Dodgers P/DH Shohei Ohtani “asked for and agreed” to have 97% of his salary -- $680M of the $700M in the 10-year contract -- “deferred without interest payable over 10 years after this playing contract expires,” according to Tom Verducci of SI. The deferred money gives the Dodgers another $23.94M to spend annually against luxury tax thresholds that they otherwise “would not have had if they paid Ohtani his full salary” in present day dollars. CAA's Nez Balelo, who reps Ohtani, said that looked at CBA language and "found no limit on how much salary a player could defer.” The only provision was that a player "must be paid at least the minimum salary.” Balelo asked, “Who in their right mind gets to this level and decides he wants to help the team and the city compete above all else and basically says, ‘I don’t need it.’ Nobody does that. But there is nobody like him.” Verducci noted Balelo succeeded in a "huge bottom-line win: gaining Ohtani the richest contract in sports history," while the Dodgers also win thanks to Ohtani deferring so much money. Even with a $2M annual salary, Ohtani will be the "highest-earning player in baseball because of his off-the-field endorsements." Sources said that Ohtani is expected to earn $50M in off-field revenue in 2024. To assure the Dodgers “honor his gesture of unselfishness,” Ohtani asked for language in his contract that “assures the club will make good on its promise to use the savings he created to build a competitive team around him” (SI, 12/12).
HAVING THEIR CAKE AND EATING IT TOO: In L.A., Jack Harris wrote Ohtani's deal for the Dodgers “initially seemed to be a bargain," but it is now "bordering on a club-altering steal.” In addition to signing a two-time MVP "they had long coveted," the Dodgers also "keep the kind of payroll flexibility they have long prioritized." Additionally, they now can approach the "rest of the free-agent market in a similar manner to as if they’d never acquired Ohtani.” The team has around $142M in payroll commitments for next season, around $80M less than in 2023, and still has $16M of space remaining "before it even eclipses the league’s first luxury tax threshold." Meanwhile, there is “no option for the deferred money to be converted into an ownership stake in the future” (L.A. TIMES, 12/11).
PLAY NOW, PAY LATER: The AP’s Ronald Blum noted Ohtani’s contract, combined with those of 2B Mookie Betts and 1B Freddie Freeman, raises the team's "total of deferred money owed to the three" to $857M from 2033-44. The high points of the deferred payments will be in 2038-39, when the trio will be owed $83M, and 2040, when they will be due $84M (AP, 12/11). In California, Jim Alexander wrote “we laugh when Bobby Bonilla gets his yearly payment from the New York Mets.” Decades from now, people will refer to a “Shohei Ohtani” contract, “almost certainly in less sarcastic terms” (ORANGE COUNTY REGISTER, 12/11).
DIFFERENCE OF OPINION AROUND THE LEAGUE: ESPN's Jeff Passan discussed how Ohtani's contract is landing around MLB, saying, “If you talk with people in large market teams they’ll say, ‘Tip my cap to you, Dodgers. That’s brilliant, that’s a good move. You are utilizing your extremely large sums of money.’ If you talk with small market executives, they’re like, 'This is circumvention of the competitive balance tax, plain and simple.' Even though it is in the rules of the collective bargaining agreement that it says you may defer as much money as possible. Nothing the Dodgers did was actually outside, extra-legal, problematic in terms of the letter of the law. It’s just the spirit of the law" ("SportsCenter," ESPN, 12/11).
