L.A. Times notes, Ohtani “took this approach…with all the teams he negotiated with.”  Given that Ohtani’s contract roughly equates to a 10-year, $460MM deal, I’d argue that he’s chasing rings a lot more than he’s chasing every last dollar.  Any team could have done this deal, but Ohtani wanted to play for the Dodgers.

The combination of Friday’s shaky reporting suggesting Ohtani was heading to the Blue Jays, plus an unprecedented contract structure, seems to be leading some fans to villainize him.  I think that’s a shame, because he has been squeaky-clean off the field and remains a generational and thrilling player.

Shohei Ohtani’s Contract Will Defer $68MM Per Year

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The Dodgers and Shohei Ohtani agreed to massive a ten-year, $700MM deal over the weekend, but it was reported that there were significant deferrals. The deal still isn’t official but Fabian Ardaya of The Athletic relays some of the particulars today, most notably that $68MM of Ohtani’s $70MM annual salary will be deferred, leaving him making just $2MM per year in the short term. The deferred money is to be paid out without interest from 2034 to 2043. This will reportedly reduce the CBT hit of the contract to around $46MM per year.

When reporting on Ohtani’s deal was initially coming out over the weekend, Jeff Passan of ESPN relayed “most of” the salary would be deferred. It now appears that wording was putting it mildly, with this framing coming as quite a shock. Deferring money is not new but this scale is clearly unprecedented. Most baseball fans are familiar with Bobby Bonilla’s unusual contract structure, with many of them celebrating “Bobby Bonilla Day” every July 1. In late 1999, the Mets released Bonilla but still owed him $5.9MM. In order to save money in the short term, the club kicked the payments down the road, agreeing to pay him $1.19MM on July 1 every year from 2011 to 2035.

But deferring $68MM annually is clearly uncharted waters, since no MLB player has ever even had a salary of $45MM or higher. Ohtani is set to almost double that, in a sense, but he will only be banking $2MM per year during his time playing for the Dodgers.

From Ohtani’s point of view, the gambit makes a lot of sense and Passan reported over the weekend it was Ohtani’s idea. By taking less money now, he will leave the club with more money to build a competitive team around him. For competitive balance tax purposes, a contract is measured in net present value as opposed to pure guarantee, so this works for luxury tax purposes also. As mentioned up top, this will lead to a CBT hit of about $46MM, instead of the $70MM that would apply if going just by average annual value. As Ardaya mentions in today’s report, Ohtani makes about $50MM per year in terms of endorsements and off-the-field revenue streams, meaning he won’t be hurting for cash by taking this path. He’ll then be able to collect $68MM per year after he has played out the 10-year term of the agreement.

For the Dodgers, this will obviously be great for their competitive chances in the short term. They get an elite player the likes of which the world has never seen for a mere $2MM per year. That’s obviously still a huge amount of money for the average person but chump change in the baseball world, with the MLB minimum is set to be $740K next year. They also cut their CBT hit way down, significantly limiting the taxes they eventually have to pay at any point over the next decade. The long-term downside is that, from 2034 to 2043, they will be spending $68MM on a player that is no longer on the club. As pointed out by Brandon Wile of The Score, there are also heavy deferrals in the Mookie Betts deal, meaning the Dodgers will be paying a combined $79MM to Ohtani and Betts in 2043 when Betts will be 50 years old and Ohtani 48.

That could come back to bite them down the road, but they clearly see the present as a unique opportunity to strike while having a unique combination of talents with players like Ohtani, Freddie Freeman and Betts  all on the roster. Due to inflation, by the time those payments roll around, the value of $68MM will be less than it is today.

Some fans of other clubs may not like the way this is playing out but it doesn’t seem like there’s any hope of the league stepping in to put a stop to it. As relayed by Passan, the collective bargaining agreement clearly states that there is no limit to the amount of money than can be deferred in a contract.

Both Ohtani and the club had to agree to this deal, so it’s obviously fine with the parties involved. But it’s not great for any rival clubs or their fans. The Dodgers have already been one of the most successful clubs in recent history, running up big payrolls and having currently made the playoffs in 11 straight seasons. Now they are adding an unprecedented talent with unprecedented financial machinations that will appear to many as unfair, regardless of whether or not they are actually against the rules.

The Dodgers still have a lot of work to do this offseason, particularly in the rotation. They are currently slated to rely upon Walker Buehler, who missed all of 2023 recovering from Tommy John surgery, and then a batch of fairly unproven youngsters such as Bobby Miller, Ryan Pepiot, Emmet Sheehan, Gavin Stone and Michael Grove. With the huge amount of money they committed to Ohtani, it was fair to wonder how much powder they would have dry for bolstering that staff. With Ohtani agreeing to this deal, it makes it far more likely that they throw some money around at free agents like Yoshinobu Yamamoto, Blake Snell, Jordan Montgomery or others.

Both Jack Harris of the L.A. Times and Jeff Fletcher of the Orange County Register report that Ohtani explored these kinds of contract structures with every team he negotiated with, so this wasn’t just a Dodgers-exclusive thing. It seems that Ohtani wants to win and has agreed to structure his deal so that his chances of doing so are as high as possible. He’ll take home far less money now in order to make the team stronger during the course of his playing career.

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