On the heels of baseball’s $700MM man making his decision, here are three things we’ll be keeping an eye on around the baseball world throughout the day today:
1. Fallout of Ohtani’s decision:
Shohei Ohtani is set to become a Dodger on a record-shattering $700MM deal. With the biggest question of the offseason answered, there’s plenty of ripple effects that will impact the remainder of the offseason. It’s not yet clear whether Ohtani has undergone a physical and his contract with the Dodgers has been finalized, and L.A. will need to clear a spot on its 40-man roster to accommodate the addition of Ohtani once those final steps have happened. Looking beyond the Dodgers, the teams that missed out on Ohtani — the Blue Jays, Angels, Cubs, and Giants are among the teams that were involved in the bidding process — will need to look elsewhere as they attempt to improve ahead of next season. That could allow the markets for other top players, such as center fielder Cody Bellinger, right-hander Yoshinobu Yamamoto, and left-hander Blake Snell, to come into focus over the coming days.
2. When will the rumored Dodgers-Yankees deal be completed?
An unusual report surfaced yesterday, with The Athletic’s Ken Rosenthal indicating that the Dodgers and Yankees were working on a trade that would send two players on L.A.’s 40-man roster to the Yankees in exchange for a prospect in the Yankees organization who is not on the 40-man. The deal would clear the aforementioned roster spot needed to finalize Ohtani’s contract while also making room for right-hander Joe Kelly. Joel Sherman of the New York Post heard the same, adding that the Yankees will pick up an “end of roster pitcher” who could provide depth lost by the inclusion of depth arms Randy Vasquez and Jhony Brito in the Juan Soto trade while also adding an additional prospect. It seems likely that the specifics of the deal should be available in the near future.
3. Could the relief market be picking up?
Yesterday saw a pair of veteran free agent southpaws come off the board as left-hander Andrew Chafin reunited with the Tigers in Detroit while Will Smith rejoined the team for whom he made his major league debut in Kansas City. With those two arms off the board, will the relief market continue to heat up? Closer Josh Hader headlines the class, while flamethrowing 27-year-old Jordan Hicks, breakout righty Robert Stephenson and NPB relief ace Yuki Matsui are among the other notable names who’ve yet to sign. The Cubs, Cardinals, Astros, and Rangers are among the many teams known to be searching for relief help at this point in the offseason.
Someone brought up an interesting point.
Last year apparently mlb was prepared to step in and veto judges 14 year 400-415 mill contract from the Padres cause ” The league’s justification for doing so would’ve been the contract length was an artificial means for the team of working around the competitive balance tax.”
mlbtraderumors.com/2022/12/latest-on-padres-pursui…
So why isn’t the mlb stepping in to potentially veto the ohtani deal or any other deals dodgers sign that push significant deferred money into the future? And whyd mlb suddenly care Padres were doing deferred money cause it’s been used for years with the likes of Griffey, Ichiro I believe, Scherzer
Mlb has a lot of explaining to do.
More crying
Nice burner account Manfred. Nobody likes you.
Is it crying or asking an honest question?
Honest question. The reason that poor imitation of a commissioner was going to veto judge’s potential contract with the Padres was the length of the contract since judge would’ve been pushing 50 by the end of the contract.
You can’t defend it, so cry more is your response.
What time should I get you a juice box and put you down for a nap?
He’ll need a diaper change too.
Maybe they’re “preparing to step in” here too
I highly doubt it.
I’m just curious why Nationals were able to offer scherzer interest free deferred money to lower his 30 mill aav to like 26-28 against the cbt at the time and dodgers can manipulate around the cbt by offering ohtani 10 years 700 mill but works out to 40-50 mill against cbt not 70 aav.
But somehow the mlb wouldn’t let the Padres lower aav for cbt purposes.
Considering Preller’s previous punishment for fudging medical info, a safe guess that the potential Judge signing was also pushing the limits a bit too far.
