Shohei Ohtani’s landmark contract with the Dodgers has prompted endless discussion, debate and criticism due to the unprecedented scope of the deferrals it contains, but that’s far from the only fascinating wrinkle of the 10-year deal.
Sports Illustrated’s Tom Verducci reports that the contract contains language “that assures the club will make good on its promise to use the savings he created to build a competitive team around him.” Ohtani’s agent, Nez Balelo of CAA Sports, tells Verducci that Ohtani asked him early in the free-agent process about whether it was possible to defer the majority or entirety of his salary in order to give his club more present-day payroll flexibility.
As far as we at MLBTR can tell, that’s the first clause of its nature in any player contract. Further specifics of the clause and the manner in which it will be enforced remain unclear. The Dodgers’ reported pursuits of a trade involving Tyler Glasnow and Manuel Margot, plus their recent meeting with Yoshinobu Yamamoto, seem to signal that the team is indeed taking steps to satisfy that condition, though.
The luxury-tax hit associated with Ohtani’s contract is $46.06MM, according to Verducci, which sits roughly in line with expectations at the outset of his free agency. But, the manner in which the contract was announced has created substantial criticism. It’s fair to wonder if, had the contract been announced as 10 years and $460MM deferred with interest, it would have invited the same backlash as the initial announcement of a $700MM deal … which was later reported to be 97% deferred.
The initial $700MM figure looks good in a recruiting pitch for future CAA clients, but the league’s approximate $460MM valuation of the net present value is a different story entirely. The MLBPA’s valuations are a bit lower yet; Jon Heyman of the New York Post tweets that the union values the contract at $437,830,563, but the luxury-tax hit will be based upon the league’s calculations.
There’s been plenty of talk about the contract as a means of gaming the luxury tax system, although the $46.06MM CBT hit is in line with the league’s valuation of the deal. If anything, the contract is less about circumventing the luxury tax and more about artificially tamping down the team’s actual, bottom-line payrolls from 2024-33.
Unprecedented contractual language doesn’t stop with the competitive team clause. Ken Rosenthal of The Athletic reports that the contract states the following: “If specific change in Dodger personnel, player may opt out of contract at end of season the change occurs.”
The conditional opt-out is applicable to controlling owner Mark Walter and president of baseball operations Andrew Friedman, per a report from Beth Harris and Ronald Blum of the Associated Press. If either Walter or Friedman leave the organization, Ohtani would gain the opt-out possibility. Alden González of ESPN tweets that would go into effect at the end of any season in which Walter or Friedman departed, so there’s no possibility of Ohtani opting out midseason.
It’s nevertheless a noteworthy inclusion, particularly in the case of Friedman. While the front office leader isn’t in any immediate jeopardy based on the team’s excellence over the course of his decade-long run, tying his contractual status to that of the team’s best player for the next 10 years is a bold move by ownership. Friedman signed an extension of undisclosed length in November 2019. It isn’t clear if he has signed any subsequent deals, though it’s hard to envision him departing the organization any time soon.
Given the massive slate of deferred money — Ohtani will be paid just $2MM annually from 2024-33, with the remaining $680MM paid out from 2034-43 — it’s difficult to see Ohtani opting out at any juncture, unless there’s language that allows a portion of those deferrals to be paid out in conjunction with the opt-out.
It’s technically feasible that if Ohtani is able to return to the mound in 2025, he could reestablish himself as a viable top-of-the-rotation starter and have even greater earning power than the ~$460MM net present value of his current contract. However, if he’s only been paid out around 1-2% of the overall guarantee at the time of a theoretical opt-out opportunity, it’d still be difficult to walk away from the deal.
Then again, Ohtani showed with his original move to MLB (and to a lesser extent with the eye-popping nature of his current deferrals) that money is not necessarily his top priority in any contract. He’s also reportedly earning as much as $50MM annually in terms of endorsements and other marketing opportunities, so the notion that he’d leave a staggering portion of his record contract on the table in order to pursue a return to free agency isn’t as far-fetched as it would be for many other players.
News of the (as we know it) unprecedented out clause in Ohtani’s contract will invite ample speculation. Fans on social media have already wondered about ownership changes, front office changes, managerial changes or perhaps even trades of star teammates like Mookie Betts and Freddie Freeman. With the contract itself not plainly spelling out the nature of the change, there’s no way of knowing the specific nature of personnel change that would trigger this right for Ohtani, however. The clause is further proof of the lengths to which the Dodgers — and presumably other teams — were willing to go in order to secure the two-way star’s generational talents.
Giants president of baseball operations Farhan Zaidi has already indicated that the terms of Ohtani’s contract with the Dodgers were proposed by Ohtani and his agents, and that the Giants were comfortable effectively matching them. Presumably if Ohtani’s camp included the stipulations about investing the present-day savings and the conditional out clause in the terms with the Dodgers, those factors were also present in discussions with the Giants, Blue Jays and other finalists for his services.
One other note from the AP: while the Dodgers have already announced the contract, it has not yet gone to MLB for official approval. As of Wednesday evening, the deal still takes the form of a letter of agreement between Ohtani and the Dodgers.
Pretty sure he doesn’t have to worry about the Dodgers trying to compete.
This. I think the whole “make sure the Dodgers are competitive” thing is just a PR fake, invented to make him look good, sort of like that dog commercial (featuring a dog that had very clearly never met him before). This contract works for him because he has other sources of income for the next ten years, and this way he evades taxes on nearly all of his baseball income. There isn’t anything to it but that.
How is he evading taxes? Sounds like b.s. on your part, no offense lol
Because he will be taxed on the 2M per year he makes, and then when he retires and moves back to Japan and starts making his deferred money he won’t have to pay taxes here.
If he moves out of CA when the $68m/year comes due, he’ll no longer have to pay the state’s relatively high income tax. It’s conjecture at this point, but highly likely conjecture.
lol that’s just absurd. You really think the US governmentand/or the state of California is going to let the Dodgers send him $68m dollars a year without taking taxes out? C’mon be smarter.
100% spot on…Ohtani the tax evader.
If he is not a resident of California he is not subject to the taxes. The state/country he chooses to move to will be taxing him. Unless you have actual input on why you think it’s false, I would hesitate to tell someone to be smarter…as what they are saying is in fact true.
The only ones who really take it on the chin are the other 29 MLB cities and their respective tax collecting entities at the local and state levels.
Deferred compensation isn’t deemed income until its paid out, meaning the pro-rata taxes paid for performing at every road game are, temporarily, avoided, on that 34m that would otherwise be divided up over those 81 games.
However, even the deferred payments ARE employee income, so, LA/CA/USA will still have their hands out as, to my knowledge, i presume the LAD are only incorporated as doing business in L.A.
@grnmtnytei — USA today is reporting that he’ll be legally allowed to avoid paying California taxes if he moves out of the state when the deferred money comes in. There are some caveats, like if he’s still playing games in California, but if he retires and moves somewhere else, there is no tax liability to California.
Like they have a choice. The ownership group is a baseball financial management service that’s not based in California. They only need to create on overseas office, which I’m sure they already have, and the us and the state of California have no jurisdiction on taxes on payments after he leaves the country. They have smart lawyers that knew what they were doing.
Which in turn makes him a tax cheat. Correct?
Bc when he gets it he may be a resident of Japan.
Are you saying it’s absurd to suggest that the US tax codes are written by, and deferential to the interests of, extremely wealthy individuals? And that prioritization for collection isn’t given to them? Because I have news for you.
Also, I don’t even think it’s Ohtani’s explicit intent. I think he genuinely deferred to help build a winner, and any tax benefit he may assume later on is simply an added bonus.
That’s not how state taxes work if you earn money in the state, you pay the state, no matter where you reside
Japanese taxes are really high
If he moves back to Japan, he’s going to pay a ton in taxes there
That is absolutely correct.
Quite a lot of retired baseball players move their residency when they are set to retire but still have money owed, that way they evade a big chunk of taxes.
This is the most cogent take I’ve read on it. Makes sense.
He has to pay the state taxes to the the state in which he is employed, not where he lives. Just because the money is deferred doesn’t mean it won’t be taxed by the state when it’s paid out. I love how envy and anger can cloud the common sense of so many people.
Balk, please spend 10 seconds using Google and find out you’re wrong
Not true, it’s the other way around, if you work in another state, but reside in another, both states can tax you. I’m a traveling practitioner and work in many states but California still taxes me because I own a home there. If he chooses to pack up and leave said state, he doesn’t have to pay a dime to that state as he is no longer a resident, and it was deferred. His actual payroll is the $2 million. Which is a tax dodge and well planned. But none the less a cheat!
The tax code is law, it’s not up to the whims of politicians to decide. Income is taxed based on where the money is earned. Baseball players pay taxes in every state they play in, every year. When Ohtani is no longer in California, the past will no longer matter, just as when his services were rendered no longer matters. That said, does anyone know anything about Japans foreign income taxes? I am completely ignorant on the subject, but it’s possibly worse than California+USfed, so he may not actually be saving money.
Anyways, doesn’t matter what state the company paying the player is based in, players are taxed based on their location.
100%
grnmt – How did you miss this exact same discussion the other day? Haha!
Ohtani knows what he’s doing, there’s a reason the deferred payments are over a decade. Not a coincidence! It’s the minimum period of time that allows for the payments to be non-taxable by Cali if he moves out of state before the payments commence.
• If you take your deferred compensation payments over a period of 10 years or more, those payments will be taxed in the state where you reside, rather than in the state in which you earned the compensation, possibly reducing your state income taxes.
Do you really think the Dodgers need the break now to compete? They aren’t lacking funds.
He has to pay them no matter what.
He won’t be employed in California anymore when he gets paid.
Good f the IRS
Donnie – You are correct, and it’s no different than traditional IRA’s.
Let’s say you earn the IRA income by working in California, if you retire in Texas or Florida then you don’t pay any state income tax on the IRA distributions. And traditional IRA’s ARE a form of deferred income.
Balk – NO! Just because someone is smart enough to know the laws and plan around them, that doesn’t make them a cheat … because they are still following the rules.
It’s crazy how people sometimes get criticized for using their brain!
No different than the companies who received millions in PPP funding even though they weren’t negatively impacted by Covid.
Hate the morons who make the laws, don’t hate the people smart enough to learn them.
Nah he still has to pay tax in Japan and it’s higher
Candy – If Ohtani had deferred nothing, it would have been the exact same $46M CBT hit each year.
You DO realize that, don’t you?
That if no money was deferred, he would have gotten a $460M contract instead of a $700M contract. And $460M divided by 10 years is $46M annually.
Its amazing how the money was not the main thing for him, in theory (yet he got the highest payday, in reality).
He was employed there when he earned the money.
They pay taxes in each state they play games in. So 82 home games, all the games vs SD, SF, ANA (and briefly OAK) so he’ll still play the majority of them in CA. It’s super complicated.
