Click here to read a transcript of Tuesday’s chat with MLBTR’s Steve Adams.
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The teams in Steve’s examples of deferring money, seems more about those teams financial commitments and their available capital to operate. None were big money spending teams at the time. And none seemed to be an obvious ploy to skirt the CBT hit, like the Dodgers and Ohtani. People were upset because one of the biggest spending teams was using a deferral to dodge the CBT.
Or, Ohtani was willing to delay his big dollars so the Dodgers could sign other significant players (like Yamamoto).
The Dodgers didn’t do it to skirt the luxury tax. It’s been explained time and time again so there is no point in explaining it to you again because you just don’t understand.
The real trickery is that it was reported as 10/700 so it will be considered the largest contract ever for any sport vs 10/465 with interest deferred.
I do agree with bham that it’s a bigger issue that Ohtani deferred so much money so the Dodgers could still spend like drunken sailors. MLB may look at capping deferrals at some point in the future if this happens again.
I understand it. I just disagree. I think the Dodgers are trying to avoid negative PR by pushing the narrative you believe. But there’s no way LA would have been sanguine with a $70M CBT hit.
I know that the $700M deal wouldn’t have been that without the deferred money. But Ohtani’s expected deal was to be at least $500M-$550M, or more. Even $600M seemed a possibility. So they are in fact reducing the CBT hit.
You’re asking people to believe that outcome was just an innocent by-product, with no intent other than to have operating capital. “Oh look, we saved anywhere from $4M to $14M on the tax. Gee, what a pleasant surprise”.
I actually agree, if a player signs tomorrow to a 10/300 million dollar deal, then every year of that contract the AAV will account for 30 million, the life time of the deal doesn’t reflect “present value”.
If I’m a team that flirts with a luxury tax hit, I beg any player to take a ballon payment as soon as their contract expires so I can skirt the luxury tax, same as the Dodgers. Ohtanis payments start as soon as his contract ends, for I believe the next ten years. That is quite the loophole for the Dodgers if you ask me
expected by who? MLB front offices, or nobodies on the internet.
@drascoo36 it was to avert the CBT, but not in the way that JM is explaining.
Basically Ohtani is giving the Dodgers an extra $20M real money to spend on players each year. ($46M CBT value – $2MM actual salary = $44M ; $20M at the tier 3 112% CBT penalty is $44M)
If Ohtani was being paid $46M per year without deferred money, the Dodgers would not have that extra $20M to spend (which could be even more, up to the actual $44M, if they get below the CBT threshold)
So to say that it’s not circumventing the CBT, is naïve, it’s just not as egregious as everyone thinks
The contract is allowed by the CBA, and it was approved by MLB. There’s no circumventing going on, just quite a bit of creativity.
gbs42, That’s like saying tax loopholes aren’t about lowering the income tax owed, because they’re legal, and allowed by the IRS.
I read today that California’s State Controller is now urging congress to close the tax loop hole of unlimited deferrals that could allow Ohtani to avoid paying $98 million in California taxes. Not to mention the payroll taxes the Dodgers would be avoiding.
Shohei should sue for discrimination if that happens.
Not a Dodgers fan, but who cares? They’re being charged AAV on the money they’re actually paying Ohtani. Each year they have to put roughly $44M into an escrow account that will eventually grow to $68M, which is when Ohtani will collect it—which will probably be better for him, as he can collect it somewhere and avoid paying CA taxes. The Dodgers aren’t paying Ohtani $700m, and are being taxed on the money they are paying him.
Baseball should care, actually.
Feel like instead of indulging in the same Ohtani questions, we could be answering more unique questions. Just my two cents after going like 0-15 lmao
It would be nice to see them do another series of team-specific chats in the near future.
That would be awesome!
Ask the Bees or Beads question… that’s always a winner.
From the chat: “John Doe
2:04 Royce Lewis for Bryan Woo make sense for both clubs? Who has more value?”
Let me answer this for you more directly. Royce Lewis has dramatically more trade value. Baseballtradevalues has Lewis more valuable than Logan Gilbert and within earshot of George Kirby.
Also Dipoto said he’s not trading his young SP. Not sure why people continue to think he’s going to trade young SP.
And according to Baseball Trade Values Michael King was 50% more valuable then Juan Soto. Nice site, definitely can’t be taken as the gospel.
I definitely don’t agree that Royce Lewis is as valuable as Logan Gilbert or George Kirby.
Imagine how much value those arms could land when Yamamoto had multiple 300m offers. You’re getting an established stud with 4 or 5 years of control making the near the minimum. The bidding war for either would be intense.
Lots of teams would love to have Royce Lewis but with a half season of success and a long injury history it seems illogical to think he’s of similar value to those two arms, especially in this crazy pitching market.