Again, just a guess
It was how the Padres were doing it. You are announcing to the world he’s going to be part 9f your franchise for 14 years, ya can’t lie about your intentions like that. You can say here’s how your 410 million is going to be distributed instead of 10 years it will be 14 years and 4 of those years you won’t be under contract. Of course the player has to agree to it, it can’t be forced. Basically Manfred doesn’t want someone just holding a spot on the 40 man roster for 14 years if on the backend he can’t perform. With deferrments the player can retire in peace and still get paid, instead of being cut later and losing money. Preller should of offered Judge real deferment payments, he did that wrong.
Because Judge’s contract situation had to do with the years not the deferrals.
“The league’s justification for doing so would’ve been the contract length was an artificial means for the team of working around the competitive balance tax.”
So teams can’t add on extra years to lower aav and cbt but teams can push money into the future 10-20-30 years to lower aav and cbt.
So pushing money into the future isn’t an “artificial means for the team of working around the competitive balance tax.”?
I would think that there’s ways the league would intervene with this deal, such as if the Dodgers tried to backload the deferrals as a way of suppressing the value (Pay Ohtani $50Mil in 2062, which would severely reduce the present day value). But ultimately taking deferred money is part of the game and with the astronomical cost of Ohtani, I can’t imagine too many teams were able to offer him a straight 10/Yr, 500M deal with no deferrals. But come 2034 if Ohtani is still hitting at an impressive level at age 39, he gets to be a FA despite the Dodgers paying him till he’s long retired. The Orioles are paying Chris Davis for another decade, should they have offered him a 20yr/162 deal instead of 7/162 so they could spread out the tax implication of the deal? He’s on the payroll either way.
I’m wondering if anything Padre related was to due to the debt load they carry.
Ohtani’s deal also ends when he’s 39 years old. The dodgers can defer cash but they’re only spreading the AAV for 10 years.
It was also a realistic expectation that San Diego wouldn’t be able to pay the contract terms. Which came to fruition with their current payroll situation.
If that were the case Walter mlb would have vetoed the Padres bogaerts deal when they missed out on judge.
Judges aav was 28.5 bogaerts got 28
And please cite someone a little better than Jon Heyman. He also said that he was signing with the Giants.
If you have issues with the source talk to mlbtr. I linked their article.
No he didn’t, that was Arson Judge! Lol
Jobu
Because this deal is for ten years with deferrals rather than pretending to be a longer deal than ten years.
So teams can’t add on extra years to a current contract but they can push money owed into the future 10-20-30 years?
Only if the player agrees to it.
Is this relevant?
MLB’s issue with the Judge contract was that it was designed to circumvent the CBT.
Ohtani’s contract is designed to circumvent the CBT. It is explicitly designed to do this, to allow the Dodgers to be competitive right now. The C in CBT stand for ________.
If massive deferrals are the workaround that MLB implicitly okays, you’re going to see a LOT more of them.
“A lot of explaining to do”..What people do with their own private property do not have “a lot of explaining” to do to you or anybody else. Please get over yourself and your sense of entitlement.
Bad take.
Mlb definitely owes fans a lot of explanations as to why they don’t equally enforce rules. And not just with this situation.
It’s not a sense of entitlement. Its a customer or customers wanting a business to operate in a fair manner. Nobody likes when TOS aren’t equally applied.
Along the lines of not enforcing the rules equally. Somehow the Mets are in trouble for their use of the IL but other teams arent
“The leagues justification” — You mean the reason given?
More likely the League was deeply concerned with the Padres finances and used that as an excuse.
Padres offer was gonna pay judge about 28 or 28.5 aav
They turned around and signed bogaerts to a 28 mill aav. Mlb didn’t step in and veto that deal.
So the reason definitely was attempting to lower aav and cbt. I’m just curious why teams can defer money well into the future but can’t add on extra years to the life of a contract.
