Shohei Ohtani is getting paid… after all.
The Los Angeles Dodgers’ newest star has signed a record-breaking $700 million contract, setting a new benchmark for the largest contracts in professional sports. However, there are some caveats.
Ohtani opted to keep more than 97% of his annual salary unchanged through his 10-year contract. Instead of receiving the full amount each year, the Japanese sensation will receive the remaining money over a 10-year period after the contract expires.
What is the specific content of the contract? And how does deferral in MLB actually work? Here’s the full breakdown of Ohtani’s contract and the implications for him and the Dodgers.
What is Shohei Ohtani’s new contract with the Dodgers?
On the surface, Ohtani’s deal with the Dodgers seems simple: 10 years, $700 million. But that’s not all.
Ohtani and his representatives decided to defer most of the money in negotiations with the Dodgers. Here’s his cash breakdown over the next 20 years:
- 2024-2033: $2 million per year (based on contract with Dodgers)
- 2034-2043: $68 million annually (after contract with Dodgers ends)
Ohtani will only pay $2 million per season with the Dodgers, but the Competitive Balance Tax (CBT) penalties will be even more severe. MLB calculated His 10-year contract is currently worth about $460 million. So, from a CBT perspective, the Dodgers’ annual salary will be approximately $46 million for Ohtani each year until 2033.
Why is Shohei Otani withholding his contract money?
According to reports, the postponement was Ohtani’s idea. ESPN, MLB.com and The Athletic.
He has prioritized winning throughout free agency, and this deal should allow him to do just that. The Dodgers will take less of a hit on CBT, but Ohtani will still receive the balance of his long-term contract.
Until then, Ohtani won’t be short on cash. ESPN reported that Ohtani makes at least $45 million a year through sponsorships. So even if he gets a $2 million annual salary from the Dodgers for the next 10 years, he’ll probably end up making close to $50 million or more each year.
How does deferred cash work in baseball?
Under the current collective bargaining agreement (CBA), Ohtani’s deferred contract with the Dodgers is legal.
Deferment has long been used in baseball to defer debt into the future and relieve the burden in real time. Bobby Bonilla is perhaps the most famous example, with the former slugger earning $1.19 million annually. new york mets From 2011 to 2035.
The Dodgers used the delay to sign their two biggest stars before Ohtani. Mookie Betts will receive $120 million in deferred payments from 2033 to 2044 after his contract expires, while Freddie Freeman will receive $57 million from 2028 to 2040.
Under the CBA, there are no restrictions on the deferral of funds. Teams can move things forward with the same amount of money or over different periods of time, as long as the team and players agree. It all comes down to how much money owners are willing to pay down the road for players who aren’t on the roster.