Getty Shohei Ohtani was determined to defer money in his contract. All the teams he proposed it to liked the idea, except for one.
The baseball world was officially rocked when Shohei Ohtani announced his decision to sign with the Los Angeles Dodgers via his Instagram account on December 9. Another thing that caught the attention of many across the industry was the structure of Ohtani’s contract.
The 2023 AL MVP Award winner signed a 10-year, $700 million deal with the Dodgers. However, Fabian Ardaya of The Athletic reported that $680 million of it will be deferred. Ohtani will earn $2 million per year over the life of his contract. That will be followed by earning $68 million per year between 2034 and 2043.
This idea was proposed to four teams: the Dodgers, San Francisco Giants, Los Angeles Angels and Toronto Blue Jays. According to ESPN’s Alden Gonzalez and Jeff Passan, every team was on board with this idea. Except for one: the Angels.
Why Shohei Ohtani Wanted to Defer so Much Money
There’s no way around it — $700 million is a lot of money, whether it’s awarded to someone in the present day, or at some point in the future. With the way Ohtani’s contract is structured, though, the present value of his deal is much lower than that gaudy number.
Jack Harris of the Los Angeles Times noted on December 13 that the MLB Players Association’s present value calculation of Ohtani’s deal is $437.8 million. That lowers the yearly luxury tax hit to about $46 million instead of $70 million.
This would still be a recording-breaking deal. But it’s also a lot lower than the initial number that hit the internet. Why would any player agree to such a thing, let alone propose it himself? It’s because this type of agreement is the best of both worlds for the player and the team.
Ohtani still gets his enormous sum of money. The massive deferrals also allow the Dodgers financial flexibility to continue making acquisitions. The two-way superstar has made it clear he prioritizes winning over everything else. He did so again during his introductory press conference on December 14 at Dodger Stadium, which was streamed by MLB.
Even though Los Angeles has qualified for the postseason in each of the last 10 years, they told him that winning only one World Series makes it all a failure. When he heard this statement, Ohtani said he knew the organization was all about winning.
Why would the Angels not be agreeable to this idea? Especially if it gave them a better chance at retaining their superstar? That’s a question we don’t have an answer for. But now, Ohtani is with a club that’s been a consistent contender in recent years. The Dodgers have already taken advantage of this unexpected financial flexibility.
Dodgers Staying Aggressive After Landing Ohtani
You’d think that landing a generational player is enough for one offseason. Not quite for Los Angeles. The unique structure of this massive contract has allowed them the opportunity to stay active in the trade and free-agent markets.
For example, they’ve acquired starting pitcher Tyler Glasnow and outfielder Manuel Margot from the Tampa Bay Rays via trade. Los Angeles will send Ryan Pepiot and Jonny Deluca to Tampa Bay in this swap. The framework was first reported by Jack Azoulay-Haron of MLB Nerds and was also contingent on Glasnow agreeing to an extension.
Marc Topkin of the Tampa Bay Times reported an extension was all but done on December 15. ESPN’s Jeff Passan was the first to report the deal will be for five years and $135 million (with no deferred money included).
This still might not be the end of the Dodgers’ offseason spending spree. They’re also in the running for free-agent starting pitcher Yoshinobu Yamamoto. There was a star-studded meeting with the hurler on December 12, as Shohei Ohtani, Freddie Freeman, and Mookie Betts were all in attendance as Los Angeles tries to reel in the Japanese ace, per The Athletic’s Fabian Ardaya.
MLB Trade Rumors predicted on November 6 that Yamamoto would pull in a nine-year, $225 million contract. Jon Heyman of the New York Post said on December 5 that a $300 million deal is possible.
Ohtani’s idea to defer the majority of his salary has seemingly helped quite a bit in these other offseason pursuits. Unfortunately for the Angels, they’ll have to watch their former star remain in the area but not play for them any longer.