Dodgers say Ohtani has signed, but sources say the $680 million part of the deal has been put off.

Dodgers say Ohtani has signed, but sources say the $680 million part of the deal has been put off.

Sources familiar with the agreement said Monday that Shohei Ohtani will defer $68 million from his annual $70 million salary as part of his historic deal with the Los Angeles Dodgers. This will greatly reduce his new team’s payroll and possible tax load.

Ohtani agreed to a 10-year, $700 million deal with the Dodgers on Saturday. It is by far the richest contract in the history for North American professional sports. The Dodgers stated on Monday that they had signed the two-time MVP.

At the time, a source said that most of the contract’s money would be paid over time. With this format, however, Ohtani is delaying more than 97% his earnings. One source said that Ohtani will get the $680 million in back pay between 2034 and 2043.

A person familiar with the situation said that Ohtani came up with the idea of deferrals. He was mainly driven by the desire to help the Dodgers add other players, which was made easier by the fact that he makes a lot of money outside of baseball.

A source said that Ohtani makes more than $45 million a year from advertising. This makes him among the most recognizable player within Major League Baseball.

It was thought that the Los Angeles Angels made over $20 million a year from his marketability while he was with them.

Ohtani told Dodgers fans Monday, “Thank you for making me feel welcome on your team.” The release from the team said this.

“I can say 100 percent which you, the Dodger organization, and I shared the same goal: to bring World Series ceremonies to the streets of Los Angeles.”

The Dodgers’ competitive after tax payroll, which takes into account the average yearly value of contracts, which in this case is $70 million but doesn’t include deferred money, will lose about $46 million each season because of Ohtani.

With Ohtani, Freddie Freeman, as well as Mookie Betts on the team, the total cost of their salaries each year is about $100 million. In 2024, the base amount for the wealth tax is set at $237 million.

There is no cap on how much money can be delayed in the collective bargaining agreement, but teams must hold the present value of the deferred money in an escrow account. In Ohtani’s case, this is about $44 million in cash every year.

The Dodgers will be able to keep spending money on Ohtani, Mookie Betts, and Freddie Freeman as long as the deal is finished soon. This will give the team flexibility with their payroll and cash flow.

Japan’s two-way superstar is supposedly making $50 million a year from endorsements as well as other deals outside of baseball.

He’s not broke. The sources say that the competitive advantage tax, also known as the luxury tax, will have an average value of about $46 million per year.

In turn, this gives the Dodgers more options to keep trying to sign top free agents like Tyler Glasnow of the Tampa Bay Rays and Yoshinobu Yamamoto of Japan.

“[Ohtani] is excited about starting this partnership, and he’s structured his contract to show a true commitment to both sides with long-term success,” Ohtani’s agent, Nez Balelo, said to a statement when the deal was first revealed.

A league source told Fabian Ardaya in The Athletic on Monday that Ohtani will put off all but $2 million of his total annual pay until the end of his contract in 2034. That’s $68 million of his $70 million salary.

The team will pay the $680 million that was put off without interest from 2034 to 2043. Sources told ESPN’s Jeff Passan about the delays as well. The Athletic also said that Ohtani is thought to make $50 million a year in money from outside of baseball.

Along with Mookie Betts and Freddie Freeman, Ohtani offered the deferrals to help the Dodgers’ future financial plans. Players like Yoshinobu Yamamoto were still on the market.

The Dodgers will also be better able to deal with the so-called competitive balance tax (CBT), also known as the luxury tax. The estimated average annual value (AAV) for CBT is said to be around $46 million per year, not the $70 million that appears on the surface.