Ohtani's Dodgers contract has $680 million deferred, lowering tax value to $46 million annually

Ohtani's record-setting deal, agreed to Saturday, calls for annual salaries of $70 million, according to details obtained by The Associated Press. Of each year's salary, $68 million is deferred with no interest, payable in equal installments each July 1 from 2034-43.

Per “The Athletic,” Ohtani is believed to make $50 million annually in non-baseball income. That on top of his accumulated endorsement income and the roughly $42 million he made playing for the Los Angeles Angels make it considerably easier for him to put off receiving $680 million in salary.

People in cities across Japan cheered the star's record $700 million, 10-year contract with the Los Angeles Dodgers.

Why? What fool wants to contribute to the wealth of an already insanely affluent man through higher ticket prices, higher electronic viewing fees, and higher prices by sponsoring companies such as New Balance, Seiko, Kose, Salesforce, Mitsubishi UFJ Bank, Japan Airlines, and Boss?

Is society ever better off when we increase the wealth gap and make goods and entertainment less affordable? Certainly not.

Bill Gates and his ex-wife Melinda have spent billions of dollars through their foundation doing a lot of good to enhance healthcare and reduce extreme poverty across the world. But do we celebrate their accumulation of greater wealth?

This is a guy who wants to win and his new team better put the players necessary around him to do so.

Differing 68 millions a year for ten years at zero interest is a real statement of intent.

Is society ever better off when we increase the wealth gap and make goods and entertainment less affordable? Certainly not.

Its called the free market and it works.

$680 million payable from 2034-43 in an unusual structure

Usual in the fact that the sum is attached to a length of elastic, now you see, it now you don't.

Inflation will take its toll, it all feels like a PR stunt. A sort of questionable IOU note.

You sure Bernard Madoff or Charles Ponzi aren't silent partners?

I pray for Ohtani that the Dodgers will not file for bankruptcy before the ten years is up.

Now they’ve got money for Yamamoto.

Asiaman7Today 04:54 pm JST

Is society ever better off when we increase the wealth gap and make goods and entertainment less affordable? Certainly not.

Watching the games on cable or online, while not cheap, is not outside the reach of most Americans.

I am 100% behind Shohei Ohtani.

I want to see his agreed earnings materialise.

I have to enquire...

Ohtani's contract, combined with those of Mookie Betts and Freddie Freeman, raises the Dodgers' total of deferred money owed to the three to $857 million from 2033-44.

One has to assume that before such a figure become due, Dodgers will be added to the team over the coming years seasons this deferred salary commitment will increase exponentially as more player are signed.

I've never understood or been able to play baseball, but I liken it to the guitar. The Stones get hundreds millions of dollars to play the guitar and sing. Ohtani gets it to throw a ball and hit and catch a ball. They both have a ball. While I can neither play guitar or baseball, it is without doubt he is the best baseball player ever. We are blessed to be able to watch Ohtani playing the world's pastime. Hopefully, the move from Anaheim to Los Angeles won't be too harrowing and he will be able to adjust to the new colors of the Dodgers uniform.

I hope there is some sort of guarantee? Like lottery winnings. Take it discounted now or as an annuity.

@TaiwanIsNotChina

Watching the games on cable or online, while not cheap, is not outside the reach of most Americans.

American households, on average, have $41,600 in savings, according to data last collected by the Federal Reserve in 2019. The median balance for American households is $5,300, according to the same data.  

The reality is that the above stats may not accurately reflect the financial situation of many Americans. In 2020 the Federal Reserve reported that only 64% of Americans had enough money on hand to cover a $400 emergency.

https://time.com/personal-finance/article/average-american-savings-account-balance/

Americans have the highest levels of personal debts.

Why didn't he start with the Dodgers in the first place? I have to say his time with the Angels really revived interest in baseball and gave him an environment where he probably had less stress and was the team star. I am not sure the high pressure to win with the Dodgers, the competitiveness and his injuries will give the same magic.

Wally, Americans have high debts and high incomes. It is really not relevant to this article. Japan has the highest public debt.

$680 million payable from 2034-43 

If inflation over the next 11 years matches inflation over the past 11 years, this $680 million payment actually has a value of $507 million in today’s dollars.

Whoah. If Ohtani retires in Japan he will be facing a 55% rate of income tax on all that.

Why? What fool wants to contribute to the wealth of an already insanely affluent man

Look at the envy dripping of this one.

Ohtani is delivering huge excitement and pleasure to millions of people including many new baseball fans, but you come along and moan about the reality that, in this world, people are not clones, and those who excel in something and can this produce value for the rest of us, and get laid commensurately for that.

Is society ever better off

Yes.

Society is better off, thanks to Ohtani.

when we increase the wealth gap

The wealth gap is not a problem. Ohtani produces value. He gets paid. So what.

and make goods and entertainment less affordable?

Are you blaming Ohtani for inflation?

