Shohei Ohtani’s $700 million contract with the Los Angeles Dodgers surprised the baseball world this offseason. It additionally reportedly surprised the Dodgers.
A Sports activities Illustrated function by Tom Verducci on Ohtani printed forward of his Dodgers debut in South Korea on Wednesday shed new gentle on how the two-way phenom’s contract got here collectively just a few months in the past, particularly how the concept happened to defer $680 million of the cash till after the tip of the contract.
Such a construction is with out precedent in baseball. A participant agreeing to an IOU for 97% of his contract cash is so team-friendly that Ohtani’s contract led to debates over whether or not MLB ought to act to shut what many known as a loophole. It is such a weird concept that it might solely have come from the participant himself, to enhance his new staff’s competitiveness.
Per SI, Ohtani’s agent Nez Balelo defined the proposal to Dodgers president of baseball operations Andrew Friedman on Dec. 7, two days earlier than the deal was introduced. Friedman advised Verducci the phrase “Deal!” instantly popped in his head, then just a few extra popped out after the decision was over:
Friedman and Balelo, who nonetheless had different groups , agreed to speak once more the following morning in additional element. After he hung up, Friedman dialed Dodgers president and CEO Stan Kasten.
“Holy f—,” Friedman mentioned.
“Is {that a} ‘Holy f—’ good or a ‘Holy f—’ unhealthy?” Kasten requested.
Superb certainly.
Relatively than paying Ohtani the $70 million common annual worth of his contract this yr, the Dodgers can pay him $2 million. Then one other $2 million subsequent yr, and yearly till 2033. Then they’ll pay him $68 million yearly, possible with the hope that Ohtani’s income streams can have already assured he has paid for himself.
Financially, Ohtani can pay the worth because of the lack of curiosity within the later funds. That is a large enough issue that the MLB Gamers Affiliation calculated the precise present-day worth of Ohtani’s contract to be roughly $438 million, whereas MLB pegged it at $460 million.
It will not be a complete loss, although, as Ohtani will be capable of keep away from great amount of California state earnings taxes. Verducci notes the California Middle for Jobs and the Economic system has estimated that if Ohtani is just not dwelling in California by the tip of the contract, he might keep away from $98 million in earnings taxes.
California state Controller Malia Cohen wasn’t amused, utilizing the information to name for a cap on contract deferrals.
Shohei Ohtani’s deferred cash unlocked the Dodgers’ offseason
Within the meantime, the Dodgers might use that $68 million on different issues, specifically make certain Ohtani wasn’t their solely splashy acquisition of the offseason. The identical day Ohtani was launched as a Dodger in Los Angeles, the staff traded for Tampa Bay Rays All-Star Tyler Glasnow. Then they signed one other Japanese free agent, Yoshinobu Yamamoto, to the most important contract ever for a pitcher, plus Teoscar Hernández (one yr, $23.5 million) and James Paxton (one yr, $11 million).
By common wage, Glasnow, Hernández and Paxton will mix to make $61.5 million subsequent season — or $6.5 million lower than what Ohtani is deferring.
As Friedman mentioned throughout Ohtani’s convention, it is a deal any staff would have been afraid to pitch Ohtani lest they insult him:
“I would not have had the center to suggest it, and it is what’s humorous about ‘Oh, the Dodgers!'” Friedman mentioned. “I would not have had the center to have completed that. However as [Ohtani’s agent Nez Balelo] walked via it and laid it out as we had been speaking, it was extremely per the whole lot he had mentioned all through the method. Typically you expertise that, however they do not sync up and match.”
The brand new-look Dodgers will make their debut within the wee hours of the morning in L.A. on Wednesday, with first pitch on the Gocheok Sky Dome scheduled for 3:05 a.m. PT in opposition to the San Diego Padres.