According to my friend Google top tax in Japan is 45% versus 37% in US. I don’t think saving on taxes had anything to do with it. Could have signed with Texas that has no state income tax if that was a big deal.
It shouldn’t matter when he gets paid the deferred money or where he’s living when he gets paid the deferred money. The deferred money is his compensation for when he played baseball as an employee for the Los Angeles Dodgers. So it should be taxed accordingly. (Right? I mean, if I was writing the tax rules it would be something along these lines…)
Ignorant – It depends on how you look at it. I’m very analytical so I thought this through when I was in my teens. It’s not about when you “earn” the income, but rather when you are able to “benefit” from the work you did to earn it.
On the flip side, let’s say Zack Greinke decided to retire today and live in Cali. Do you think for one minute that Cali wouldn’t tax his deferred salary payments from 2024-2026 despite the fact it’s getting paid by the Astros.
So, kingbum, you must hate the US Military and it’s soldiers as that is the largest benefactor of US taxes?
Tax “Dodger”…?
Fever pitch NO! He intentionally restructured his $46 million a year to dodge the California tax. He’s now allowed to take that money that was made mostly by the American economy and insert it into the Japan economy to bolster theirs. He’s robbing the American taxpayers. Of course that’s assuming he goes back to Japan where taxes are pretty high. But he could move to a country where the tax is very little. In no way am I saying it’s illegal but it should be and to me it’s a tax cheat. I’m glad it’s shining a light on how fraudulent that is.
What you don’t get, those 44m out of 46m will be able to be used to pay other players and or the cbt tax. So it does help them alot. If they pay him 46m a year, then they are getting less profit.
Higher taxes in Japan. He’d do better moving to Wyoming
Higher taxes in Japan
Why you assuming he is going to japan? He might move to florida or texas
This is the best answer
Florida or Texas? Don’t make me laugh too hard
That’s exactly what I said, but one can assume since that’s where he’s from, that’s where he may go. If he’s smart he’d go to the United Arab Emirates! Haha
Yes, it does. When players play road games they aren’t taxed by the state in which their team resides, but where their team is playing.
Yes. The law is very clear on this point. Ten years is the statutory limit on how long after the labor your compensation can be taxed where you earned it. His contract is designed so that each $68m payment comes exactly ten years after it was earned.
Does anybody here work for TurboTax??? I’m pretty sure you have to pay taxes, income taxes which is what this will be, in the state the income comes from regardless of where you live. Otherwise every player would “live” in Washington State and just work in LA. If what you and others is saying is true Couldn’t Ohtani just do that same thing now? I believe that he has so much money from baseball and endorsements that he doesn’t give a flying pigs a$$ about taxes. You and I care about taxes. He doesn’t look at the price of cereal at the store, he just throws it in the cart.
Lark: To my understanding you are correct. The tax on his pay is based on the location where he earns that money (which is why during road games those respective cities/states can charge him the “jock tax”).
Also to the best of my understanding, although I don’t live in CA, there is no legal way the CA government can force Ohtani to pay taxes on any earnings (deferred payments) after his contract expires if he moves to a different state/country. Whichever state he calls home during his retirement would then lay claim to his taxable income, unless it’s one of the few states that have no income tax, like Florida.
That is not what I am reading in tax law. Unless this is not considered income, which it appears to be in the tax law, then you pay taxes where the income is/was earned. It is very confusing and I’m not a tax attorney, but it looks like this obvious tax loop hole was closed long ago. Otherwise no athletes or movie stars would live in California or ever pay taxes.
IS-o-a-b;
Unless you were writing them for yourself. Your personal monetary gain.
Wrong. He will have to pay taxes on any money that he earns. Like most rich people he will pay a person to find ways to lower his tax liability. I don’t know why you are all so mad. The last time you were all faced with a huge “tax cheat” you elected him President!
Doesn’t matter where you live. It matters where the income is earned.
That is not the tax law.
Lark…deferred income is not the same as payroll. You don’t need to work for turbo tax, just basic tax law. I’ve lived in California, but travel in healthcare, been doing it since Covid, I file taxes in all the states I take a contract in along with California state taxes since I own a home there. I’ve filed my own taxes each and every year. Where ohtani asked his money to be put is more like an IRA.
Lark, perhaps you are right and I misread the way that deferred money is treated. I guess the key would be determining exactly what the deferred payments constitute for tax purposes, which is beyond my scope of knowledge.
If you get paid 68 million dollars from a company in California it will be considered income. Deferred income is still income.
Or the Mariners. Lots of other states have sales tax instead of income tax.
Seamaholic….bingo!!
How about Seattle! No state income tax and less hill williams.
I wouldn’t say “cheat.” It’s 100% legal.
There is a specific entertainment tax. Musicians pay it too.
Ah, how I would love to be that innocent about baseball players again …
No, not if they are deferred more than 10 years. Then the state and country where you earned the money cannot collect. It is a firm law in the U.S. Rarely taken advantage of because 10 years is a long time and money loses a lot of value in that time, but for a $70m salary it’s totally worth it. And Ohtani doesn’t lose any more to time than he possibly could, as every payment is precisely 10 years after it was earned.
About the same as U.S., and celebrities get a lot of breaks. He’ll pay very little.
Nope, California won’t get a dime if he no longer resides there. Period! Ohtani wanted his dollars to be invested, so it accumulates. They aren’t paying him the 68 million they’re paying him 2mill, they are putting it away for him. Two different things. It will be taxed, but only by the place he resides
No that is false. You always pay to the state you live in (although you may have to also file a return in the state of employment in a few cases). In any case, there is a special rule for deferred income that says that after 10 years of deferral the state you owe it to (where you lived when you earned it) can no longer collect. Same for federal taxes. If he moves to Japan after his career he will owe zero taxes anywhere in the U.S.
Uncommon…I don’t need to Google anything, you’re wrong, you probably don’t even know what to google! Haha. Unless you have some input go sidebust somewhere else.
No he does not.
Not necessarily. Japanese tax laws are very beneficial to celebrities. There are loopholes galore. And that assumes he actually retires to Japan. Could easily go to Monaco or some other tax haven, at least officially.
On the $2m each year yeah. Not the $68m.
Yes that should be the case. It’s not.
Or Monaco, where the European tax cheats go (don’t know if it’s still a thing or not).
Nope. You generally pay the state you live in.
The Dodgers are going to use insurance money from Guggenheim Partners. “They’re playing a hedge on interest rates,” The hedge involves the tax treatment of the funds. If the Dodgers were to, say, hold treasuries to fund the Ohtani’s deferred contract obligation, they would have to pay taxes every year on any interest received. But if a company like Guggenheim holds treasuries in conjunction with an insurance policy, the interest income grows tax-free. Hear that everyone!! Tax free! Only Ohtani will have to pay taxes on where he chooses to reside.
In most professions including baseball, you can’t help but live in the same state you earn your money (actually, MLB players pay taxes in every state they play, amazingly enough). But it’s very impractical to chase after people if they’re being paid deferred income long after it was earned, so the law sets a 10 year limit.
After 10 years California is not permitted to collect tax on it. That’s why each payment of $68m to Ohtani comes precisely 10 years after the year it was earned.
Legally, there’s nothing they can do. He found the loophole. They can change the laws but it won’t affect ohtani
Why does it make him a tax cheat? He’s not cheating anything. This is what our laws are… He is simply taking advantage of the laws our silly government puts in place
Second time you’ve been wrong on here grnmtnyeti… Stop talking about this contact. Your personal opinions have been proven wrong multiple times. You can even turn sportscenter and see you’re wrong
It does seem likely…but coastal areas and islands being far less desirable in the mid ’30s is also fairly likely
@bbatardo No, no, no. You think ANY government anywhere on Earth would allow this sort of tax evasion?
@Balk “Unless you can prove god DOESN’T exist, don’t tell ME he doesn’t exist!”
Sigh.
@grnmtnyeti As the tax law stands right now, Californian politicians can’t do anything about it. The Dodgers will be taxed on that money, but Ohtani won’t pay Californian income tax if he is not a resident of California. Of course, I wouldn’t be surprised if they tried some politician witchcraft to change that.
@Balk Tax evasion is one of the most virtuous things you can do these days. Any effort to keep money out of the hands of corrupt war criminal politicians is a positive good.
State tax is based on where the player (worker) lives, not where he used to live (work) so if Ohtani moves to a no-tax state or back to Japan full-time the tax experts say he pays no tax on the $68M per year. (During the season a player pays California tax – for example – only for the games he plays in California and pays tax on road game earnings in that state or country.)
But the other clauses are more concerning and I’m told they are raising ire as well as eyebrows. Notably that the deal in effect protects jobs of Walter and Friedman — giving each of them leverage over the owners and team. Is that best for baseball? Is that legal? How much are these revealed terms hurting reputation of Ohtani?
But this will be an unavoidable iceberg in 10 years. Team could fire Friedman to get rid of Ohtani obligations but loss of Walter and Friedman doesn’t trigger Ohtani leaving just gives him option to do so. Dodgers partners may want their own tax lawyers to examine their future obligations.
Has this deal so caught the attention of the US Congress that baseball exemptions can be dissolved? Has this changed relationship of baseball to fans? Will CAA face sanctions/lawsuits from fans, cities or states losing tax income because of this deal? Can an injunction stop Ohtani from playing?
Don’t presume he returns to Japan. He may move to no-tax Florida and set up a baseball academy…
No. He makes $70 million a year. The fancy baseball accounting making it look like less is just that, fancy baseball accounting. His earnings (income) will be $70 million a year with $68 million deferred by 10 years, that’s all. The CBT and other numbers are irrelevant except to luxury tax dodgers, which the LA Dodgers will be. And let’s hope MLB transparently considers that and doesn’t approve other LA moves (trades, FA signings) until they’ve approved this mess.
Massachusetts taxes NH residents who work in Massachusetts
It doesn’t make him a tax cheat, it may make him smarter at avoiding ridiculous taxes though but he isn’t cheating. This is the system. The US could have done it differently. Why would anyone pay more than the law requires them to?
If California changes the law before Ohtani signs the contract they could have a clause that affects individuals attempting to defer more than $10 million per year. The targets would be few but it would target Ohtani shenanigans.
Balk – First of all even though it’s likely he will move out of Cali after the contract, we don’t know that for sure yet. If he likes it there enough he may stay and pay the Cali tax, as he could certainly afford it. I don’t like making assumptions.
But if he does move his primary residence out of Cali, assuming he already lives there at least 6 months out of the year, it’s the Cali taxpayers he’s affecting mostly … not all American taxpayers.
Cheating is defined as breaking the rules/laws, he is doing no such thing. He’s simply using intelligence.
Think of it this way, if you’re an American and you can legally get dental work done for thousands of dollars less in Mexico or buy a car for thousands of dollars less in Canada, why wouldn’t you do it? It’s simply not logical to pay more money when you don’t have to, even if you are wealthy.
And I wouldn’t be surprised if Ohtani donates quite a bit to charity.