Deferring money would make the cost of the player greater, thus making the price toward the CBA more (Future Money is worth less than Present Money, so as an example: 700M is a bigger hit to CBA than 650M). In the example thats a 50M hit to CBA that Dodgers will have to account for, just for paying the money later.
Extending years is just to send the CBA total for the player into the future, when he probably won’t even be playing.
Kind of obvious that these two things are completely different.
“Given the fact that “most of” Ohtani’s contract is expected to be deferred, Passan suggests that Ohtani’s deal, for luxury tax purposes, is expected to settle in the range of $40MM to $50MM when all is said and done. While those numbers aren’t final and won’t figure to become exact until the contract is properly finalized and announced, that range substantially alters the impact Ohtani will have on LA’s luxury tax bill over his decade-long tenure with the club.”
@Green
I think you’re lost.
$700m paid as a straight $70m over 10 years = a $70m per year hit against tax thresholds for 10 years.
To keep it simple: $700m with half deferred over an identical second 10 year period = a $35m hit against the tax thresholds for 20 years. It is functionally identical to a 20 year, $35m per year contract for tax purposes.
A $197m tax threshold cares nothing about the value or purchasing power of $197m.
“I think you’re lost”
I think youre lost, since thats the exact same thing I said.
“tax threshold cares nothing about the value . . .” Absolutely correct.
But, any accountant will tell you $700M paid over time is worth less than $700M paid right now. Dodgers did the deal with a lot of future aka deferred money. Its reasonable to assume, they couldve gotten the deal done with a lot less money, if it was all up front. I used $650M for the upfront money.
$650/10 =
is less than
$700/10 =
This is too complex for u, give it up.
“I think youre lost”
“It is functionally identical to a 20 year, $35m per year contract for tax purpose”.
spotrac.com/mlb/los-angeles-dodgers/shohei-ohtani-…
I thought you didnt understand how future and present money works. You just dont have a clue about any of the salary talk. You though Salary Deferred Money was also Deferred from the seasons the pay was for. Lol.
Ah okay. This is just irrelevant to the original question. Bye!
Passan reported it would likely be a 40-50m hit against the tax. Your sportrac link says the full 70.
Who is wrong?
(I know the answer. But do you? And by the way, I used very simple fake numbers for ease of understanding. Appears I failed to make it easy enough.)
I didnt read what Passan said, but if he said they can defer the CBA hit, hes dead wrong. Every team would do it, CBA would be rendered useless.
Manny Ramirez, Dustin Pedroia are still receiving deferred money from their contracts. Yet, when you look at the Red Sox Spotrac page theres a line that specifically spells it out:
“Salaries for players who had salaries deferred to the current year. We are NOT counting these against the active payroll.”
spotrac.com/mlb/boston-red-sox/payroll/
Your faith in Passan has blinded you from the obvious truth.
It is $46M a year. What do you think now?
“What do you think now”
I think the same exact thing. None of the money is being deferred for future years beyond the 10 year playing conctract as I said. Its 46M because none of the deferred income is getting any interest, which was never disclosed until now. So the contract is worth a lot less than first revealed.
I also think you can shove it up your ass for the petty comment after the fact, when you werent in the conversation to begin with.
Because it’s Los Angeles and L.A. is exempt when it comes to pro sports’ “rules”. Case in point, the Lakers of the early 2000s. They were WAY the F over the salary cap, but wormed their way around it with the help of David Stern. But other teams weren’t allowed to do the same thing.
“Los Angeles is exempt”..The NFL did the same thing for the Dallas Cowboys and even allowed them to sign an independent soft drink deal, even though the rest of the teams had to use the NFL’s soft drink provider. Leagues OFTEN
do what’s best for business. Sports is a business, remember?
Because contract duration and contract discounts are completely separate things.
I really want to know how this is going to work, after Ohtanis contract runs out and he retires, are the Dodgers still taxed at 40 million or so for the next 8 years or does that money magically no longer matter?
