Earlier in the week, the LA Dodgers signed Shohei Ohtani to a $700 mill/10 year contract. He is both a hitter and pitcher.
After having Tommy John surgery in 2018, Ohtani had a second surgery on his arm towards the end of this past season. It remains a mystery as to what he had done but his agent said it wasn’t TJ.
Shohei will not be pitching in 2024 and will only be hitting. There is some question about his pitching future.
The contract is a unique one. His yearly salary will be $70 mill but he is deferring $68 mill of it every year for the entire 10 years. He said he is doing it because otherwise the Dodgers would not be able to afford signing any new talent. He is also not charging any interest for his deferred salary.
It is believed that in a decade, he will be back in Japan. There is some question as to whether this unusual salary arrangement is due to California’s high taxes and/or later moving out of the country that could change how he is taxed.
There is a full no-trade clause but should the 2 top execs who signed him to the contract leave the Dodgers, he can opt out of his contract.
Already, Ohtani has set a record for MLB’s fastest selling jersey. They are almost sold out at over $350 a pop.
There are certainly plusses and minuses to the signing.
Certainly, the amount of the contract is one, followed by his arm surgeries and his age (40) when his contract expires.
Consider that the Dodgers will be paying him $68 mill every year for 10 years after he retires which will be a huge albatross around the team’s neck for a full decade.
But he is an exceptional player having won most of the major awards, including 2 MVPs. And he is MLB’s biggest draw.
What do you think of the contract? Do the rewards outweigh the risks?
Is it a smart move for a team to try to win now while potentially mortgaging their future long-term?
Today’s blog addresses this dilemma and allows readers to share their thoughts in more detail. And hopefully, to actively engage with others by responding to their posts and creating back-and-forth discussion threads. The more the merrier!
For this one blog only, you’ve got 6 sentences max to share your thoughts. Of course, you can also respond to other readers.
TT will supply the ammunition. One thought-provoking question. Several options provided. One hard choice to be selected. One vote.
Ready?
Make sure to come back and check the final results!
Don’t see your comment? Comments are limited to a maximum of 6 sentences. Please make sure to check out the other rules for posting under the link at the top of the page in order for your comments to be published.
FINAL RESULTS FROM A DECEMBER TOTALLY TIGERS POLL:
Did the Tigers make the right decision about developing their young players and not signing a free agent for 3B?
- Yes, focus on the homegrown prospects. 93%
- No, a free agent should have been signed. 7%
Why should you follow Totally Tigers https://twitter.com/totallytigersbb on Twitter?
- We tweet out breaking news before it’s published in the sports pages. The best news from the best sources.
- Want more than 1 Totally Tigers fix every day? How about throughout the day?
Totally Tigers 
Even though the Dodgers are only paying Ohtani $2M, I read they’re getting charged $46M vs the luxury tax due to present value of the deferred money. Does anyone know if any of the deferred payments will be will impact the luxury tax when they actually take place? In either case this contract is great for the Dodgers. If they set aside $30M this year and invest it at a 4% return after 10 years it will be over $44M so they only need to come up with $24M each year to cover the $68M.
LikeLike
I am still searching for an article that states this directly, but I infer the luxury tax impact will be limited to the ten years of the contract and not the ten years of the deferred payment period. Also, I guess after 10 years, Ohtani could sign and play for the Tigers while still being paid $68 million/year from the Dodgers!
LikeLike
Exceptional talent, that’s what Miguel Cabrera was for us. He was extended to be a Tiger for life based on past performance and he couldn’t even swing with his hips for the last five years he was with us. Exceptional talent, that’s what Shohei is and he’ll probably be a Dodger for the rest of his mlb career. The Dodgers are paying based on past performance as well. None of us have a crystal ball that can see in the future. However, players only get older (never younger) and fade toward the end.
LikeLiked by 1 person
Ohtani’s Dodgers contract is bad for baseball. The contract and attention to Ohtani may seem wise, but they contribute to MLB’s fixation on rich teams getting richer, while poor teams get poorer. By contrast, look at the fascinating competition in the NFL as pulling for the playoffs crescendos. MLB used to have that fascination, but with the rich teams like the Dodgers getting to the top every season, fewer fans are watching the games.