Do you really think there’s not an entire class of people who use accounting tricks like this all the time?
Like how Amazon somehow doesn’t make a profit, so it can’t be taxed?
Cmon be smarter (which is on par with do better of smarmy douchey sayings)
I worked as a tax accountant out of college. He would likely go to court for this because California cares about where you “earned the income” not when it is paid. If a contractor from Missouri is hired to build a skyscraper in LA than the work was done in California and will be taxed in California even if there was a loan to pay the contractor after he went back home. It is idiotic and he would lose in court if he genuinely tried to evade paying taxes on the contract.
njbf
“Do you really think there’s not an entire class of people who use accounting tricks like this all the time?”
Like, for example, I don’t know, say, the owners of baseball teams?
Balk (& everyone else): I found this document which explains taxes on income in CA – a cheat sheet, if you will. The [legal] question is whether or not his “deferred income “ will be considered deferred compensation as illustrated in the tax code.
If it is, then he won’t pay CA taxes on that money. My initial impression is that he won’t if he moves, but I am no tax expert and I very well may be wrong on my legal interpretation of this.
The other reason I believe he won’t is that he likely has expensive attorneys that have whatever income is being deferred set to an investment classification which would, by definition, be deferred comp.
Anyway, it may provide added insight into the discussion.
edd.ca.gov/siteassets/files/pdf_pub_ctr/de231p.pdf
@Balk, because the $ is invested here in the US so when he takes the payment it will be subject to US Federal Tax. I’m not sure as to the State Tax laws but I’d assume they re similar.
The situation is similar to someone living in the suburbs of a big city that has a city tax where they work but not where they live. They are taxed city taxes just like residents despite not living there.
@Balk, if his contract is structured in a way that breaks no law, how is he cheating? Structuring a contract or any business dealing to ones advantage is not cheating if it is compliant with all laws, rules, regulations, codes laid out.
Some retirees opt to retire to States with no State Taxes on retirees. That is in no way cheating, it is using the rules to their advantage and perfectly legal.
@Candy, I’m sure if there is a tax advantage it was viewed and mentioned by someone in his camp. I agree tho, I highly doubt it was deliberate.
I suspect 2 motivations here, obviously it benefits his team. It also bolsters the mystique and draws attention to Ohtani. Which nobody can deny, as it has clearly kept his name in the forefront even after it was known which team. Ultimately I think this bolsters the already booming market for his endorsement revenue. The man has been leading MLB for the last few seasons by a wide margin. I think this only bolsters that.
The other factor is that Ohtani is not stupid. He understands the implication for his reputation, his HOF candidacy, and his status as a baseball great are going to be judged, in part, by whether or not he won the WS, and how he performed in postseason play.
@grnmtnyeto, the issue here is the principal $ for the deferrals is invested with a 3rd party each season at the time of deferral. The Dodgers will annually be paying the $2M AAV and said principal. The collection of the deferred investments and the accrued growth is collected by Ohtani, it is not a check from the Dodgers.
So it very well could be that he avoids CA state tax if he no longer resident their. It would belike a retiree moving to a different state and the new state of residence is where the state tax burden is applied. There could be a difference here where the state of CA will apply incone tax to the principal that was invested at time of each deferral. The growth on that $ seems like it would be taxed pursuant to where he resides at the time of collection.
That sounds too good to be true. Since that money is earned here I can’t see that.
Persky
“That sounds too good to be true. Since that money is earned here I can’t see that.”
Why, besides the weather, do you think old people move to Florida?
They earned their money in wherever, they invested, and now they are receiving the money in Florida
Do you think that Japan does not have taxes?
Jackstrawb…I would never tell you God doesn’t exist, imho He does exist.
Question – does Greinke’s salary deferral count against the 2024-2026 astros CBT hit?
CatuliCarl…I agree, and believe in less government and less taxes. I don’t believe in uneven application.
Fever Pitch…my “cheating” statement is out of the ridiculous frame work and work around of the tax penalties he would be paying if he were to be collecting $46 instead of $2 million in payroll. To me that’s a dodge, and is obviously legal but unfair. Name a superstar his caliber making $2 million a year. I can understand maybe splitting and deferring half of that salary but to me that’s excessive.
It has to right?
So 10 years, $610 million with a salary of $31.5 million annually from 2024 through 2043?
While the military is a necessity the US needs to stop playing world cop. What’s going on in Ukraine and Gaza is none of our damn business and no US taxpayer money should be involved. NATO costs us 2% of GDP which is 460 billion dollars, we don’t need it. Rest of the world will cry about it but the US citizens and the US don’t need it.
Ohtani and his agent and I’m going to assume tax specialist or accountant have put together the best star player contract of all-time. I got so much more respect for Ohtani after this, he knows how to keep his money.
RE kb
“While the military is a necessity the US needs to stop playing world cop. What’s going on in Ukraine and Gaza is none of our damn business”
Similarly, my house has never burned down, I’ve never needed the police or our criminal justice system, or emergency medicine
Thus, I shouldn’t pay for them and I definitely don’t receive any indirect benefit from them
@Balk, the Dodgers have $46M counted against the luxury tax each year for Ohtani. That is because they are paying him $2M and roughly $44M to fund the deferrals annually.
The Dodgers will never pay $700M to Ohtani. They will pay him $20M directly and fund the deferrals with roughly $440M. The other $240M will come from whatever 3rd party the $ is invested with to accrue til date of collection.
There are rules per MLB and the CBA on how and when deferred $ is funded. People are acting like this is something new and some kind of loophole. Deferred contracts have been around for decades, MLB is quite familiar with how to account for them.
theringer.com/mlb/2023/12/12/23998355/shohei-ohtan…
I don’t know why you feel like this is relevant…. but the argument is that the funding is a hedge against a full-scale war that the US will be involved in. We already know how catastrophic those Geopolitical issues can be in regards to making things more expensive, so I’m 100% in favor of the US giving financial assistance to our allies.
It isn’t like the US is the only country providing aid either, our peers have also stepped in. It’s just the right thing to do.
That is not what i am reading in tax code. Taxes will be taken out of his pay check just like they do yours. He will pay taxes where the income is earned.
Tigers – Right you are! That’s why I’ve told people Devers didn’t really sign for $314M/10, he actually signed for $292M/10.
This isn’t true. I live in Wisconsin. My company is based in Minnesota. I pay taxes in Wisconsin.
He can’t evade taxes, either in CA or federal. He’ll just be paying them as a nonresident. Lots of people who don’t live in the USA have to pay taxes on US earnings.
Even a pinhead gets it!
Pinhead…Its being invested, like an IrA. So it’s not a normal paycheck. Wherever he chooses his residence is where the tax will be collected
It’s not evading taxes, how are people so clueless.
You get taxed on what your income was for the year. Hes not getting $70 million this year but somehow paying taxes on $2 million.
If he’s living elsewhere in 2040 or whenever he retires, he should get that places tax policy. It’s not cheating or evading when you are literally following the letter of the law.
This isn’t like hiding money he already earned in a Swiss bank account. It’s not shady at all.
People are being willfully ignorant on this site because of their team bias, and they’re angry that they did not sign Ohtani
That’s exactly it, Uncommon. They’re looking for any reason to hate on the guy.
Dodgers, being the employer, and the payer, will be removing taxes as required by law, on any wages earned by their employees. Won’t matter that its deferred. 401k is the employees money, so where they live when they take it matters. It was their money. This is money that has not yet been paid by the Dodgers to an employee. Payroll taxes will apply.
Agreed. It’s this image of I only care about winning and not the money routine of his.
Of course you cared enough to make sure you’d be the first athlete to sign a contract starting with a 7 you deferred almost all of it to make it happen.
But no, you only care about the winning. Sure.
Teams get old really fast. And of course DH is locked up.
It’s not the lock you think it is.
What he is doing really is insane. I always say with florida and texas having no state tax plays should take less overall but clear the same amount in the end and do this so those teams can sign more players. Players get taxed 13% more in canada and California then Florida and texas for example
Florida and Texas might not have income taxes but they have higher property taxes. Unless you are living in an apartment, those taxes still get you. Not to mention sales tax
Florida is only marginally higher in property taxes than CA for percentage. But, Florida’s homes are valued lower overall, thus the taxes are actually lower. Moreover, Florida doesn’t have a school tax like NY and CA either.
It’s undoubtedly cheaper in Florida than CA. Consider also all the other costs which are markedly cheaper, like food, retail, etc.
Lol, California sales tax is 7.25%. I hope you weren’t seriously using that as an example.
When you make millions of dollars it’s probably okay to value where you live over saving a little bit of money.
Yeah but they got those Zika Virus mosquitoes.
Did he sign in Colombia or Venezuela?
Folks are speculating that after his playing career is over he would leave CA and his deferred money would not be hit with income taxes, I have no idea how that works or if there is any truth to that. Income tax would 13.3% for Ohtani in CA, and no income tax in several states.
What about insurance in FL vs CA? The cost of living may be higher in CA than FL, but the income in CA is far greater than the income in FL
Everyone is going to see 2 things- 1 pitchers are going to pitch differently to him now that he is not pitching, & mind you all that they have been learning how to pitch to him..
2 he will likely never pitch again, and if he does, it will not more than 5-8 starts next year if he does at all and he will not be anywhere near as effective as his mediocre, nine win season performance… worst contract ever. Like the guy but he’s not Aaron Judge & Garret Cole in 1 person. He’s more like- who do you think?
17iq
“2 he will likely never pitch again,”]
I’ll bet you $70,000 he does pitch again
You in?
$700 mil. Dolt. He’d better be pitching, again. Filihok, good morning. As you know, not a fan of the 2 way player angle (on the pitching side). IMO, he’ll excel on the mound, but to make that accommodation (most likely by doing a 6 man “bro”tation), it will adversely effect the performance of rest of SP staff.
CYJ
” As you know, not a fan of the 2 way player angle (on the pitching side).”
I do not know that
“IMO, he’ll excel on the mound, but to make that accommodation (most likely by doing a 6 man “bro”tation), it will adversely effect the performance of rest of SP staff.”
In baseball, as in most things, everything is a trade off.
The Dodgers will get Ohtani’s above average innings at the cost of using an extra starter that would likely be in AAA otherwise.
There’s not many teams I’d expect to squeak more extra value out of this situation than the Dodgers
I’m not a contract lawyer, but doesn’t the fact that the contract doesn’t specify which player Ohtani can base his opt-out on means it’s unenforceable? How the heck is a judge supposed to enforce that? The team and player could simply make up a name.
It doesn’t say player.
Sean- the specific language may be in there, it probably just wasn’t and probably never will be revealed. If it’s just one or two specific players and the names come out it cause some problems with his teammates.
The rich get richer and we look like idiots supporting them
I look like an idiot either way, so, par for the course
This isn’t the example that shows why the general public is dumb. Your inability to pinpoint a true culprit may be, though.
