In a strange deal with the Dodgers, Shohei Ohtani will put off $68 million a year: Where to Find It
A person with knowledge of Shohei Ohtani’s 10-year, $700 million deal told The Athletic on Monday that the terms include a number of deferrals that have never been seen before.
So that the Los Angeles Dodgers could keep spending money on stars like Ohtani, Mookie Betts, as well as Freddie Freeman, Ohtani decided to put off all but $2 million of his total annual salary, or $68 million of his $70 million salary, until after the contract was over.
A source says that Ohtani will only get that $2 million a year via the Dodgers for the first 10 years of his $700 million deal with the team. The rest of the money will not be paid until the end of the 10 years.
The group will give the $680 million in back pay out at a rate of $68 million per year from 2034 to 2043. The money that was put off is going to be paid out with no interest from 2034 to 2043.
The deal was made public with the Dodgers on Monday night, and Ohtani has been added to their team.
Ohtani said in the news release announcing the deal that he wants to give Dodger fans “World Series parades” (in more than one way).
Ohtani said in the statement, “Dodger fans, thank you for making me feel welcome on your team.” “The Dodgers, I can say for sure that we all want the same thing: to bring World Series parades on the streets of Los Angeles.”
Ohtani offered the one-of-a-kind deal that was agreed upon on Saturday while he was in talks with the Dodgers. The person said that Ohtani gave other teams he met the same choice.
Major League Baseball and the players’ union have an agreement that says there are “no limitations regarding the amount in deferred compensation and the portion of total comp attributable for deferred compensation.”
It saves the Dodgers money up front, which lowers the team’s rivalry balance tax and lets them spend it on better players for the team.
The source said that Ohtani had learned more about the subject before he started negotiating his deal.
Ohtani won’t have to pay taxes on the $680 million he earned from his new deal until many years from now, when he may live in a place with a lower tax rate than where he is now.
In the year the meantime, the $40 million he made from endorsements last year will help pay the bills.
Nez Balelo, Ohtani’s lawyer, wasn’t joking when he said that the deal for the two-time American League MVP was “a unique, historic contract with a unique, historic player.”
Since Ohtani isn’t getting paid right away, the real value of his deal has gone down to about $460 million. Even so, it is still the highest within MLB history, surpassing Mike Trout’s $426.5 million extension for the Angels.
That brings down the typical yearly value for CBT purposes to about $46 million. The extra money Ohtani will bring to the Dodgers is expected to more than make up for that amount.
It is thought that Ohtani brought in an extra $20 million a year for the Angels. This number will likely be topped if Ohtani joins the Dodgers.
The 10-year, $700 million deal that Shohei Ohtani signed with the Los Angeles Dodgers is a first in many ways. Reports say that the deal also includes an amazing $680 million in delayed pay.
Sources say that Ohtani came up with the unusual deal, which will give the Dodgers options in the future when it comes to free agents and trades.
That’s kind of how the Dodgers set up their high-end deals with Freddie Freeman as well as Mookie Betts the past two seasons, but this deal was a lot more extreme.
From 2024 to 2033, Ohtani will always get paid the same way: $2 million every season, with the other $68 million put off.
They are thought to be one of the most serious teams interested in signing free man right-hander Yoshinobu Yamamoto.