LOS ANGELES, Calif. – Baseball fans were left in awe when news broke of Shohei Ohtani’s groundbreaking $700 million contract with the Los Angeles Dodgers. The deal not only caught the attention of the baseball world but reportedly stunned the Dodgers themselves.
A recent Sports Illustrated feature shed light on how the unique structure of Ohtani’s contract came to be. The contract, which involves deferring a staggering $680 million until after the completion of the deal, sparked debates in the MLB community over its team-friendly nature.
The idea of deferring such a large portion of the contract is unprecedented in baseball, prompting discussions on whether MLB should address what some consider a loophole. Ohtani’s agent, Nez Balelo, presented the proposal to Dodgers president of baseball operations Andrew Friedman, leading to an immediate agreement on the deal.
Rather than receiving the average annual value of $70 million this year, Ohtani will only be paid $2 million, with gradual increases in subsequent years until 2033. This unique payment structure is seen as a strategic move to enhance the Dodgers’ competitiveness and financial flexibility.
Financially, Ohtani may face challenges due to the lack of interest in the deferred payments, resulting in calculations of the contract’s present-day value at approximately $438 million. The Dodgers, however, stand to benefit from potential revenue streams that could offset the deferred payments in the future.
The contract also introduces tax implications, with Ohtani potentially avoiding a significant amount of California state income taxes by the end of the deal. This led to calls for a cap on contract deferrals from California state Controller Malia Cohen.
The Dodgers have wasted no time in leveraging the deferred money to make significant moves in the offseason. The acquisition of high-profile players like Tyler Glasnow, Yoshinobu Yamamoto, Teoscar Hernández, and James Paxton signifies the team’s commitment to building a competitive roster around Ohtani.
The revamped Dodgers roster is set to make its debut in a highly anticipated game against the San Diego Padres at the Gocheok Sky Dome. With a new star-studded lineup and a groundbreaking contract, the Dodgers are poised to make a splash in the upcoming season.