Curly was the smart stooge;
Bingo! For those that don’t like the setup of mlb & what these owners and teams do, stop supporting them! Stop watching, listening & going to the games! When they all draw 10,000 or less and loose money hand over fist, they’ll change things then.
It’s Ippei, his translator/BFF
It’s absolutely circumventing payroll. No other way around it. Laughable.
lol yeah, I’m sure you’re an expert on the matter.
I mean they’re going to pay for it when they’d start giving Ohtani $68m a year for ten years, so who cares? Even with inflation, that’ll be a huge cost
Which is legal in the new CBA
Freddie – Not in terms of the Lux Tax Payroll.
The Lux Tax Payroll is completely unaffected, $46M a year whether he defers or not.
Good for Ohtani for holding the Dodgers accountable. He obviously is prioritizing winning. The money certainly won’t hurt though.
Yes. Congrats on finding a loophole on the CBT. We now know why he kept the negotiations hush, hush.
What a guy!!
Is it a loophole though? Bitter much?
It most certainly is a loophole. Blatantly. That said I applaud anyone who can figure out how to legally circumvent the spirit of the rules in virtually any circumstance if it gains them a competitive advantage and doesnt result in enforcement actions – thats called just being smart. So i’m not mad at it. But dont pretend its not something that it is.
How is a “loophole” specifically written into the CBA? LOL
There are NO loopholes in anything financial. There are rules and laws that normal people can’t access and rules and laws for us normal people.
That’s it. Again, there is no such thing as a loophole. That is a nonsense term used by politicians and such when they are exposed.
Ohtani and LA used the CBA exactly as it is written.
Go to Jeff Pasan’s Twitter. He posted the deferred payment rules. It’s legal.
Yeah, regardless of whether you think it’s good or bad, it is a loophole.
lol bitter Angels fan
Pretty much the entire Nationals roster was on deferred contracts in 2019. Max Scherzer’s entire $35M salary was deferred that year. His “seven” year deal with the Nats pays him from 2015-28.
This isn’t the nefarious scheme you’re making it out to be. A 97% deferral on a contract lacks precedent, yes, but Max deferred 50% of his then-record $210MM contract.
No one seemed to cast Scherzer as an evil mastermind villain.
The voice of reason amongst the sea of bitterness and ignorance…
True.
Really if any team other than the Dodgers or Yankees did this the furor would be a fraction of what it is. Maybe the Mets nowadays.
Had he done the same contract to stay with the Angels he’d be lauded as trying to help the team and Trout win.
People get pissed when the super rich in any circle find ways to skirt rules and become even super richer.
@Steve, you are absolutely correct. The deferral language has been around for a long time, just that most people were unaware of it and/or the amounts weren’t as staggering. When news first broke it was 10 years/700 million, Then a couple of days later, 680 million of it is deferred, wtf.
A commenter in an earlier post suggested that what ever team signed him, would then be working for him. With this additional contract language coming out, it doesn’t is that for off.
Is Ohtani becoming the LeBron James of basketball, essentially telling ownership who he wants to play with?
I think it’s the fact that on 700 million dollar contract, an insane number, hes getting paid the same as Daniel Hudson for the next 10 years. If it was a 10 for 550 and 10-15 or 20 million was deferred every year, nobody would have cared.
Except the deferrals in his case quite literally are almost higher than Max’s full contract.
The dodgers saving even more money than some teams entire payrolls.
If it was only half I think it would be way more palatable in my opinion. But you don’t know and I don’t know so it’s dumb to even use that as an argument
Steve
You are missing a large piece of context
The Nationals and Scherzer signed that deal in 2015, and was one of the reason in 2016 they changed the tax system to what it is now. In 2016 it became the system due to these types of deals.
Do they though?? Half if the country elected a huge fraud and tax cheat President. He was literally elected while settling a fraud case for a fake university that he set up and half the country didn’t care even a little. I think poster nailed it when they said that they are sports hating this dude when Scherzer and other deferred salary. I don’t think most of these posters understand that Ohtani isn’t even close to the super rich. The super rich write him a paycheck. A large paycheck, but you see what I mean.
50% is definitely a lot less than 97%
105 mill is significantly less than 680 mill
Also I don’t think scherzer was attempting to avoid paying taxes the way ohtani appears to be doing.
People usually don’t take kindly to millionaires billionaires evading taxes and paying “their fair share”.
That came later…
You really need to turn off the TV larkraxm.
Nah, it is nefarious and unfair. The fact that people didn’t know about Scherzer’s contract then didn’t criticize it doesn’t change the fact that the Dodgers are getting to eat their cake and have it too here.
This comment section is CRAY-CRAY !!!
I can’t forsee any situation in which the Dodgers aren’t competitive.
Have you seen them in the playoffs?
The fact they got into the playoffs means they’re competitive. The playoffs are a crap shoot, and sometimes you shoot the crap
How about, a few years, in when they’ve missed the playoffs a couple years in a row because of underperformance so they tell him they want to reset their CBT tax and they plan to take a step back for a season. It worked for the Mets to get Max to waive his no trade clause.
It’s as much an out for the Dodgers as it is for Ohtani.
You’re implying they are competitive? If you call a decade of losing competitive, then yeah, sure.
Hwm
Imagine knowing so little you think the team with the most wins over the last decade has had a decade of losing
So unless you win the world series, you’re not competitive? How does that work?
It’s probably his pal/translator Ippei! Angels fans loved that guy. Dodgers fans will too.
Looks like this post will go over 1k comments as well
That a doozie of extra conditions?
The contract is gross and makes me root even harder against the Dodgers. From hating them 100% of the time, to now hating them 110% of the time! Haha. Seriously, they should have advertised it as a 10/460 with deferment. Also, I am worried this is the start of the ‘super teams’ which helped ruin basketball. You’ll have the big markets hoarding talent as they take larger deferments, while the smaller markets will suffer. Time will tell.
This has been going on for a good knows how long. Every team has players with deferments. Dodgers just did it at a larger scale and everyone is upset. But the RedSox are still paying Manny. Mariners are still paying Griffey $3.5m a year. Chris Davis still getting $14m a year from Orioles and we all know about Bobby Bonilla day.
Can I still hate the Dodgers but acknowledge this is a fair point?
Larger scale is an understatement, especially at this scale… deferring 680M of 700M
The problem with this logic is you are valuing $700 million in today’s currency. The $700 million reflects the value of ~$465 million after 20 years of inflation.
It was posed to the media to be clickbait and it succeeded. If the news had reported Ohtani signs 10/$465 million, there would be far fewer comments on all of these articles. He’s effectively going to earn $52 million in 2034 and that $68 million is going to devalue to ~$40.6 million by the final payment in 2043, if we were to assess this in 2023 dollars.
No luxury tax in these instances.
Before 2016 the current, (much more effective) iteration of the tax didn’t exist.
This was seen as a problem, that’s why the 2016 version was made. Since then it’s been much different
My comparison was KD joining the already great warriors team. It benefited us in the Bay Area, now it’s breaking the other way.
5TUNT1N—the difference is the warriors had almost all homegrown talent and then added KD to the mix. The dodgers are buying almost everyone. Gross
Ohtani, the Lebron James of baskeball.
This has been increasingly happening for a few years now. You are just now noticing because this is the most blatant?
And who gets to determine if the opt out clause gets exercised? Ohtani? If he isn’t happy with the players they acquire, he can take his ball and go home?
Exactly. Opinions are like a–holes, everybody has one.
Wow
I love baseball, I hate the competitive imbalance of the system.
Al C
More postseason upsets in MLB than NBA or NFL.
I don’t know much about hockey, but I know decades ago another “great one”, Gretzky, took a lot of deferred money in a contract. Those who do not study history are doomed to grouse when it repeats itself.
Maybe mlb should no longer have a season and just have a playoff tournament? Playoffs are the only competitive and unpredictable aspect of MLB baseball that remains.
Jeremy
I just don’t see it that way. I look at one game at a time. In baseball, a team like the Colorado Rockies still beats a team like the Dodgers at least one out of every three games.
The worst teams in the NBA and NFL are less likely to win against better teams than that. So if you are a fan going to a game or watching it on tv or a device with your faamily or friends, the utcome is up for grabs on any particular day.
Baseball is competitive and unpredictable compared to other major professional team sports. Are big market team at an advantage over small market teams? Yes, generally. But it is still a fun game to watch.
Baseball is only predictable because of terrible ownership. Good ownership makes baseball better for everyone. Terrible ownership puts out subpar rosters for a decade at a time, while pocketing money, thus taking away all hope of their fanbase, who are then left to fervently search for excuses as to why their team sucks for decades.
More crying incoming.
He missed the last month of the year with an oblique injury. As a pitcher, he will miss all of 2024.
There is more than a reasonable chance he will be the reason for not building a competitive team. And when the contract is over a the Dodgers have to pay 700 million dollars, there is a great chance he’s the reason the Dodgers will have a hard time building a competitive team.
I hope he falls flat on his face.
I have to admit, to me he’s absolutely less likable than he was a couple weeks ago. I don’t hate the guy and I’ll give him his due as an absolute monster, but his “rules” for teams, and all the pomp and circumstance of his “decision” when I don’t think this was ever much a decision at all, is going to make him less appealing overall. He knew, and the Dodgers knew all along. That’s why Roberts was so flippant in violating those ridiculous terms. I think 98 percent of us all knew he was going there as well. The unprofessional clowns like Heyman, Nightengale, etc. made this what it was. This whole thing screams egomaniac just like when that clown LeBron did this, and I didn’t really think dude was like that. Nothing personal, but I wanna see him do bad just to watch that insufferable fan base panic.
His shtick has grown tiresome.
I was rooting for hi, if this was a ten year 450 million dollar contract. I would be rooting for him.
But is 2 million a year is crap. It makes a mockery of the system. It’s not cheating, but it is absolutely stacks the deck.
I don’t blame the Dodgers, I blame him.
“If anything, the contract is less about circumventing the luxury tax and more about artificially tamping down the team’s actual, bottom-line payrolls from 2024-33.”
Why do you keep saying this… When Ohtani and Co themselves say it outright, in which you highlighted.
“Ohtani’s agent, Nez Balelo of CAA Sports, tells Verducci that Ohtani asked him early in the free-agent process about whether it was possible to defer the majority or entirety of his salary in order to give his club more present-day payroll flexibility.”
Stop saying it’s about anything other than this when all of them say outright its for aquiring more talent
And then you Googled the value of Guggenheim and it killed your fantasy. This isn’t Arte Moreno’s mom n pop shop
Zachary -did you ever stop and think that all of his “rules for teams” was perhaps an attempt at preventing exactly what happened with the whole Toronto fiasco? I commend him for the way he handled it and that he truly didn’t make a big spectacle out of it.
