Shohei Ohtani’s $700M Dodgers Deal Includes $680M in Deferrals

Jim Parsons December 11, 2023 in Featured, MLB Tagged Shohei Ohtani, Top Story - 2 Minutes

In a groundbreaking move, Shohei Ohtani’s 10-year, $700 million Dodgers deal involves unique deferrals. Unique might be an understatement. In a deal that prioritizes team flexibility, the jaw-dropping contract has baseball fans in shock, while also not surprised.

Shohei Ohtani’s record-setting contract with the Los Angeles Dodgers is not just noteworthy for its astronomical value but also for the innovative deferral structure incorporated into the deal. According to Fabian Ardaya and Evan Drellich of The Athletic, the star player has agreed to defer a staggering $68 million per year from his $70 million annual salary, spanning from 2034 to 2043. This strategic decision aims to empower the Dodgers to maintain significant spending capabilities, especially around key players like Ohtani, Mookie Betts, and Freddie Freeman.

Exclusive @TheAthletic: Shohei Ohtani will defer $68 million per year of his $70 million annual salary over the course of his 10-year, $700 million deal with the Dodgers, allowing the team to keep spending, according to a person briefed on the terms.https://t.co/IsnWlsbTq9
— Fabian Ardaya (@FabianArdaya) December 11, 2023

The unconventional arrangement allows the Dodgers to distribute payments creatively, paying only $2 million annually from 2024 to 2033 and deferring the substantial amount to the later years. This pioneering approach provides the team with enhanced cash flow and increased payroll flexibility during the initial years of the contract. Notably, Ohtani’s deferred earnings will be disbursed without interest.

While this financial maneuver ensures the Dodgers’ continued ability to invest in top-tier talent, Ohtani himself remains a financial powerhouse. Beyond his on-field earnings, the multi-talented player is set to earn an estimated $50 million annually through endorsements and various off-the-field ventures.

There Is Nothing Illegal About Shohei Ohtani’s Deal with the Dodgers

The structuring of Ohtani’s deal aligns with baseball’s collective bargaining agreement, which places no restrictions on the extent of salary deferrals agreed upon by players and teams. Additionally, the agreement incorporates a net-present-value calculation for luxury-tax purposes, determining the contract’s season-by-season value. This groundbreaking contract not only secures Ohtani’s future but also charts new territory in the realm of sports contracts.

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