I think it’s still bs regardless, this allows the Dodgers a lot of room to play hop scotch with the luxury tax. With this little loophole they can sign a guy to a 700 million dollar contract and still drop beneath the threshold this season, opening them up to go wild again next year.
No, it still doesn’t. Take a crazy example. Let’s the contract called $10M a year over 70 years. Surely everyone would recognize that that contract is worth a lot less than someone getting $650M over 10 years.
All the discounting does is to put a present value on what the $700M is really worth. $700M today is worth a heck of a lot more than $700M spread out over 30 years.
This right here is exactly a big issue. It’s all about money, growing the game, etc. All these MLB broadcasters are saying it’s great for the game, why, because it’s job security. It’s a money maker for one of the biggest markets in the game. It’s a problem when smaller markets do it because the impact will be a lot less. No one will say it though because MLB is their employer and what keeps them employed. The bigger the brand, the better it is for them. Everything revolves around money in life…sad, but true.
I don’t think contract size is a huge issue but teams shouldn’t be allowed to manipulate the luxury tax. It’s 700 million for 10 years it shouldn’t matter how it’s paid out.
“ well the future value…” no, the contract is still 700 million for 10 years of work. In the future if someone signs for 700 million for 10 years of work, it’s still 70 million average annual value.
Great question jobo! I didn’t know that about nixing the Judge deal so thx for that insight.
Max scherzer signed a deferred contract with the nationals. He’s making like 15 mil a season from the nationals that counted toward cap in a prior season and as long as his contract was – half was deferred over and equal time. So if it was 6/180 then he got 90 mil in years 7-12. They offered a same type deal to Harper.
So you can’t manipulate the cap by signing players in dead years like w judge, but u can defer money counted toward cap in later years.
after watching all those all stars walk away in LA in recent years – it makes sense the dodgers where preparing to sign ohtani at all cost and then rework their budgeting from there. Seems a poor move, but dodgers are a savvy organization so maybe they can make up for it ? Idk, a lot of talent lost. They better go get Bauer and urias lol.
Maybe because 10 < 14?
I think there’s a difference under the CBA between adding extra years you know the player won’t likely play, and including “deferred money.” The latter is specifically allowed under the CBA, and has special rules for how it’s treated for luxury tax purposes. The former is not authorized under the CBA, and would represent a way to game the system.
sports.yahoo.com/900-ticket-shohei-ohtanis-dodgers…
This adds another layer to everything.
I’ve never been a spoiler.
I feel that the Cubs were always only in it if he agreed to a shorter-term deal or one with an early opt-out. I’m sure they wouldn’t go past 500M anyway, so not making any moves is really discouraging to me. The signing of Counsell appeared to be an “all-in” move. but now I wonder. They need a good lefty in the pen as well as another high leverage arm. They also need a frontline staring pitcher, and 3B & 1B help. At least one of those bats have to fill the big hole left by Belli. A lot of work to do with stiff competition and their reluctance to go big is hurting them.
I’m not a Cubs fan obviously but missing out on Ohtani isn’t something that should make you doubt they are all in. It is definitely possible they won’t spend big but I just feel that this particular miss shouldn’t be held against them.
I think the biggest mistake the Cubs are making is nibbling around the trade market. Sometimes I feel like the Cubs get hyper focused on one domino that never falls and it typically involves a trade.
I think this year, they are trying to trade Morel for an impact bat but no team is biting. It just reminds me so much of when they spent the entire off-season trying to move Bryant for ML ready talent instead of trying to clear easier contracts like Chatwood (salary dump) and Quintana.
1. But, given inflation, he’s not actually getting $700M, so that’s disappointing. I think he should have asked for $1.5B so that it probably works out to $700M in the future.