Oh please, you commend him? Yeah right Skip Bayless. He could’ve deaded that Toronto nonsense early, but he let it play out because it served him. That fiasco was created by overzealous reporters who would rather be first than right, but it certainly wasn’t helped by him or his team. Again, I never said what they did was illegal, but that contract and the way he went about it all, won’t gain him any fans. You commend him. Lol. Gimme a break.
Halo
If you are an Angels fan, was there ever a scenario where you would be rooting for Ohtani and the Dodgers to win it all and humiliate their cross-town team that failed to succeed with Ohtani, Trout and Rendon as their highly touted “big three”?
Now Ohtani is going to be rich and happy and I don’t mind if you root against him to do poorly. That’s what fans do. Just don’t root for a guy to get injured, just that they suck on the field but are otherwise healthy.
I don’t believe that Halo is hoping for injury, just very poor performance.
I mean, the Dodgers are always fielding a competitive team, but this puts in writing that they have to field a playoff team. Ohtani is definitely chasing rings, and this team has what it takes to get some.
What I wonder now is what happens if the Dodgers get new ownership, does that trigger an opt out?
It does
This is why he’s no longer an Angel (although it might not have mattered). No way was Arte Moreno going to let a player have a clause that holds him responsible for fielding a competitive team.
That and we don’t have a President of Baseball Operations.
Or a single assistant GM.
We do have several execs whose only qualifications are being Arte’s friends.
Can’t figure out if that’s why we suck or not. Hmmmm..,,
I wonder if the companies that endorse a player apply pressure for him to play in markets that give them more exposure? How can a small market team ever really compete?
Wait I heard the Dodgers are rebuilding.
Obviously Shohei is serious about playing for a team committed to winning…
Dodgers are ruining baseball!
How are Dodgers ruining baseball?
They are not hoarding all the champsionship flags!
They are not playing dirty on the field!
They do not have the top payroll even if you treat Ohtani as getting $46 million cash per year or even if you falsely counted it as $70 million cash per year that obviously no team offered.
Neither the Dodgers nor Ohtani are ruining baseball. No other team owner nor the players union has spoke out against this. No reputable economist has spoke out against this.
Do you decline to take legal tax deductions because you think it will damage the U.S.’s reputation?
“No other team owner nor the players union has spoke out against this. No reputable economist has spoke out against this.’
Fans are pretty important… All those other things you mention are dependent on them
I agree that the fans are the most important stakeholder. But they also are the least vested and least educated.
Why does that matter?
Isn’t the customer always right?
Chris Russo spoke out about it.
If the Dodgers sign Yamomoto for $300mill I betcha there will be more hate for the Dodgers. This will make the Gay Nun Parade look like a day at the beach.
Russo is a Giants fan and I doubt he’d be as angry if Ohtani accepted the exact same offer from them. Which he did recieve.
Still pissy about not winning the eternal 2020 postseason, are we?
C’mon guys, give this CBT hit “in line with expectations” garbage a rest. I’m not aware of y’all treating any other contract as not really the amount that it is – in this case 700m – and devaluing it as the value of present day dollars.
Re: Kelland:
“C’mon guys, give this CBT hit “in line with expectations” garbage a rest. I’m not aware of y’all treating any other contract as not really the amount that it is – in this case 700m – and devaluing it as the value of present day dollars.”
Here’s one of many FanGraphs articles, this one from 2016 discussing present value
“On Saturday, the Orioles agreed to re-sign star first baseman Chris Davis, and the price tag was staggering given his limited market: $161 million over seven years. Except, they aren’t really paying him $161 million over the next seven years; as part of the deal, the Orioles have deferred about a quarter of the contract, pushing $6 million per year of his annual salary into the years after the contract has expired, and pushing some of it way into the future. Under the terms of this deal, Baltimore will now be sending Davis checks for the next 22 years, with the $42 million in deferred money being paid out from 2023 through 2037.
So while the $161 million number is a headline-grabber, the actual value of this deal is quite a bit lower than that”
blogs.fangraphs.com/the-value-of-deferred-money-in…
Another from 2006
“Present Value
by David Gassko
November 27, 2006
Damn. Eight years, $136 million? For Alfonso Soriano? What?
Those, approximately, were the first words to come out of my mouth after hearing about the Cubs signing the soon-to-be 31-year-old slugger. After a few offseasons of fiscal sanity, owners flush with cash have decided to bust their wallets open and throw money left and right. Soriano’s contract is the biggest signed since the infamous 2000-01 offseason, when five players—Alex Rodriguez, Derek Jeter, Manny Ramirez, Todd Helton, and Mike Hampton—all received nine-figure deals worth a combined $863.5 million.
So damn. That was my initial reaction. Then I asked myself, well how much did he really get?”
tht.fangraphs.com/present-value/
Don’t assume that all of us are as ignorant as you
We are not
Filihok, I was commenting on how MLBTR has leaned-into saying this contract is not worth the 700m in current dollars. Bravo for finding two fangraphs articles, find any MLBTR articles? I would not be surprised that they might exist, but my point is that Ohtani will receive 700m, not the league-arrived-upon future dollar value I. 2023 dollars. And on that, funny that the article mentions the Union value being less than the League as if to say ‘see, this contract is not even worth 460m’ – which elides the point the the union will always undervalue future dollars compared to the league.
Ohtani will “really get” 700m. As you were.
Kellend
You’re getting muted, so don’t brother replying. You’re either completely intellectually dishonest or you don’t have two braincells to rub together
Either way, I have no desire to ever come across your thoughts again
Looking at the present value of contracts is absolutely the right way to do it. If MLBTR is late to the party, better late than never.
If your point is that Ohtani will receive $700 million
1) no [crap]. No one is saying otherwise.
2) that just shoes your lack of understanding. Don’t pay your next credit card bill for 10 years, then give them whatever amount was due and tell them, “you still got your $577.43 (or whatever)”, and see what they say.
Or maybe your work to hold your paychecks for a year, then you “you got your money” when you complain.
Now, off to oblivion with you
What if the Dodgers had given Ohtani $375 million in the first year and then $10 million per year in seasons two through ten, so they only exceed the luxury tax the first year?*
Would you guys still be whining? If so, write your favorite owner and players union rep and tell them all multiyear contracts must pay the same amount for each year, because there is no existing rule that requires that.
* Baseball teams that want to hire me as their paid consultant on this issue should feel free to contact me on or after Opening Day. LOL
Ohtani will be paid $700 million dollars. Nobody is disputing that. People are simply pointing out that the value of the dollar is almost certainly going to decrease over the next 20 years. Anyone who has a basic understanding of finance knows that this schedule of cash flows can be discounted to a present value. It isn’t a matter of Party A or Party B or Party C undervaluing future dollars. It is simple finance.
An employee who earns $100,000 today will earn more in 2043. They may receive a 3% raise annually until 2043, but ultimately the present value of their salary is $1.9M instead of the nominal $2.6M.
The penalties that existed pre 2016 for going over weren’t harsh like they are today.
Those deals were made at a time where there was little to no penalty.
2016 to now, those penalties are much stronger and have deterred quite a bit, much bigger deal competitively speaking, as those penalties effect, drafting, and acts to punish teams who go crazy on spending. I think it’s not a good comparison. Baseball players did steroids at one point, it was wrong then and it’s wrong now. The same goes for all this
I am glad to see NPV being discussed here, many of the posters here obviously dont have a good understanding of contract and trade valuation and present value is an important part of that.
I love this web site. It’s chocked full of information for the passionate fan as well as the pedestrian fan. I read it multiple times per day and pass on information to my Dad who’s not as inclined to participate in the site.
However, the comment section, is trash. I had no idea that the everyday baseball fan was so phuqqing ignorant. I am so tired of each and every comment section being hijacked by people whining, complaining, protesting, grumbling, complaining and griping
To each their own. I think the comment section is the best part of the website. The information you can get anywhere. When the best player in the world gets a 10 year 700 million dollar contract and the richest team in the land is deferring 97 percent of it to buy more players, it will stir the pot.
Dude, you are complaining about complainers. I love it!
I personally love the diversity of opinion snd ideas here. It’s better than most of the other baseball sites I visit. I almost never check the comments on a fangraphs article but always do here. I like that there’s not as much groupthink here as some other sites. Like any site theres trolls ansld annoying people but you can always ignore them or mute people or whatever.
Bloomquist
“I personally love the diversity of opinion snd ideas here. It’s better than most of the other baseball sites I visit. ”
You do you, but there’s a difference between diversity of opinion and ignorance of opinion
I see a heck of a lot more of the latter here than I do at FanGraphs
I mean, just go,read the comments on the first article about the deferrals in the Ohtani contract, About half of them are people insisting the contract would absolutely count $70 million against the Dodgers’ CBT number
That wasn’t diversity of opinion. Just a bunch of people who were absolutely sure about something about which they actually had no idea.
@receo This is nothing; you should see the comment sections in The Athletic. Of course reddit/twitter are lowest common denominator. But compared to those three, MLBTR holds its own …it’s just this topic has made people crazy.
They might as well add him to the Board and let him make trade/signing decisions for Dodgers
Sorry for those where hot stove is getting too exciting for them. The MLB monopoly is evolving Nothing unethical here. But the Dodgers have not come close to closing the gap with the Atlanta ball club without two more frontline starters and neither team had postseason success last year.
Go Ohtani, go!!!
I wonder if the state of California will sue to try and block this — I’m assuming the real incentive here is Ohtani leaving the state in 10 years to circumvent the current 13.3% income tax liability for working in California.
I doubt it. They collected $280 billion in tax revenue for FY22, I don’t think they would go through that effort to collect ~$90 million today, let alone from 2034 through 2043
If he’s not the pitcher he was before the 2nd TJS will the after 10 years part of the contract have been worth it? That’s for the next ownership group to find out.
It took him a full year after he came back from TJS to look normal at the plate and pitching…gonna be real interesting to see how he looks this time around after a second ligament replacement…
sac – And he’s also 5 years older.
Recovery is a lot harder for a 29-year-old than it is for a 24-year-old.
There is no way around it without mental gymnastics. The deal was done so that the signing team could less payroll implications and help sign other players. It is manipulation, whether Ohtani’s or not.
Steve, I’m confused about something–the opt-out terms. I’m assuming the player vests in his deferred salary as it would be paid out un-deferred. Plays one year, has earned $2M, is owed $60M deferred. 2 years $136M, If he opts out, he doesn’t forfeit his deferred payments for the years he’s earned.
This is why this guy is a winner!
Every day we hear commenters complaining that teams pocket their savings and don’t spend to improve the on-field product, and how this is terrible and bad for baseball. Now a team commits to using its savings to improve the on-field product, and it’s Meh because it’s the wrong team. This is a good development and good for baseball, people, take the W.
Well said, highfly.
HighFly
I would not go as far as you do. I do not think this creates any harm other than PR for people who do not understand that a dollar in 30 years is worth less than a dollar today. But if the rules required every 10 year contract to pay 10% of the total contract each of the ten years, there still would have been a team that paid Ohtani a boatload of money and after last year’s embarrassing first-round exit, I think we all knew it would likely be the Dodgers who additionally want to tap into the Japanese fan base to become a global business. For now, the owners and players all seem content to allow this and only the bloggers are uptight.
