It seems like the name “Shohei Ohtani” and the words “record breaking” together in one sentence has become normal at this point. But then he announced that he signed with the L.A. Dodgers on Saturday, December 9th 2023. Six years after the L.A. Angels had their press conference to introduce him as a part of their team. In his six years as an Angel, Shohei amassed $42.26MM in career earnings, with most of that being the $30MM that the Angels paid him in arbitration for his 2023 AL MVP season. And that’s just in his baseball contracts since 2018, we’re not including sponsorship and endorsement money that is said to have been an additional $40MM in 2023 alone. So, 10-years and $700MM are the base numbers for this deal, reportedly, with heavy deferrals (Ohtani’s idea), to keep the AAV around $40-50MM rather than a mind boggling and team heavy $70MM. But the man may as well be making that much, before taxes and all.
Let’s look at a couple of hypothetical situations, if we say Ohtani’s AAV is in the middle at $45MM. That’s $450MM over 10 years, leaving $250MM in deferred payments for who knows how long. If we take the largest current deferred payments, former Oriole in Chris Davis, who received $14.8MM in 2023 as a retired player, but only $9.2MM of that was in deferred payments. For the sake of ease, we’ll round up for Shohei Ohtani and the Dodgers deferred payment, since they can afford it, and say that he’ll be getting $10MM yearly in deferred payments for 25 years starting in 2034 (He’s a Free Agent, age 38, 16 years in the Majors, he may retire after this contract) through 2058. Shohei Ohtani will be in his 60’s by the time those payments end.
A second hypothetical is that Shohei doesn’t want to wait until his 60’s to get the full amount that he is being signed to, so let’s go with $25MM yearly deferred payments over a decade starting in 2034. Again, an unprecedented number, a number that could go towards a different stars’ yearly salary, but the Dodgers would be done with paying him by 2048, a much nicer timeline for both the team and player. Shohei Ohtani would be 48 years old, and have a very nice retirement fund. Any way you slice it, this sports shattering, industry altering, mind boggling contract will be very interesting to dissect once the real numbers come out. And don’t worry, you’ll be some of the first to be updated on those numbers!
UPDATE: Yeah, I told you that you’d be the first to be updated on Shohei’s contract, and funny enough, news came out before this article was published. Using the MLB and MLBPA’s new CBA (Competitive Bargaining Agreement), Ohtani, his agent, and the Dodgers were able to use article XVI referring to deferred payments which states the following: “There shall be no limitations on either the amount of deferred compensation or the percentage of total compensation attributable to deferred compensation for which a Uniform Player’s Contract may provide.” Or in layman’s terms, as long as the player, agent, and team all agree, the contract can defer as much money as they want, up to the point of league minimum for a Major League Player. Shohei will not be receiving interest on the remaining $680MM that he is to receive from 2034-2043, either. So, my first two hypotheticals were on the right path, but not to the extreme that is is actually going. Ohtani makes $40MM+ in off-field endorsements and sponsorships, as I mentioned before, and this is most likely why he has chosen to take so little from the actual contract, 97% of it being his “pension fund”, one could say. So, he will be receiving $20MM over the course of 2024-2033, and I have to guess $68MM payments yearly from the above stated 2034-2043.