2. Once Ohtani signs officially with the Dodges and is traded to the Yankees.
3. Hopefully. SPs are overpriced and only last 4 innings of work. Not really worth the billions of dollars being spend on them. Given the league SIERA is 4.24, it’s pretty poor pitching performance. Imaging giving up half a run each inning. Need better SPs actually doing their job of getting guys OUT.. SIERA should be down around 1.00.
That’s why the total is 700 million. It’s because of all the Deferred money.
Actual top bid was probably what was first reported, high fives maybe 600 million dollars.
Dodgers said we need a little help here.., we’ll make it 700 if you defer a bunch of $$.
Negative it was Ohtani who approached the Dodgers about deferring significant amount of money
Really? Okay good info. But I guess it works out to be the same thing. It depends on who asked for 700 million? If it was Ohtani and he also suggested deferred money, then really it’s the same thing. “What, you want 700 million, then we need a little help. Deferred $$? Ok great.”
I know your comment about trading to Yankees is a joke but has anyone heard if there’s any No Trade language in the contract?
All deferred money is going to come with interest. Depending on the % they settle upon (it won’t be lower than 8%), that’s a windfall for Ohtani and his family.
An ultra high net worth individual like Ohtani should have investment opportunities at his disposal that clear the 8% threshold.
Hedge Funds and alternative investments are available to those kinds of high net worth individuals. He left something on the table with deferrals to help his club.
Also, how are you sure about the deferral rate?
If they’re deferring payments out at 8% that’s going to keep the AAV high despite the deferments. If they’re interest free or low interest deferrals—that’s what will bring that AAV down.
The deferrals not counting against the tax is absolutely absurd. Should not work like that. Deferrals are absolutely fine 700M is a ton of money to pay out in a 10 year contract. Just those deferrals should not ease luxury tax penalties. That’s a broken system.
@Jake Biggar
Small market teams should be using it as well. Sign a guy to 15 years and defer the payments. Why not?
“That’s a broken system”. Why is the system broken? Because you say so?..There’s usually a peanut gallery of people calling owners “cheap” when they don’t offer a pile of money to every slightly above average player in town. And now, it seems people are complaining that owners are offering too MUCH money to a player. It seems unhappy people will be complaining no matter what owners do, right?
“It seems unhappy people will be complaining no matter what . . .”
Lol, have you ever been to an MLBTR Red Sox column?
LOL !!!!!! Green, exactly !!!!
@GreenMonsta
Red Sox are terrible. They’re owner is spending like they’re a top team but getting Jokeland Athletic results. They’re trying to be like the Rays without the analytics and player development.
it is, because it’s circumventing the nature of the rule. 10/700 should count for all 700 over 10 years and not beyond. These rules were created to help the small market teams that don’t have the ability to pay these salaries – competitive balance, This approach completely goes around the rule.
Let’s say you get paid $100k per year. Suppose your employer says fine, but I am going to give you $50k this year, and $50k ten years from now. Do you feel like you are still getting $100k?
Will Smith signed with Kansas City. That makes them 2024 World Series champions, as is tradition now since he’s won with the Braves in 2021, Astros in 2022 and Rangers in 2023.
@acoss13
Given the new playoff system, and how top teams really don’t make it to the WS too often (aside from Astros), I wouldn’t be surprised that KC is playing in the WS. Sure, the Braves, Dodgers and O’s can celebrate their 162 win seasons but ultimately, they won’t be in the finals.
Or, it means that whichever team the Royals trade him to next July, will be the World Series champions.
$700 million is a vulgar amount of money, no matter who commands such a salary. It’s amazing the wealth the Dodgers seem to possess. Not only did they sign Ohtani, but they allowed JD Martinez to become a free agent. Martinez hit .271 with 33 homers and 103 RBIs in 2023. Sure, he’s 36 and not gifted defensively, but he can still rake and he only made $10 million last season. An ideal spot for him to sign would be the Phillies. They need to add a moderately priced right handed slugger to their lineup, and Dave Dombrowski is familiar with Martinez who previously played for the Red Sox.