So a lifetime extension for Friedman
No, but certainly 10 years, within an evergreen provision that insurer he will be the highest paid executive in MLB.
This says nothing about anything. Twitter garbage repeated to generate clicks. Like this one that I am responsible for – how ironic.
“If specific change in Dodger personnel, player may opt out of contract at end of season the change occurs.”
Aside from missing a verb in the first part of this sentence (should be “if a specific change in Dodger personnel occurs”), does this mean Shohei Ohtani may opt out if there is any change at all in Dodger personnel?
Because I am pretty sure all MLB teams turn over at least one person every year, either among the players or the coaching staff.
This would give Ohtani an opt out every year of his contract.
Does he have to specify which personnel he demands the Dodgers not part ways with at the beginning of each season, with said preference to expire and require renewal at the end of each season? Is it an annual “renewal”? Does it matter if said individuals depart of their own accord, against the Dodgers’ preference?
I don’t get it.
There’s nothing negative about this contract at all no matter how much fans of other teams try to position it that way. Even the deferred money aspect would be beneficial to smaller- and mid-market teams by pushing off payments to the future. This is a case of a unicorn player dictating a unicorn contract and going where he wants to go.
If you’re a Dodgers fan, you love it. If you’re not, you hate it. If he would have signed with the team you root for, you would have defended this contract. Let it go and move on.
This contract is awesome, sorry. Yes, it’s a game changer in a lot of ways, and most likely will lead to some changes later in the next CBA, but kudos to Ohtani, CAA, and the Dodgers for even whipping this up. The reasons both given and speculated are most likely ALL true, but none should take away from the balls it takes to execute it. I’m impressed as should everyone tbh.
Obviously it skirted the agreements intent. Bypasses all the constraints the alleged tax increases were supposed to prevent. Tell us again baseball why Galarraga can’t be given his perfect game after getting 28 consecutive out’s save for a fumbled call by the umpires.
The 23rd perfect game since records kept denied by baseball Fast forward to now, and every year there is a new Ohtani exception made. Baseball is becoming a joke. Ohtani rules ! Change the drafting process, add tax penalties, then Ohtani hits the scene, and whatever he needs he gets. Too funny. Not really though. Give Galarraga his perfect game.
This makes it an even worse contract. If the payroll drops below 300 MM he opts out? If they trade anyone, must they ask their owner’s, eh player’s, permission to trade anyone? So, he is the GM now? I wonder if he gets the deferrals if he opts out or if he only gets the years of deferrals the years he plays.
It’s odd to me that the article assumes if Ohtani opted out the default is he wouldn’t get any of the deferred compensation. It’s deferred, but he’s still earning it during the contract.
That opt-out would be entirely worthless if there wasn’t any entitlement to a share of the deferred money. If you’re going to make an assumption about it, it’s much more logical to assume he’d get a pro-rata portion of the deferred compensation as opposed to assuming he can opt out if he agrees to forfeit all the deferred money and only make $2M for those years.
It’s like everyone all failed basic high school economics class. The deal allows for more payroll flexibility, so there is some payroll manipulation. There is literally zero tax manipulation concerning the CBT and how it’s calculated. None.
The Dodgers and Ohtani were creative about how the deal is structured but there is no one getting away with anything and no one not paying what’s owed. To say otherwise is ignorance.
The contract was wanted by Ohtani so in that way, there is no manipulation of taxes. However, if you’re arguing against the implications this has for a team like the Dodgers, you’re the one short on understanding.
The Dodgers are saving CBT of $24MM per year. That additional $24MM they’ll be spending above the CBT threshhold would push the team into the 42.5% surcharge bracket on top of the 50% CBTto begin with. The tax benefits are huge, even for a large market team.
Wrong. The contract is still a 10 year $460 million dollar deal, structured to pay out over a longer term, so money was added to reflect the money that would be lost by deferring. The ‘value’ of the contract remains the same, and that’s reflected in the CBT valuation. They aren’t saving anything.
Yeah with only Ohtani, Freeman, Betts, Smith, and Outman in their lineup, they have a long way to go in building a competitive team. I mean they only won 100 games last season. Can’t count on sneaking into the playoffs like that again.
It’s always nice to see rebuilding teams finally go for it.
They got manhandled by the Diamondbacks, so they went after Babe Ruth of our time.
I don’t understand how deferring 44MM/yr can be 68MM/yr in 10 years? That’s like a 50% return. A 10-yr T-Bill is like 4% and Ohtani’s getting 50% on his deferred money… wtf
1-Open up Excel.
2- Type in 44*1.0443^10
What you’re not considering in your 4% v 5% is a) the number for calculation purposes is 4.43% and b) Compound interest.
Thanks
Joe – You ever have to use Google Sheets? It sucks.
And that’s coming from someone who has used Lotus and SuperCalc.
I look forward to seeing his face as the Dodgers get eliminated again next year lol.
How sad are you that you look forward to someone else’s misfortune
The Dodgers failing in the playoffs each year following a 162 game season is very sad and we should all feel bad.
@Uncommon
Do you root for your favorite team when they play?
How sad are you that you look forward to the opposing teams misfortune?
Clown comment.
Guild
I think this was an ethical and fair deal.
But yeah I root against teams that I don’t like all the time. I never root for a guy to get injured, but happy to root for a player or team to suck.
You’re damn right I do when it comes to sports haha.
And this is called being a normal sports fan.
No one accused us of being angels, and no one said schadenfreude wasn’t part of the deal.
ISBD
There’s a reason I hate most sportsfans
Nobody cares what you think
Schadenfreude can only be experienced after the team you dislike falls flat on their face. At the moment, the Dodgers have won the Hot Stove league and are riding high. If anything, some but not all Dodgers fans are laughing at all the sour graping, whining, and anguished tears.
The Dodgers are timely in obliging every year.
Oh more deferrals
Plus, why if Ohtani gets hurt again?
Then What?
Then many commenting here will have a brief glimmer of misplaced happiness before descending deeper into their personal, swirling morass of hopelessness.
Ahh the Road Not Taken
Is there an opt out clause for repeatedly winning 105 games and then losing in the first round of the playoffs?
The problem with this whole story and past few days boils down to something simple—sloppy journalism and irresponsible reporting…..and for one of the first times this site is just as guilty as many others.
One day, there is a headline here that Ohtani is a Blue Jay…..moments later—well, maybe not. No fact checking—just a cut and paste from a tweet or something that someone posted. Next, we are following private jets to Toronto and dinner reservations by Blue Jays pitchers.
I refreshed the ESPN page and other sports outlets and none of them had a headline that Ohtani was en route to Toronto.
Next day, he signs for 10 years and 700 mill…. well—with some deferrals—but in haste to get it out there not a single person waited and confirm the financial deal that was made.
Simple math says “hey that’s 70 large against the tax”…..well–not so fast—instead, the sports fandom goes up in arms when the tax is is only 46+ and it is perceived that the Dodgers are screwing with the bottom line.
Well, if having to be the first to the finish line was just a little less important and getting the story correct was more important maybe the tortoise would have never beaten the hare.
The was so much thirst to get the story and be the Ohtani news breaker that the details became secondary and have sent everything into a spiral.
Sometimes the way to get somewhere fast is to go slowly—and in this case—getting the story right would have been much effective and we wouldn’t have had to see stories why the Dodgers aren’t doing anything shady.
Spot on, Mike!
the sports fandom goes up in arms when the tax is is only 46+ and it is perceived that the Dodgers are screwing with the bottom line.
========================
Everyone should’ve waited to find out the details of the contract. I assumed that there would be some deferrals, so other people should’ve considered it.
And once people knew there were deferrals, they **should’ve** known that the CBT would be less than $70M per.
Mike
“The problem with this whole story and past few days boils down to something simple—sloppy journalism and irresponsible reporting…..and for one of the first times this site is just as guilty as many others.”
You’re saying that MLB Trade Rumors posted an article about a rumor and not a fact?
I was out the day of the Toronto stuff, so I don’t know exactly how it went down.
There’s no problem with reporting on rumors. It just needs to be explicitly stated, “So and so said, ….”
Readers have some culpability here – they are mostly uneducated and lacking in basic reasoning skills. That makes reporting more difficult because they don’t understand more difficult concepts or nuance. Most articles are written at middle school levels.
smart opt out
I have to say this, to me, makes Ohtani look bad. It’s great to want to win at almost any cost, but to sell a franchise’s future down the river to do it is absurd. Now of course there may be things that figure into this equation which offset the burden of these future payments but consider this. A lot has been made about how five teams have a total payroll less than what Ohtani’s simple expense would be if it weren’t differed. Now inflation aside, in ten years the Dodgers will be paying someone who is not even playing what 50 percent of five teams payroll? I am sorry that is not a sustainable situation no matter how you paint it. Sure everyone has a right to do what they can do, but it’s not good for the game as a business.
The Dodgers sold themselves down that river, if we want that to be the formulation.
But, the way inflation goes, I am not seeing any way paying Ohtani $68 million a year a decade from now is worse than paying him that money now. The money will be worth less than, and chances are it will consume much less of the Dodgers’ actual payroll (as opposed to the luxury tax “payroll”) then than it will now.
Yeah it sucks to pay a guy who is not playing for you anymore (assuming he’s not by that point), but paying Ohtani in dollars that will be worth less than they are now is the trade off.
In terms of competitor balance, this deal really isn’t much different from previous mega contracts with big market teams. I still understand being upset at these kind of mega deals in general, though. What I don’t get is why people are mad Ohtani
Jabronie- it’s their jealous rage getting the better of them. Imagine to be so angry at someone that you’ve never met, whose only impact on your life is through watching a game?
This is kind of similar to ARod signing with the NYY. Everyone thought it made them unbeatable, and it didn’t. And ARod’s salary, when adding inflation, is probably a lot higher than Ohtani’s.
And Ohtani’s salary is identical to Trout’s if one assumes BB inflation is running 6%.
Lmfao Friedman, that’s one way you’re guaranteed to keep your job
The Dodgers can get rid of Friedmann. They just have to make sure Ohtani is OK with it.
IF Ohtani slumps and is no longer “Ohtani” — they may induce getting rid of Friedman just to get out of that contract.
“Down here, in the comments section, salt is a way of life.”
I really hope he has a debilitating injury and doesn’t complete the majority of his contact
bob
” really hope he has a debilitating injury and doesn’t complete the majority of his contact”
Imagine being this kind of jack [donkey]
Muted
Bag o Ballz
Be classy. Ojk to root for him to suck.. But root for him to be healthy and still suck. That is what classy fans do.
