The biggest talk of the town is Shohei Ohtani’s $700 million contract. Well, the fact that a majority of it has been deferred raises more questions on how this idea was born. Apparently, it was the unicorn himself who proposed this. Well, this is a big step in favor of the team; maybe Ohtani learned it from Mookie Betts. 

The implementation of this concept allows the Los Angeles Dodgers to manage the huge financial impact of signing the two-way phenom. The team can spend competitively to accommodate more names to strengthen their lineup. After all, they are not new to managing payroll with deferred money. 

Details on Shohei Ohtani and Mookie Betts’ Deferrals

Sources say that Ohtani will defer $68 million of his $70 million salary per season till his contract gets over. This means that he will earn $2 million per season over the course of 10 years. Diving deeper into the subject, it becomes clear that Mookie Betts’ $365-million contract has a value of only $306.7 million in this present day. That’s because of $115 million in deferred payments.

As far as this subject goes, the MLBPA determines how much deferrals reduce the contract’s value on contracts containing deferred money. In Betts’ case, this is approximately $5 million annually. Do also note that Freddie Freeman is part of a $162 million over 6 years with a deferred amount of $57 million. The contract’s value for competitive balance tax purposes is ascertained using that figure. So, how has the Blue Crew mastered this financial aspect? 

The Dodgers are one among a select few teams capable of generating profits without solely relying on cost-cutting measures. They are achieved by delivering a successful output in the field. Shotime’s contributions would be able to enhance the Dodgers’ ability to sell more tickets and progress in the playoffs, thereby positively impacting their overall revenue. So, their finances seem quite sorted out. 

Here’s How the Future Looks for the Dodgers and Ohtani

The combination of Ohtani’s contract, along with those of Betts and Freeman, increases the Dodgers’ overall deferred payment obligations for the three players to $857 million, spanning the years 2033 to 2044. The three Los Angeles-based players have deferred payments peaking in 2038 and ’39 at $83 million and in 2040 at $84 million, which the team will pay the trio. In the midst of this, Ohtani emerges with an advantage. 

Read More: While Shohei Ohtani Grabs All Attention, Los Angeles Dodgers Seek Alternatives for Mookie Betts’ Temporary Role

He will receive a tax benefit because, since a vast portion, his money will be earned when he is most likely not going to be residing in the United States. The highest tax rate that Californians pay is 13.3%. That said, it inevitably draws comparisons to his past contracts. The unicorn made about $42.3 million with the Angels, almost twice as much as he does now with an average salary. It also surpasses Oakland’s and Baltimore’s combined payrolls for this year. That’s quite a massive figure! 

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