@padrepapl and the 3 people who “liked” the comment:
The value of the player also includes their estimated future cost. Educate yourself on how the site works before posting your opinion.
Lewis is projected at 133MM of future value or probably about 15 WAR over the remainder of team control (3WAR per season). The tool projects the cost of Lewis’ services over that span as $60MM. 3WAR for 1/2 a year of Lewis looks about right based on his performance in his rookie campaign.
Gilbert has 4 years of control remaining with an estimated production worth $108MM (also about 3WAR per season) and $42MM left to be paid. Lewis is worth more in the tool because he has an additional year of team control.
Kirby’s surplus is higher, but Kirby’s “average valuation” isn’t more than Lewis’ top of the range valuation.
Baseballtradevalues isn’t great in some cases. It’s pretty rough when it comes to mid level prospects outside the top 100. Aside from that, it’s “usually” pretty accurate.
A survey should be posted. I suspect 90% or more people would rather have Kirby.
Mantras – Thank you, I have been hoping someone could explain how Soto with 2.33 years of control has a BTV valuation of 170m where Soto with 1 year of control only has a 22m valuation.
In the first scenario he was already making 17m as a super-2 so it would be pretty easy to estimate the following two arbitration salaries.
Thanks in advance!
@sillywabbit. Not what I said.
For Woo/Miller no chance at Lewis. If we’re talking Gilbert or Kirby then MAYBE we can work something out. Lewis has MVP talent if he can get a full season of health
Baseballtradevalues is whack..
People dorget that accounting only cares about NPV when you defer a deal, not when you give a guy 5 MM 1 year and 25 MM the next (Glasnow). Inflation exists in both cases, but that deal would have an AAV of 15 MM. It’s not as much that they use NPV as much as it is that deferred money is fine, while the Padres going 14/400 on Judge is not. The Padres’ fanbase and many other fanbases see this as biased.
You bring up a valid point, I mean Bryce Harper’s net value isn’t the same when he signed his original contract right? With inflation his deal isn’t going to be “worth the same” as the day he signed it.
Fair is fair, AAVs should account for inflation if Ohtanis does as well so if player A signs for 10/300, then his AAV should reflect the decrease of value due to inflation in the AAV.
The CBT thresholds go up from year to year, so in effect, the AAV is going down relative to the CBT.
That isn’t the purpose of the luxury tax increases nor is it the same thing as what I was referring to.
Contract inflation is probably way more than the increase in CBT, though. If you take the top salary from 2024 and divide by the top salary from 1980 (the first 1 MM player), that’s an inflation rate of 8.8%. (46 MM/1.125 MM)^(1/44))
Sure, that’s not acerage salary, but 8.8 >>>> whatever the CBT increases amount to
Hear me out…Joe Adell
Haha
The will the Cubs trade for Kris Bryant question slayed me.
Steve, your response to “people are up in arms”, was a classic. Nicely done!!!
This will be controversial! But it is true. I live in México, in the bario. While the Dominican Republic is not México, they have similar mores. Here it is not uncommon for Girls to have sex at 13-14. The point of my comment is understanding. And it isn’t looked down on by parents. They want children more than morals. This does not exonerate Franco, but if he were a regular person in the DR, I seriously doubt charges would be brought. Why he wanted a 14 year old is dificultad to understand. But sex with a 14 year old is not rare. The culture is different in the bario. In Latín América rules and laws are ignored. If the charges against where evenly applied, hundreds of men would be prosecuted daily.
Spudchukar, You are obviously just the messenger and stating facts, though everything I just read is truly vile & vomit inducing. And angering. And just plain wrong. The Almighty is behind on his smiting as of late, clearly. Thanks for stating the facts Spudchukar. I am sorry you have to reside in contemporary Sodom & Gomorrah.
He’s correct, have you ever seen the parties that parents throw their 15 year old daughters, quintaceria or something like that? Often alcohol, daughter in a skimpy dress or bridal gown, her friends dressed like bridesmaids, lots of pressure to socialize with boys. It’s the “coming of age” which in a lot of cultures would be considered gross.
I know he is 110% correct. That is what bothers me Sid.
Sid, quinceañera. Took about 10 seconds to look up. And it’s nothing like a 22 year old having sex with a 14 year old.
I won’t be surprised if Franco pleas down to whatever the DR calls misdemeanors, allowing him to continue his career.
GBS, so what, you Googled something. I have hosted them in a resort I managed. Tacky and certainly a sexualization of the child. Someone should check your hard drive.
Ultimately bham it will be plead down with lots of big money handshakes happening.
Bobby Bonilla
Is all the deferred money in the history of baseball more or less than Ohtani’s?