In a groundbreaking move, Shohei Ohtani’s record-breaking 10-year, $700 million contract with the Los Angeles Dodgers includes unparalleled payment deferrals.
The two-way superstar will defer all but $2 million per year of his staggering $70 million average annual salary until the contract’s culmination in 2034, leaving $680 million to be paid over a decade later.
Reportedly, Ohtani proposed these unique deferrals, and the Dodgers officially announced the signing on Monday without disclosing the detailed terms. The deferred portion of the contract will be disbursed to Ohtani without interest from 2034 to 2043, providing financial flexibility for the Dodgers to enhance their roster around the Japanese sensation.
The Los Angeles Dodgers have signed two-time American League Most Valuable Player Shohei Ohtani to a 10-year contract. pic.twitter.com/mggYwgp01i
— Los Angeles Dodgers (@Dodgers) December 12, 2023
For competitive balance tax (CBT) purposes, the deferred contract is expected to amount to approximately $46 million annually. Similar to the NBA’s luxury tax, CBT penalizes teams exceeding a predetermined spending ceiling. The intricacies of reaching the $46 million figure remain unclear.
Ohtani’s reported $50 million annual non-baseball income, coupled with his endorsement earnings and the roughly $42 million from his time with the Los Angeles Angels, makes it feasible for him to postpone receiving $680 million in salary.
This groundbreaking contract isn’t an isolated instance, as other Dodgers stars have embraced deferral agreements. Freddie Freeman’s six-year, $162 million deal reportedly defers $57 million from 2028 to 2040. Mookie Betts’ 12-year, $365 million contract includes $115 million in deferred salary paid from 2033 to 2044.
The Dodgers continue their spending spree, actively pursuing sought-after Japanese pitcher Yoshinobu Yamamoto and other free-agent targets in the wake of Ohtani’s historic deal.
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