By Shohei Ohtani has made headlines with his historic 10-year, $700 million contract with the Los Angeles Dodgers. However, it is now being reported that Ohtani will be deferring about $68 million a year, allowing the team more financial flexibility to comply with Major League Baseball’s luxury tax regulations.
According to The Athletic, Ohtani has agreed to defer all but $2 million of his annual salary. The deferred amount will be paid out without interest from 2034 to 2043. This creative accounting strategy means that for luxury tax purposes, his annual contract will only amount to $46 million.
This maneuver gives the Dodgers much-needed payroll flexibility, enabling them to continue pursuing other high-priced superstar players. Alongside Ohtani, the team already boasts players like Mookie Betts (earning $365 million over 12 years) and Freddie Freeman ($162 million over six years). They are also rumored to be in the hunt for Japanese pitcher Yoshinobu Yamamoto, whose contract could reach $300 million.
Ohtani’s agent, Nez Balelo, describes this contract as both unique and historic, reflecting a true commitment to long-term success from both sides. It demonstrates Ohtani’s enthusiasm for beginning this partnership with the Dodgers.
Despite concerns from opposing fans on social media, this contract is perfectly legal. The current collective-bargaining agreement explicitly addresses deferred payments and sets no restrictions on their amounts or duration. According to ESPN baseball writer Jeff Passan, “It’s very clear: Deferred money is limitless – even $680 million of $700 million.”
It’s worth noting that Ohtani’s off-field endeavors also contribute significantly to his income. He earns approximately $50 million per year through endorsements and other ventures, according to The Athletic.
Overall, Shohei Ohtani’s record-breaking contract with the Los Angeles Dodgers showcases both his exceptional talent and the team’s commitment to long-term success. With this newfound financial flexibility, the Dodgers are poised to remain competitive and continue their pursuit of top-tier talent.
Comments