Bill Gates and his ex-wife Melinda have spent billions of dollars through their foundation doing a lot of good to enhance healthcare and reduce extreme poverty across the world. But do we celebrate their accumulation of greater wealth?

I do… I love billionaires. It’s a pity that Japan doesn’t.

Shohei Ohtani will receive just $20 million of his $700 million contract with the Los Angeles Dodgers over the next 10 years

Just?

I would be totally fine with "just" $2 million a year.

Especially if I knew I had $680 million coming to me upon my before-age-40 retirement.

Speaking from my Major league baseball scouting experience, I said from the beginning the money was deferred. That is a lot of money for ten years and that is why I said Ohtani has a good team of people around him. This isn't the first time an athlete took a deferred payment clause. Bobby Bonilla did it with the Pittsburgh Pirates he was out of baseball for 15 plus years and is still collecting millions from his contract today that was signed in the 80's. Owners and Players and a good management team do this to avoid team salary caps, and the luxury tax. What people really don't know is that the money is also amortized over the years to collect projected interest which combines the payouts. Ohtani could care less about the money he made over $40 million in endorsements alone that doesn't count his baseball earnings. Now that he has switched teams and the new interest those endorsement are projected to double. The only things Ohtani cares about now is winning its obvious, the guy has won on every stage playing the game he loves except winning a World Series ring. He took the deferred contract to go to a proven team to pretty much guarantee him a world series because he too knows his time is running out. Again for Ohtani its not about the money its about winning!

Ohtani could care less about the money he made over $40 million in endorsements alone that doesn't count his baseball earnings. Now that he has switched teams and the new interest those endorsement are projected to double. 

If Ohtani’s accepting those endorsements, he obviously cares about them. Or he cares about the money — that $50 million a year in endorsements.

I knew something was going behind the scene, and I believe there are many clauses in case he can not play or for the contract termination. At the end of the day, not the raw wage but the net salary is important. 20M a year minus taxes right ?

Between 10 to 15 M a year.

Obscene … money talks!

For those who thumbed me down obviously don't know anything about baseball. One thing you must realized if you never played the game is ITS A BUSINESS!! When it gets to that level its all about business, and having the right people around you to make such business deals. I am sure most of the posters here have no idea of what deferred income was before it was reported, all they read was $700 million. I agree yes that is a lot of money but there is a lot that goes behind close doors in the negotiations in getting a deal done. Been there done that. Now that Ohtani is going to make $700 million over 10 years. My question is this have any of you thought about how much the Dodgers will make? I can guarantee you its 4 times more and no one is talking about those numbers and that is because ITS BUSINESS big Business! Ohtani's money is guaranteed, but have you thought about the Dodgers money it is guaranteed to because if Ohtani gets hurt think about how much that insurance policy is costing them to protect their prized interest. Its business. Should Ohtani gets hurt the insurance policy kicks in arm chair baseball fans don't know this they only see $700 million its business. Don't hate the player or those in the know hate the game in this case its BUSINESS.

Americans have the highest levels of personal debts.

This isn’t true. A quick Google search turns up that Denmark, Norway and the Netherlands have the highest levels of personal debt

For everyone talki gabout inflation etc.... yes, but missing a lot of things. the tax savings he will eventually make will offset most of whatever he would have made in investment ( a dollar saved is a dollar earned).

The number is probably inflated some to account for some of that.

If he can win championships his endorsement based income will increase, again offsetting any lost income on the deferred contract.

His risks are if the dodgers go bankrupt before he gets paid out ( highly unlikely). Or if he turns to crap in the next few years and the endorsements dry up quicker than he expected.

Worst case scenario though, he still comes out of it all with $100's of millions. And can still come back to Japan for a few seasons at the end of his career to milk what's left. He'll be ok.

Society is better off, thanks to Ohtani.

Baseball has a salary cap doesn't it. The cap will be far from perfect, but will make the sport slightly more competitive than it would be otherwise. Ohtani is getting around tax here, but the Dodgers are also getting around the full hit to their salary cap that the most expensive player in baseball history would mean otherwise.

I don't really watch MLB baseball but NFL is a competitive league. It has huge problems with concussions, racism, and franchises screwing cities for free stadia, but it provides close games and great entertainment. The least we should expect from professional sports is to serve up such entertainment.

Asiaman7Dec. 12 07:35 pm JST

wallaceDec. 12 08:14 pm JST

Ok. Does this prove that people are unable to view professional baseball? It's even easier to access out of market.

Baseball has a salary cap doesn't it. I don't really watch MLB baseball but NFL is a competitive league.

MLB doesn’t, but the NFL does.

the tax savings he will eventually make 

So an athlete making $52 million today in salary and endorsements will pay less of a percentage tax today than that same athlete making $70 million in deferred salary 11 years later? Wouldn’t that $70 million be taxed 11 years later at the same percentage tax rate as today (assuming the government doesn’t alter the rates)?

He really wants to win! Or else this deal seems a bit too over hyped. Given no interest accrual which sounds like a bit of a silly thing to do. Just my opinion of course.