He is basically screwing baseball and the state I live in, normally I shouldn’t feel that way but I’m this case I actually actively hope the worst for him
If you live in California Ohtani is not screwing the State, he will get California games broadcast on tv and more people will vacation and spend money here just like the Rose Bowl parade does. There is even a tiny chance if Ohtani becomes a U.S. citizen that he pays taxes in California and screws Japan by not paying taxes there.
He could remain healthy….but I’d like to see every small market team intentional walk every at bat….zero extra base hits would eventually be pretty boring…
And “great for baseball” as one NY scribe wrote…
Bs, that is a pittance compared to the tax revenue that her would personally be paying in a normally structured contract. He is a tax dodger and he is cheating the restrictions out in place by baseball and gaming the system
It is so bad for baseball. He basically setup the blueprint of how to let big market teams stack the deck and avoid luxury penalties
This just gets more interesting every day. I’m waiting to see if MLB approves this contract which it hasn’t yet.
Pretty sure he’s already signed and it’s official. But keep dreaming!
He’s already signed and they’re doing the formal introduction to Dodger Nation tomorrow.
espn.com/mlb/story/_/id/39105665/shohei-ohtani-int…
That is some JOB SECURITY for Friedman.
Ohtani may have said “I’m telling you, you’re not getting me to sign here without the clause for Walter or Friedman,. I said, you’re not getting me. I’m going to be leaving here for SF, I think it in about six hours”
Well, son of a gun! He got the clause and an outrageous deferment
That was some quid quo pro from Ohtani.
Friedman could go full Costanza if he wanted. Zero chance the Dodgers fire him for anything short of a videotaped felony and they’ll have to keep him as the highest paid front office guy.
Great day for Andrew.
imagine Friedman when they discuss next terms of his contract…whoa!!!! LAD has put themselves into a bind…lucky for them Friedman is good..
One new thought. What if Ohtani became a U.S. citizen? By deferring money maybe he could get out of paying taxes in Japan?
“If either Walter or Friedman leave the organization, Ohtani would gain the opt-out possibility.”
I could see maybe this applying to an owner, since a change in ownership typically signals a chanqe in organizational philosophy, which players might not want to be around for.
But a GM buying himself job security by tying a star player’s fate to his fate?
I’m gonna say MLB should consider if it wants to allow that going forward. Seems shady. Or hell, whether MLB wants to allow that in this very deal, since they haven’t approved it yet.
Wonder if he’ll get to pick the players or get rid of players
This contract is so bad for baseball. The fact there is an opt out if his “key” people exit clearly indicates to me that there have been promises/assurances made to him outside the parameters of the contract itself. And if the key man exit occurs and promises can’t be kept he has his out. Shady stuff.
I do think it’s funny that San Fransicko offered the same deal and he chose Los angehell instread. Both cities are cess pools now. Sad.
re Chipper
“San Fransicko”
“Los angehell”
Muted
@Samuel I mean, filihok, your Mute List must take up five or six pages on here. Mute Bully! Mute Bully! Mock & Mute! Mock & Mute! I hope you don’t handle RL in this manner, but I have a feeling you do.
I’m sure this ground has been well-plowed here in the comments by now, but much of this feels a tad disingenuous. Get even a little ways into the contract and one of the execs departs — is Ohtani really going to opt out with all of the deferred money hanging out there?
Likely no. I don’t see Ohtani leaving even if the Dodgers collapse.
YOT
“is Ohtani really going to opt out with all of the deferred money hanging out there?”
Another person who appears to not understand
The deferred money is earned after the end of each season from 2024 to 2033.
If he opts out he’s not forfeiting that money
So Ohtani is now leverage for Friedman. For everyone saying he has “nothing to worry about” he was obviously worried about something.
Walter on the hand will cash out eventually. The Dodgers are probably the most valuable team in Baseball and could be sold at a record shattering figure
Yeah, MLB’s gotta slap this down. There’s no way star player contracts can be allowed to be leverage for GMs. This is ridiculous.
They approved the contract. Perhaps they’ll address this in a future CBA.
Negative. Unless MLBTR is wrong or this has changed in the last few minutes.
“One other note from the AP: while the Dodgers have already announced the contract, it has not yet gone to MLB for official approval.”
Thanks. I missed that part.
Nah, it’s an opt-out. There’s nothing in the CBA that says a player can’t put a clause int eh contract stipulating what would make him opt-out. There’s nothing ridiculous about it at all. besides I’m not sure why Friedman would want to leave or why the Dodgers would want to get rid of him. He’s the best Gm in baseball, aside from the fact that he refuses to fire Dave Roberts.
Eventually even the best move on to new challenges. Flip side is if the Dodgers postseason woes continue it will eventually lead back to Friedman, especially if Roberts is fired and the problem continues
It changes a decision to retain a GM from a decision based on his or her merit to one based on which star player will leave if said GM goes. That creates undue leverage for the GM and adds duress to the decision.
In this case, the GM and owner have the same leverage over each other, so at least there is parity. But MLB should not permit the precedent to stand. I am guessing this won’t stand if indeed a GM tries to get this worked into a contract at the expense of his or her team’s ownership in the future.
Maybe “ridiculous” was too strong a word, but if I were Manfred this would a bridge too far for me in accommodating Ohtani. I would tell the Dodgers ix nay.
Difference as far as ownership is concerned is after they sell the team they could care less who is on the roster.
MLB cannot allow contracts to be tied to executives, such a premise is basically extortion
And that he had the infinite wisdom to sign Trevor Bauer.
I’d like to point out to the anti- California crowd in here…
Taxes in Japan are higher. Than US taxes and CA taxes.
It’s not hard to look up.
Try harder
I half-jokingly wrote a couple weeks back that o was looking forward to which team will be working for Ohtani. Looks like it was no half joke at all.
LAD better win a string of WS, starting with 2024
Can you imagine the outcry if they do?
The issue is not the deferred salary (for Ohtani tax evasion or Dodgers to save money short term) the issue is that it a work around for the CBT, which is, “in spirit”, put into place so things like this dont happen. I understand that as it is, it is allowed as per the CBA,but why even have a tax bracket? If there is no CBT then everyone can spend more and no one has to argue; The issue is that other teams cant outspend if people can sign players and not have it count fully against the CBT until after they retire..So they dont get the CBT punishment while fielding a team who’s AAV is above the threshold.
To summarize. Why have the COMPETITVE BALANCE tax let a lot of the “cap hit” happen well after the player retires? PA and owners are to blame for agreeing to this. Although the PA is the megastars and the owners are the Dodgers and Manfred.
Dd
“To summarize. Why have the COMPETITVE BALANCE tax let a lot of the “cap hit” happen well after the player retires?”
None. .Absolutely NONE of the “cap hit” happens after he retires. ,0. Zilch. Nada.
The reason it counts $46 million a year while he’s being paid $2 million a year is because all the differed money is being accounted for while he’s playing. ,
So, you good with it now?
For the CBT the tax is $46 million per year, because that is the value of the contract, regardless of when it gets paid out. There will be $68 million/year in payroll for the Dodgers to cover for a decade and $0 in CBT considerations when he retires. That’s why deferrals are allowed, because the total tax burden, as far as MLB is concerned, is paid over the life of the contract.
Every single team that benefits from CBT taxes will receive the EXACT SAME AMOUNT as they would have if he were paid 10/$460.
Yes, but they would receive a lot more if most of the contract wasn’t deferred. Sure he wouldn’t have gotten $700. Someone surely would’ve offered him a none deferred 10/500. Going to the extreme they did is an obvious, although allowed, work around the tax code. Similar to how wealthy individuals have obvious, although allowed, tax evasion
No, they wouldn’t. It’s identical. That’s why it’s allowed. There is literally no difference.
And even if there were (there isn’t) it’s still tax avoidance and not tax evasion.
So sayeth Judge Learned Hand
There was no chance he thought about playing anywhere other than LA.
A7
There was a chance he would go elsewhere, but Dodgers held all the tie-breakers.
I actually feel a bit sorry for the Giants here.
“Oh, sure, you guys will give me all the things the Dodgers will too….but, well, you’re the Giants, see, and they’re the Dodgers.”
If I were one of these GM’s, I’d mess with Ohtani by pretending to offer $200 million more than the Dodgers did, just to see if that would make him say yes. Then say “nah, just kidding, we both know how this was always gonna go”.
That approach would make the rounds with agents and players quickly and your team wouldn’t be signing appreciable squat for years. You wouldn’t happen to be a Giants fan, would you?
ISBD
“I actually feel a bit sorry for the Giants here.
“Oh, sure, you guys will give me all the things the Dodgers will too….but, well, you’re the Giants, see, and they’re the Dodgers.”
If I were one of these GM’s, I’d mess with Ohtani by pretending to offer $200 million more than the Dodgers did, just to see if that would make him say yes. Then say “nah, just kidding, we both know how this was always gonna go”.”
Doesn’t sound like this was written by someone who’s informed
Or by someone who’s ever had options or companies companies competing for their services
I’m sorry that you’ve always had to take whatever job was willing to take you
But, some peole are in demand. And they can rank their preferred destinations. And they can interview with multiple companies to see what the other options are and as fall backs in case things don’t work out as they wanted with their #1 choice.
So what, out of his generosity it’s possible that Ohtani renounces his fat salary that’s to be paid from 2034 when his 10-year 20MM contract is up in 2034? And the only condition for him to do so is a resignation from just either Mark or Andrew?
AGS
“it’s possible that Ohtani renounces his fat salary that’s to be paid from 2034 when his 10-year 20MM contract is up in 2034?”
That’s a non-understanding on your part
Once 2024 is over, he’s owed the $68 million defferal in 2034
Once 2025 is over, he’s owed th3 $68 million defferal in 2035
Etc
You’re right. But how about his 8th or 9th year he could opt out (the condition withstanding) and give up the whole chunk of his money right? l know nobody would but say he ends up being like Chris Davis, not to mention Strassberg then trust me he would.
Will be the worst contract of all time, no doubt about it. Already turns 30 this season and won’t be able to be a 2 way player again until the season he turns 31 and who knows how long he will be able to do it. It’s going to be a lot of sub 4 war seasons. It would have been the worst contract of all time at 50 million a year. 70 million just blows it away and shows how desperate the Dodgers are. Zero chance he opts out of that and the opt-out, the “must remain competitive ” language, the secrecy of the process, Ohtani’s obvious tax evasion, etc all reflect badly on him.
Nah, but your sour grapes definitely reflect badly on you.
And this is why my club will continue to SLAY THE DRAGON. Bc of insane contracts like this done by the management of the Smell-A Dodgers. Signed- Carp.
I see Ohtani moving to Gilligan’s Island after the 2033 season! I’m pretty sure there’s no taxes there! At that point and time, he can buy his own island somewhere with no jurisdiction! He should have signed with the Pirates, because he is truly a Pirate!!
Sign me up!
The language about making sure the Dodgers field a competitive team is quite humorous. In the past 10 full seasons, they’ve won 988 games, averaging 98.8 wins for 10 years! I’m pretty sure that constitutes being competitive.