LikeLiked by 3 people
If fewer fans are watching less baseball I believe it has more to do with access than it has to do with poor play. Nowadays fans have to pay a premium rate to watch their hometown team play and that’s bad for baseball
LikeLiked by 2 people
I would say no, the rewards don’t outweigh the risks and it is not wise to try to win now while potentially mortgaging the future. However, the Dodgers are probably thinking two strategies: 1) The increase in attendance and media income will cover some of the $68 million every year, and 2) the acquisition of Otani might pave the way for other players from Japan, so nonmonetary benefits might emerge. But I do think it will be an albatross around their neck.
LikeLiked by 1 person
Fantastic signing if ur a Dodger fan. Best player in baseball for $2M year. Ticket and merchandise sales, parking fees, TV rights…will cover a chunk of salary. LA can now sign more stars. How can Tigers compete with NY & LA by signing marginal/project FAs? This is the type of creative contract I wanted the Tigers to offer Ohtani.
LikeLiked by 1 person
The Dodgers are helped financially by owning a substantial portion of their (profitable) regional sports network (RSN) – Spectrum SportsNet LA. That RSN, unlike Bally’s, is financially healthy. While the Dodgers are already close to being maxed out in ball park attendance, their local television ratings have room to grow. The Yankees, Mets, and Phillies have higher local ratings than the Dodgers. I am guessing the Tigers organization is is trying to determine how best to profit from some sort of future ownership of local broadcasting and distribution. Hence, in part, the Benetti hiring?
LikeLiked by 3 people
Tigers will succeed because they are building sustainability. The 2 mil per does not count their luxury tax payments as well. The only way to be a consistent mid-market team is to build not buy.
LikeLike
It’s bad for baseball fans because players will continue to receive higher salaries. Ultimately, the fans pay all this money through not just ticket prices, but also media contracts, etc. Baseball teams don’t pay a single penny to any player— we do. I’m a free market guy so if people are willing to pay then go for it. But the lower and middle class fans are being priced out of baseball. Then MLB wonders why they are losing fans.
LikeLiked by 3 people
The Ohtani contract after discount rate and with no interest attached is actually $43M-$45M a year. I would gladly pay higher ticket prices to see him pitch and hit on a daily basis. I will not pay those prices for current Tiger roster.
LikeLike
The value of the contract is 46 million per year for 10 years. That sounds pretty reasonable for a generational talent like Ohtani. I believe the 68 million has to be funded well in advance so I don’t think there will be a burden in the second decade. The Dodgers are going to sell a lot of beer and hotdogs in the meantime.
LikeLiked by 3 people
The thing is, with inflationa nd where MLB salaries are headed, is this contract really unreasonable? MLB salaries in 10 years might be pushing $60-$70 million. Look at how many $30-$40 million salaries out there now. I think it could be a wise decision.
LikeLiked by 3 people
The Dodgers franchise is worth $4.8 billion according to a quick and dirty Google search I just made. The numbers for owners and players are simply mind-blowing. If the streaming wars shake down perhaps the media rights will not continue to explode. Player contract inflation would be directly tied to that perhaps?. The thing I find hardest to take this off-season is the breathlessness of the national meia over which mega-stars New York or LA will land. Salary cap and floor tied to league profits would be ideal but that ship no doubt has sailed.
LikeLike
This is not good for baseball. The Dodgers are simply trying to buy a WS. Baseball needs a hard cap or tougher penalties for the luxury tax.
LikeLiked by 1 person
They also need a floor to prevent organizations from tearing down and gleefully presenting an uncompetitive product.
LikeLiked by 1 person
Absolutely, but unfortunately both sides now benefit from status quo. Hopefully, both sides will realize that if they want to survive they better take care of their fans and bring about some pairity.
LikeLike
I wonder how the Nationals feel about deferred salary as they pay for Max’s back surgery, lol. The MLB needs to do something for these ridiculous deferments that penalizes mid-market teams because the rich continue to buy, buy, buy. It needs to be addressed during the next CBA if the MLB ever hopes for any semblance of parity. Deferred payments need to be subject to greater luxury tax payments. So I am a big emphatic no for the strength and survival of the MLB.
LikeLiked by 1 person
Diminishing returns towards the end of the contact are a likely hood and/or if he should have a career ending injury before the contract expires (although I would assume LA took out a major insurance policy on him) but we’ve seen how trying to buy a WS has worked out here.
LikeLike
The present value of his contract is $460 million, which is pretty far under the $500 million that was widely speculated to be the floor of his negotiations. I still think it is an overpay, but I admire the Dodgers for seeing an opprtunity to win now, and doing everything they can to make it happen.
LikeLike