Shohei Ohtani’s historic 10-year, $700 million contract with the Los Angeles Dodgers is an industry first, in several ways. The deal also reportedly includes a remarkable $680 million in deferred compensation.
Ohtani himself proposed the unique arrangement, sources said, and the deal was structured that way in order to enable the Dodgers to maintain flexibility in the free agent and trade markets going forward. They are believed to be among the most serious suitors for coveted free agent right-hander Yoshinobu Yamamoto.
The deal was done similar to the way Dodgers structured high-end contracts with Freddie Freeman and Mookie Betts in the previous two seasons, but quite a bit more radical.
Ohtani’s payment schedule will be constant from 2024-2033 — he is to receive $2 million each season, with the remaining $68 million deferred.
The Dodgers now have a projected $218 million payroll 2024, but because major league baseball discounts deferred money in calculations determining the competitive balance tax, the Dodgers are about $60 million below the $2024 million threshold.
The contract seemingly weds Ohtani to the Dodgers through his age-39 season. After the 10-year deal expires following the 2033 season, he will earn the $680 million in deferred money from 2034-43.
No Limit To Deferred Money In MLB Contracts
The collective bargaining between players and major league baseball stipulates that there is no restriction the amount of money that can be deferred in a contract. The deferrals may give Ohtani a tax advantage if he were to move from Los Angeles to state with a more favorable tax struture.
“To all Dodgers fans, I pledge to always do what’s best for the team and always continue to give it my all to be the best version of myself,” Ohtani said in an Instagram post after the contract agreement Saturday. “Until the last day of my playing career, I want to continue to strive forward not only for the Dodgers but for the baseball world.”
The Dodgers paid a competive balance tax in 2021 and 2022 but scooted under last season. The penalty for going over the threshold also includes a drop of 10 spots in the ensuing year’s June free agent draft.
Ohtani’s acceptance of so much deferred money gives the Dodgers plenty of room to work the free agent market this season. With Betts and Freeman, the Dodgers already had $172 million deferred dollars on the books. Now, they $852 million.
Betts And Freeman Also Have Large Deferments
Betts signed a 12-year $365 million deal in 2021 that includes $115 million in deferred money that will be paid through 2044. Betts will receive final $5 million of his $65 million signing bonus by 2023. He also will receive $8 million per year from 2033-2037, $10 million a year in 2038-2039, and $5 million a year from 2040-2044.
Freeman’s six-year, $162 million deal signed in 2022 includes $57 million in deferred money that will be paid through 2040. He is to earn $4 million yearly from 2028-2035 and $5 million yearly from 2036-2040.
The $70 million average annual value of Ohtani’s new contract is half-again more than the previous high of the identical $43.33 million by right-handers Max Scherzer and Justin Verlander with the New York Mets. New York Yankees’ outfielder Aaron Judge’s nine-year deal signed in 2023 ranks fourth at $40 million.
Dodgers’ Lineup Could Be Among The Best
Manager Dave Roberts will have a top of the lineup threesome in Betts, Freeman and Ohtani — in whatever order — that will be among the best in the majors.
Ohtani, the two-time reigning American League MVP, had 44 home runs and a 1.066 OPS and was 10-5 with a 3.14 ERA in 135 games with the Los Angeles Angels last season, when he ranked in the top 10 in both ERA+ and OPS+.
Ohtani He is not expected to pitch this season after suffering an the ulnar collateral ligament in his right elbow Aug. 23. He suffered right oblique inflammation while taking batting practice Sept. 4 and missed the rest of the season.