Shohei Ohtani contract deferrals set Dodgers up for free agency monopoly
After giving Shohei Ohtani the largest contract in the history of baseball, the Los Angeles Dodgers will have plenty of cash to splash in free agency.
How is that possible? Because Ohtani cooked up the most diabolical contract imaginable with massive deferrals that will amount to the Dodgers paying him pennies until 2034.
According to Fabian Ardaya of The Athletic, Ohtani is deferring $68 million of the $70 million owed him per year until the end of his 10-year contract. He will make $2 million per year until 2034 when the Dodgers will owe him the interest-free remainder of his contract, which they will be paying out until 2043.
Exclusive @TheAthletic: Shohei Ohtani will defer $68 million per year of his $70 million annual salary over the course of his 10-year, $700 million deal with the Dodgers, allowing the team to keep spending, according to a person briefed on the terms.https://t.co/IsnWlsbTq9
— Fabian Ardaya (@FabianArdaya) December 11, 2023
It's an unprecedented deal that will give the Dodgers more spending power than anyone could have guessed after signing a player to such a lucrative contract. It's also apparently totally within the rules.
As Jeff Passan pointed out, the CFB does not put a cap on deferred money.
For anyone wondering if MLB will challenge or cancel Ohtani's contract: The answer is unequivocally no. There is a specific article in the collective-bargaining agreement that addresses this. And it's very clear: Deferred money is limitless -- even $680 million of $700 million. pic.twitter.com/DGNK0JulED
— Jeff Passan (@JeffPassan) December 11, 2023
Even though the Dodgers will only technically pay Ohtani $2 million per year in salary, his contract will count for $46 million per year against the luxury tax. That's still a hefty savings from the $70 million per year that a more straightforward contract would have required.
So basically, the Dodgers are getting Ohtani on the cheap while he's playing for them. They'll be able to surround him with major talent in hopes of winning a World Series. The chickens on his contract won't come home to roost for a decade. And there's no need to worry about interest because Ohtani is willing to take that loss...He makes enough money in endorsement deals as it is.
shohei ohtani continues to be an unprecedented two-way player. he is both the most affordable and most expensive player in baseball history.
— alex (@steven_lebron) December 11, 2023
It now makes sense how the Dodgers are still considered contenders for big free agents like Yoshinobu Yamamoto.
Is this fair? Do teams in mid-tier and small markets have any hope of competing for free agents when large-market juggernauts can get players to defer money? MLB doesn't seem concerned with fairness or competitive balance for teams in smaller markets.
The only thing that's certain is the Dodgers have zero excuses not to win the next few World Series with this kind of financial edge.
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