Los Angeles, California – Shohei Ohtani’s groundbreaking $700 million contract with the Los Angeles Dodgers has sent shockwaves through the world of baseball this offseason. Reports suggest that even the Dodgers themselves were taken aback by the magnitude of the deal.
An in-depth feature published by Sports Illustrated shed light on the unique structure of Ohtani’s contract, revealing the unprecedented decision to defer $680 million of the money until after the completion of the contract in 2034. This unconventional arrangement sparked debates within the MLB community, with some questioning whether the league should address what many perceive as a loophole in contract negotiations.
According to the feature, Ohtani’s agent, Nez Balelo, presented the proposal to Dodgers president of baseball operations, Andrew Friedman, triggering an immediate positive response from Friedman. The intricacies of the deal were further discussed the next morning, leading to a series of eye-opening revelations that left even Dodgers president and CEO, Stan Kasten, in disbelief.
Rather than receiving the full $70 million average annual value of his contract upfront, Ohtani will receive incremental payments over the course of the agreement, with larger sums expected in later years. The financial implications of this arrangement have raised questions about the actual present-day value of the contract, with estimates varying between $438 million to $460 million.
Furthermore, the deferred payments could have significant tax benefits for Ohtani, potentially saving him millions in California state income taxes by the end of the deal. However, this aspect of the contract has attracted criticism from some quarters, prompting calls for a cap on contract deferrals.
The impact of Ohtani’s deferred money has had far-reaching consequences for the Dodgers’ offseason plans. Following the announcement of Ohtani’s contract, the team made a flurry of high-profile acquisitions, including trading for All-Star pitcher Tyler Glasnow and signing Japanese free agent pitcher Yoshinobu Yamamoto to a record-breaking deal. Additional signings of Teoscar Hernandez and James Paxton further solidified the team’s roster for the upcoming season.
As the Dodgers gear up for their season opener against the San Diego Padres, the implications of Ohtani’s contract are sure to reverberate throughout the league. The unconventional nature of the deal and its implications for both player and team set a new precedent in the world of baseball contracts, sparking discussions and debates among fans and experts alike.