He will average 3-4 war a year. Read it here first.
mlaja
“He will average 3-4 war a year. Read it here first.”
Blah blah blah
Jim Everett should have knocked Jim Rome out. Maybe we wouldn’t have all these idiots thinking their dumb opinions were “hot taeks”
There is only one player that Ohtani cannot strike out…..myself (Matthew “Carp” Carpenter). Goodnight! Signed- Carp.
Damn. This article was posted just one second ago and already 300 comments…..with or without Ohtani we will SLAY THE DRAGON this year once again!
“…the contract contains language ‘that assures the club will make good on its promise to use the savings he created to build a competitive team around him.’ ”
—-
Have no idea how something vaguely worded like this can be enforced. The Dodgers still have to deal with his $46+ million hit to the luxury tax, while also putting money in escrow to fund Ohtani’s contact 10 to 20 years on. How will it exactly be determine what portion of the payroll is going toward Ohtani-funded or not from Ohtani? How will it be interpreted when the Dodgers have to occasionally fall below certain luxury tax thresholds?
This cuts both ways. Maybe the Dodgers could actually decide to force Ohtani out one year with a planned rebuild, hoping he’ll trip his opt out, and they can then get him off the books if he’s regressing. Probably doesn’t matter as I don’t see Ohtani ever walking away from all that deferred money.
Maybe the specifics in the contract are more clear, but this sounds like something that won’t stand. MLB will probably ask it be removed because it’s unenforceable.
For crying out loud,PLEASE stop with the Ohtani updates!! No one other than Dodgers fans gives a rat’s furry behind about him
That’s why this has 320 replies. Because only Dodgers fans care about it anymore.
Also because of the crybabies whining about it.,
So the MLB season ends “5 days after the World Series” is completed. If the Dodgers wait for 7 days to fire Friedman or Roberts or Ohtani’s pitching or batting coach or team paid interpreter, does that mean he has to play that next season out before opting out? Gives them the leway of a season to try and regain his trust again? Also, I imagine he gets the 68M per based on how long he stays so he won’t get all $680M if he opts out after 3 years if they chose to make a change. If he can’t perform at expectations… can they cut ties with someone he considers one of his pieces in an effort to get him to opt out? With those options you have to figure there are some options on their end to keep him there. Pre-agreed upon positions of said managers/office personnel/ect. He can’t have free reign of those decisions.
wouldn’t it be nice if the dodgers claim bankruptcy in 2034 and they can’t pay him the money.
No
Why would that be nice?
Because Ohtani is ruining baseball and the state of California.
mlaja
“Because Ohtani is ruining baseball and the state of California.”
How so?
Please be specific
I guess we are in a entirely different age now. Where the players are running the team now. Maybe owners will get creative and not hire GM’s or Managers, that would save them millions. As we’ll nip in the bud the inevitable firing of these employees if you don’t win. I have no issues with players opinions or wants for the teams. But this “deal” has opened a can of worms that will have huge ramifications. The scary part is that it’s not the player that caused it. When Arod signed his 250 mil deal in 2001 there was outrage and anger aimed at him. Somehow 700 million is justified for a DH.
Marketing and selling out. That’s what the game has turned into
RR Fg:
People have been so brainwashed by capital that whenever labor gets the slightest thing more than “take this pay and shut up”, they think the sky is falling,
Venn Diagram: the people commenting here about how horrible it is that Ohtani might not pay California (or US) taxes on the deferred money and people who complain every other day of their lives about paying taxes.
Evading taxes is when your fail to pay legally owed taxes. He doesn’t legally owe the resident state tax if he doesn’t live there so he is avoiding taxes. Everyone should be actively avoiding paying taxes.
SW
“Evading taxes is when your fail to pay legally owed taxes. He doesn’t legally owe the resident state tax if he doesn’t live there so he is avoiding taxes. ”
This is true
“Everyone should be actively avoiding paying taxes.”
This is a subjective opinion which, by definition, is not true.
If it’s subjective then it’s neither true nor false. How much extra do you add to your tax bills every year?
SW
“If it’s subjective then it’s neither true nor false”
That’s not correct
It is not correct to say, for example, that blue is prettier than red. It not a true statement that blue is prettier than red.
In the same way it is not a true statement to say that everyone should be avoiding paying taxes.
So “not true” does not equate to “false”?
SW
“So “not true” does not equate to “false”?”
I just explained that it does not.
Sorry just not getting the logic.
SW
“Sorry just not getting the logic.”
Saying that “blue is a prettier color then red” is not true.
Sure, through an objective lens. But my original comment was a subjective opinion. True/ false isn’t even part of the argument and I am not sure why you injected it improperly.
There’s been quite a bit of talk recently about taxing unrealized capital gains. Ohtani’s defered income could possibly be considered unrealized capital gains- depending on how the Dodgers accrue the funds to later on make those payments. If so, Ohtani’s tax liability could be a lot more than the $2MM he receives. Wouldn’t that be sweet.
cg
“Ohtani’s tax liability could be a lot more than the $2MM he receives. Wouldn’t that be sweet.”
I also hope you pay more in taxes
(Well, probably not. You probably don’t make enough for me to want you to pay ,ore in taxes.
Anyway, if he pays more no in taxes, he’ll pay less later, so…
Ever heard of “tongue in cheek” comments? Inciteful of you to predict my income level from that post. Absurdly ludicrous- but incieful.
Why would it be sweet?
cg
“Inciteful of you to predict my income level from that post. Absurdly ludicrous- but incieful.”
I stand by my “prediction”
There’s a juncture when “tax optimization” of a contract jumps the shark and looks like straight up tax avoidance. Current tax code literally reads if you take the deferral after 10yrs after the work is performed the taxation moves from where the work was performed to where the individual resides. Deferred comp is common among police and fire dept workers.
I get that it’s in compliance with the tax code but the optics are horrific Ohtani LOVES living in CA, but he’s gone to the extremes here to not pay his fair share of tax to CA possibly the US, that’s garbage., The magnitude of press surrounding this deal is of course going to catch the eye of state legislators and taxing authorities, there might end up being an “Ohtani rule” as a result.
Whatever Ohtani envisioned would happen upon signing this deal, this was NOT it, This was his team’s deal structure as SF front office indicated they were presented with a similar structure.
sfjc
*The magnitude of press surrounding this deal is of course going to catch the eye of state legislators and taxing authorities, there might end up being an “Ohtani rule” as a result.”.
Do you think Ohtani’s $68 million a year is the most greivous “exploitation” of this rule?
I’m all but 100% certain that it is not
This is the public eye in a way that’s atypical, it’s gone beyond business news, it’s riding his fame that points out a tax loop hole enjoyed by the wealthy. I don’t believe that tax code was written with this intent. This whole “pay your fare share” is not a new theme in today’s political landscape.
Next year is an election year, we’re in the off-season heading into the holidays and I’m not sure what baseball story is going to make this one go away anytime soon. Even business networks are starting to comment on it.
A simple and perhaps wrong way to think about it is that the Dodgers committed to actually spend $70 million a year (like everyone wants, right?:D) for the next 10 years, $46 million to Ohtani and $24 million to someone else. Yamamoto for 10 years and at least $240 million seems the easiest way for the Dodgers to meet that requirement. Perhaps this was just saying, don’t get outbid on Yamamoto.
Can someone please explain how the contract is valued at 460m? Where does this number come from?
My other question is why does his actual salary differ from the salary that’s being counted towards LAD’s payroll?
Everyone was saying it was a tax dodge and at first when it was reported he would get 2m per season, it made sense. But if it’s not 70m going against their payroll, how is it a tax dodge? But more importantly, again, where does the 46m towards LAD payroll come from? Why isn’t it 2m if that’s what his actual salary will be?
“Then again, Ohtani showed with his original move to MLB (and to a lesser extent with the eye-popping nature of his current deferrals) that money is not necessarily his top priority in any contract. ”
I don’t know who are the bigger fools, the writer who penned that statement, the editor who passed it without comment, or the credulous readers who believe it to be true.
It would be interesting how that works out. If someone leaves and he opts out of the contract, he’s essentially only been paid $2M per year and doesn’t get that additional $680M. That’s a lot of money to leave on the table. I get that he could get another contract for even more though but the risk is there. Maybe he can’t pitch as effectively by then.
OY
“If someone leaves and he opts out of the contract, he’s essentially only been paid $2M per year and doesn’t get that additional $680M.
Wrong!
Most of his 2024 salary is deferred until 2034
Most of his 2025 salary is deferred until 2035
It’s like if you put some money in 2023 into a 401K and then quit in 2024, you don’t lose that money
@filihok
Where’s the working in the agreement. If you sign with opt outs in a contract, are you still allowed to be paid the remaining money plus whatever you sign for with the new team? I don’t think that’s how opt-outs work unless the wording in this one says he’s getting paid regardless.
OY
“Where’s the working in the agreement. If you sign with opt outs in a contract, are you still allowed to be paid the remaining money plus whatever you sign for with the new team? I don’t think that’s how opt-outs work unless the wording in this one says he’s getting paid regardless.”
You don’t understand
I only have so much patience to explain it to you
His 2024 salary is paid $2 million in 2024 and $68 million in 2034
If he opts out after 2024, he still receives his 2024 salary
He would not receive his 2025 to 2033 salaries (which are to be paid out between 2025 and 2035)
Just like you don’t forfeit your 401k or social security if you quit your job
Again, where’s the contract wording on that? If I leave a job, I don’t still get the money that I left on the table.
OY
“Again, where’s the contract wording on that? If I leave a job, I don’t still get the money that I left on the table.”
I hope you’re arginine just to argue
If you quit your job in the middle of a pay period, you still get the money that’s been deferred until your next paycheck.
You don’t work one minute and get paid immediately for that minute.
All pay is deferred to some degree. This is just deferred more
Ohtani is a shady SOB.
After thinking about it some more, I’m still not sure I understand the contract structure from the Dodgers’ perspective. Ohtani and his agent like it because they get to claim the record-breaking $700M figure, and there may or may not be some tax benefits to Ohtani personally (I’ve seen conflicting answers on this).
But I’m not sure I understand why the Dodgers will save money the first 10 years of the deal. Yes, they’re only paying Ohtani $2M at the time, but presumably they also have to put $44M in escrow each year so that it will be worth $68M in 10 years. So that’s still $46M a year they can’t spend now. How is it different than if they had just given Ohtani a non-deferred 10/$460M deal? How does this give them more payroll flexibility?
the dodgers are idiots!
they committed 1.4 BILLION just to appease one player who has yet to return from TJS!!!
df
“they committed 1.4 BILLION just to appease one player who has yet to return from TJS!!!”
What?
Jeez, when will Steve Adams learn how to use commas? If you use “but” to begin a sentence, it doesn’t need a comma after it.
Are you saying Steve Adam’s a but, head?
Here’s where my protégé Jed steps in – go Cubs go!