Bingo this is what reeks about this deal as Martinez put up amazing numbers for $10 million so if Ohtani puts up .275/44/105 is the extra 13 Hrs really worth freaking $70 million per yr! Sorry this was the stupidest contract ever and its going to bite Dodgers in the ass paying a DH that kind of money as the success rate coming back strong after 2 – TJ surgeries is not very good let alone as a 2 way player that only adds to more wear and tear. Im happy for the kid but these contracts are so out of hand mlb owners should lock these clowns out next contract and hold out for 1-2 yrs to break the union. We need more balance so all 30 teams can play on even level and not cost $500-800 for family of 4 to see a stupid baseball game!
Time for MLB to start salary caps. It’s difficult to understand the parity in one team paying one player more than another team pays its entire starting lineup.
Did you know that the LAD have only the 5th highest payroll, even after adding Ohtani?
Joe, The Dodgers will defer $68 million of Ohtani’s $70 million yearly salary, which means Ohtani will make $2 million a year while he’s playing, but a fortune when he retires. I know deferring salaries is nothing new to baseball, but this gives the Dodgers a massive financial edge for the next decade.
Everyone can do the same thing. I’m just surprised he took this low a package.
Joe, Every team may be able to do the same thing, but $10 million over 10 years is a lot different than $680 million over any number of years.
The Reds SHOULD be searching for relief help with a bunch of five inning starters, especially since they are unable or unwilling to get starters who give you innings.
Well since the pitching market is now just starting to open up what makes you think they are not looking for RP or SP? They already signed two pitchers, one relief and one starter who could turn out to be a RP so not sure what you are complaining about.
Get back to me at the end of the offseason like every other.
It’s 70 million a year, it should be counted as 70 million a year
“Should be counted as 70”..Accountants have been rigging the system for billionaires and massaging the figures for my whole lifetime. It’s not exactly a new concept. It’s done on tax filings every year without much complaint.
its more like 35million if you include the horrific California taxes
Swagsuper, you spelled United States wrong.
Yes California income taxes are high but property tax is low. That’s the shock of people moving out and to states such as texas. 1% property tax Prop 13 suddenly becomes 3 or 3.5% property tax.
Same thing in florida. Have you seen the property insurance premiums lately? Tripling and quadrupling.
So for the ball player it really doesn’t matter where you sign, whether California, Texas, Florida or New York. All works out to be about 50% tax no matter how you cut it.
If you’re worried about taxes move to Mississippi. You’ll love the education system there. And the roads. And the healthcare system.
For all the criticism Ohtani received for not publicizing his decision to promote baseball, his decision on Saturday totally overshadowed the NBA Cup Final.
Let’s not pretend anyone cared about that in the first place.
Does the NBA have a “cup”? I haven’t followed them in a long time, but I thought the NHL was the only sport with a “cup”.
First time they held this, an in-season tournament. A big success by all accounts.
Wrong Will Smith link
The Giants are going to massively overpay for at least two top free agents to make sure they come away with something. They probably don’t care who the players are at this point
Meanwhile, the Angels are still drinking.
Just a horrible start to FA off-season ; Rich conglomerates Yankees & Dodgers throw fool weight & money around, raising costs on fans everywhere; rest of league left to piddle away slimmer pool of revenue (thanks to dwindling TV rights lucre) at inflated placeholders. Sure, Yamamoto looks interesting but which deep pocket team gets him, and how much will it cost for a hot dog — $15 now?
The thing that makes this country great is that no one forcing you to pay $15 for the hot dog.
Somewhere Bobby Bonilla is laughing and counting his deferred ca-ching $$!!
i believe that’s done this year! look for him to show up in some media box
My take is Ohtani is no way worth the contract he was awarded. Six years with Angels and they never won more than 80 games in any year.
I’m looking forward to April 26-28, when the Dodgers visit Toronto.