After a slow start, the MLB offseason has picked up the pace with some eye-catching deals. To begin with, the $700 million Shohei Ohtani deal with the Los Angeles Dodgers has stormed the entire sporting circle by making the Japanese star the highest-earning athlete on American soil. Contrary to expectations, the most recent reports present a different scenario.
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Notably, Ohtani topped the leader box of highest-paid athletes over global football icon Lionel Messi with $70 million a season. But the latest reports suggest that this was a presumption only. Reportedly, the 2023 MVP is expected to earn way less, with some claiming it to be $2 million a year. Given it is multifold less than the projected earnings, it looks unreal. But if it is true, what is the reason behind such numbers?
Shohei Ohtani to Earn Only $20 Million in All His 10-Year Contract
Notably, the 30-year-old has chosen the path of deferments to fulfill his deal. Due to this, Ohtani will earn two million dollars a year until the end of 2033, amounting to $20 million in 10 seasons. It will leave him with $680 million in salaries, which the Dodgers will pay for till 2043, making this a contract of two decades inked as one.
The Dodgers’ payouts to Shohei Ohtani for the next 20 years: 2024:$2M 2025: $2M 2026: $2M 2027: $2M 2028: $2M 2029: $2M 2030: $2M 2031: $2M 2032: $2M 2033: $2M 2034: $68M 2035: $68M 2036: $68M 2037: $68M 2038: $68M 2039: $68M 2040: $68M 2041: $68M 2042: $68M 2043: $68M
Fascinating indeed! Yet, with this arrangement, there’s a significant message for everyone involved. The question remains: will other teams take heed?
Will Other Teams Follow Suit After Seeing the Benefits of the Deferments?
Shohei Ohtani deal was a center of attraction for all due to the money involved. Notably, the deferments involved in the deal have changed the nature from a costly to an economical setup. According to Bob Nightingale, the setup will benefit, both the Dodgers and Shohei Ohtani.
He shared, “Shohei Ohtani’s decision to earn just $2 million a year certainly is a great benefit to the Dodgers’ payroll, but also a stroke of genius for tax repercussions. If he’s not living in California once his deferred payments start, he will not be subjected to heavy California tax.”
Shohei Ohtani’s decision to earn just $2 million a year certainly is a great benefit to the Dodgers’ payroll, but also a stroke of genius for tax repercussions. If he’s not living in California once his deferred payments start, he will not be subjected to heavy California tax.