How Will Shohei Ohtani’s $680 Million Deferred Payments With Dodgers Work? Explained

Shohei Ohtani ultimately touched down where most people anticipated him to. Ohtani made his agreement with the Los Angeles Dodgers official on Saturday afternoon. The parameters of the contract are astounding: $700 million over 10 years. With a $673 million contract, signed by Lionel Messi with FC Barcelona, it is the richest contract in sports history.

Here are the largest contract in baseball history:

  1. Shohei Ohtani, Dodgers: $700 million
  2. Mike Trout, Angels: $426.5 million
  3. Aaron Judge, Yankees: $360 million
  4. Manny Machado, Padres: $350 million
  5. Francisco Lindor, Mets: $341 million

Ohtani’s record-breaking contract is obviously quite convoluted; over the course of ten years, he will not receive a straight $70 million annually. In fact, the deal’s payout structure and overall cash amount make it noteworthy. Ohtani and the Dodgers have specifically agreed to significant deferrals on a scale never seen in Major League Baseball. Now let’s go straight to the most important lesson.

How Will Shohei Ohtani’s $680 Million Deferred Payments With Dodgers Work? Explained

Ohtani will defer $68 million of his $70 million yearly compensation, which means the two-time MVP would only receive $2 million for the life of the contract, according to a Monday report from The Athletic’s Fabian Ardaya. Ohtani will start earning $68 million a year in 2034.

That’s not a typo, but the situation is more complicated than it seems. The Dodgers will still have to pay a large amount toward the luxury tax each year since the deal would still count for $46 million instead of $2 million.

Ohtani will only get $2 million a year, with endorsement deals probably providing the majority of his earnings. The deal does count against the $46 million luxury tax standards that, in previous years, have somewhat hampered even the largest-market clubs.

According to Bob Nightengale of USA Today, Ohtani requested sizable deferments so that the Dodgers would still have room to add players to the roster.

For CBT reasons, the payroll of a team is determined using average yearly value. What matters isn’t a player on a long-term contract’s actual wage during a particular season. Because that is the average yearly worth of his contract, a player on a two-year, $20 million deal who receives $5 million in year one and $15 million in year two is still subject to a $10 million CBT penalty in both years.

In Ohtani’s instance, such significant deferrals over a number of years translate into an AAV of around $46 million rather than the $70 million ($700 million over the claimed 10-year contract).

Year Salary
2024 $2 million
2025 $2 million
2026 $2 million
2027 $2 million
2028 $2 million
2029 $2 million
2030 $2 million
2031 $2 million
2032 $2 million
2033 $2 million
2034 $68 million
2035 $68 million
2036 $68 million
2037 $68 million
2038 $68 million
2039 $68 million
2040 $68 million
2041 $68 million
2042 $68 million
2043 $68 million

For the purposes of CBT, the Dodgers’ salary in 2023 was $267.2 million. In 2015, the franchise recorded $297.9 million. This year’s $366.2 million CBT payroll set a record for the Mets.

In MLB, the CBT has evolved into a kind of “soft” payroll cap, and elite clubs are frequently moving into and out of taxable zone, sometimes in an attempt to “reset” their penalty status and stay out of the higher tax categories designated for repeat offenders.

In September, Ohtani had surgery on his elbow.

He intends to return to the mound in 2025 and is anticipated to be available as a batter in the next season.

“The ultimate plan after deliberation with Shohei, was to repair the issue at hand and to reinforce the healthy ligament in place while adding viable tissue for the longevity of the elbow,” his surgeon Dr. Neal ElAttrache said in a statement at the time.

“I expect full recovery and he’ll be ready to hit without any restrictions come opening day of 2024 and do both [hit and pitch] come 2025.”

This flexibility should be put to good use given the Dodgers still have significant requirements in the rotation (recall that Ohtani will miss 2024’s games due to an elbow operation).

Ohtani is the most paid athlete in the sport. In addition to bringing in new Japanese sponsors and supporters, he sells tickets and shirts. The Los Angeles Times said that Ohtani brought in between $10 and $20 million annually for the Angels in marketing, advertising, and other expenses. With over 15,000 more fans each game in 2023 than the Angels, the Dodgers—a more globally recognized team—are expected to earn a significant amount more from Ohtani’s signing.

Has Ohtani won a World Series?

The Dodgers have triumphed in the World Series in 2020, finished above 100 wins in five of the last six complete seasons, and won the National League West in ten of the previous eleven seasons. In his major league career, Ohtani has never participated in a postseason game.

What is shohei ohtani net worth?

What is the net worth of Shohei Ohtani? Shohei Ohtani’s projected net worth is $20 million, according to Celebrity Net Worth.

Does shohei ohtani speak fluent English?

Although Ohtani can communicate in some English, he would rather leave it to Mizuhara. It has generated some controversy in the past several years, to the point where a prominent ESPN expert chastised him for it.

What is Shohei Ohtani known for?

What you should know about MLB All-Star Shohei Ohtani from the…
A two-time American League MVP, a machine that hits home runs and pitches well, Shohei Ohtani may soon become a Toronto Blue Jay.

Who is Shohei Ohtani sponsored by?

He has contracts with other Japanese businesses in addition to New Balance, Fanatics, and Topps. In addition to the $30 million salary the Angels gave him, that additional $40 million. Ohtani’s Dodgers endorsements will only increase in number and value.

What type of player is Shohei Ohtani?

Ohtani is a three-time All-Star who plays both right-handed pitching and left-handed batting. Throughout his six big league seasons, he has a.274 average, 171 home runs, 437 RBIs, and 86 steals. He is 38-19 with a 3.01 ERA in 86 starts with 608 strikeouts in 481 2/3 innings.

 

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