Official Shohei Ohtani Thread (Update: Ohtani signs with Dodgers 10 years, $700 million)

[Davey0]

He'll be 30 next year. Not a chance for 10 years.

That contract is going to eat them in the next 3-5 years.

But all the best to him.

[Cyrus]

It's likely a contract of 10 years and 350-400 mill, and 20-30 years differed payment of theother 300 mill. That's pretty reasonable for Dodgers, sign the guy for 35-40 mill per, and then pay him afterwards 3 mill a year, so their TAX number is low.

Either way had we been close, it'd be similar like structure over here.

[JN]

Shohei Ohtani joining Dodgers on 10-year, $700M contract - ESPN.com

Shohei Ohtani signed a historic 10-year, $700 million contract with the Los Angeles Dodgers on Saturday.

Ohtani posted to Instagram on Saturday saying he would play for his former team's crosstown rival starting next season after spending six seasons with the Los Angeles Angels.

"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. 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," Ohtani wrote.

The contract is the largest in baseball history by more than $250 million, topping the 12-year, $426.5 million that now-former teammate Mike Trout signed in 2019. The $70 million average annual salary also easily eclipses the previous record of $43.3 million for Justin Verlander and Max Scherzer.

The deal does not include any opt-outs, a source told ESPN. Another source said "the majority" of Ohtani's salary will be deferred in order to mitigate what the Dodgers are charged toward their competitive balance tax payroll on a yearly basis, giving them more freedom to add to their payroll over the life of Ohtani's contract. The deferrals, according to the source, were Ohtani's idea.

With the dollar of the Ohtani contract one would think it will be the one and only contract allowed to fully backload the salary like how the NHL immediately implemented the Kovalchuk rule. You simply cannot have players signing 8+ year $400+M deals in their early 30s with a nominal cap impact during the prime years of the contract.
That's what the Devils tried some years ago offering Kovy something like $1M each year of the proposed contract and then like $30+M in the final year when he'd be in his 40s. The NHL shut that **** down before the contract would even be printed and Kovy retired to the KHL paycheque instead.

You have the Kovalchuk contract entirely backwards. it was front ended, not back-ended and it was done to circumvent the NHL salary cap. No such concern in MLB where there is no cap. (Note unlike the NBA, the NHL used the average salary over the term of the contract as the annual cap hit, and allows increases or decreases in pay over the term of the contract of greater than 8%)

The theory behind Kovalchuk's contract. is that If you add years at the end of a contact for $1M each, when the player already intends to retire before those years, you are able to significantly drive down the cap hit (while still essentially paying the guy the same)

The Kovalchuk contract was structured something like this (not exact figures, but as an example). The NHL struck down on it because it was the most severe of contracts that already had been done in a similar manner for other players like Shea Weber.

Year 1 - $10M
2 - $10M
3 - $10M
4 - $10M
5 - $10M
6- $10M
7- $10M
8- $7M
9 - $1M
10 - $1M
11 - $1M
12 - $1M
13 - $1M
14 - $1M

The player has no intention to be playing in the NHL by year 9 of the contract -- so he doesn't care that the annual salary on the deal is only $1M for those last 6 years.

So that contract above is a 14 yr contract for $83 million. So the average of this contract is about $6M. But in essence you are paying the guy $10M - so it's a way to artificially preserve nearly $4M of salary cap space in the first 7 years of that contract.

The NHL created salary recapture rules to discourage similar structures moving forward. The maximum contract term has also been lowered to 8 years.

[Cyrus]

Yep, almost identical it turned out although this was many times worse due to yesterday afternoon.

His agent certainly did an amazing job playing Rogers off to get 700M out of LAD.

I realize a hundred million more dollars is nothing to sneeze but at the end of the day does it matter to somebody like Ohtani? He'll probably make close to that in endorsements alone over the next decade. The man is basically a God back in Japan. The Dodgers could've stuck to their guns at let's say 55 million and he was still signing there. The only thing I'm upset about is the organization looking like fools again.

Over the last 4-5 days I raised my chances of landing him from 1% to 5% but in the back of my head I always knew he was going to end up a Dodger.

The extra 100 millions dollars matters to Ohtani's agent, and his final commission. Ohtani wants his agent to get the Maximum Best Deal possible, and I applaud his agent for using the Jays as Leverage to get that extra 100 million from the Dodgers. The Dodgers could have held their guns, but his agent knew they would fold and cough up more money, with the rumours going around how Ohtani was likely to sign with the Jays. Brilliant job by Ohtani's agent.

How do you know we offeered 600 mill, and not 700, we typically have always OVERPAID free agents to sign with us, either given more years, or higher AVG. Look at Ryu deal, it was 1 extra year and 20-25 mill. Same with Springer. Hell even Canadian Russell Martin, we had to go an extra year and 15-20 mill (Can't remember the contract exactly.)

IF anything I wouldn't even be surprised we had the higher offer on the table (Whether that was Avg, or years or whatever). Put this way, has anyone even rumored, that we were offering less and seriously thought about signing with us.

IF Othani was seriously mulling our offer, we had at one time the highest offer. I heard on radio that said if there is significant deferred payment, there is more people/groups that would need to sign off on this, so in this former agents mind, this was deal about 4-5 days ago, but they now needed approvals from Players Association (For any big chunk deferrals), the Commissioners office (for huge deferrals that potential work around the tax payments) and need everyone signing off it, vs. just an agent and Management conversation.

[JN]

It's likely a contract of 10 years and 350-400 mill, and 20-30 years differed payment of theother 300 mill. That's pretty reasonable for Dodgers, sign the guy for 35-40 mill per, and then pay him afterwards 3 mill a year, so their TAX number is low.

Either way had we been close, it'd be similar like structure over here.

I doubt that the deferred compensation is close to that high. (EDIT - seems like its coming around $450M base, so not that far off your estimate)

But either way, if a contract is deferred like that, you are not really saving tax money. The highest tax bracket in the USA starts at $700K (and in Canada around $270K) . So you are not really eliminating any tax consequences by paying deferred amounts that are well above the maximum number anyway.

[JN]

I realize a hundred million more dollars is nothing to sneeze but at the end of the day does it matter to somebody like Ohtani? He'll probably make close to that in endorsements alone over the next decade. The man is basically a God back in Japan. The Dodgers could've stuck to their guns at let's say 55 million and he was still signing there. The only thing I'm upset about is the organization looking like fools again.

Over the last 4-5 days I raised my chances of landing him from 1% to 5% but in the back of my head I always knew he was going to end up a Dodger.

The extra 100 millions dollars matters to Ohtani's agent, and his final commission. Ohtani wants his agent to get the Maximum Best Deal possible, and I applaud his agent for using the Jays as Leverage to get that extra 100 million from the Dodgers. The Dodgers could have held their guns, but his agent knew they would fold and cough up more money, with the rumours going around how Ohtani was likely to sign with the Jays. Brilliant job by Ohtani's agent.

How do you know we offeered 600 mill, and not 700, we typically have always OVERPAID free agents to sign with us, either given more years, or higher AVG. Look at Ryu deal, it was 1 extra year and 20-25 mill. Same with Springer. Hell even Canadian Russell Martin, we had to go an extra year and 15-20 mill (Can't remember the contract exactly.)

IF anything I wouldn't even be surprised we had the higher offer on the table (Whether that was Avg, or years or whatever). Put this way, has anyone even rumored, that we were offering less and seriously thought about signing with us.

IF Othani was seriously mulling our offer, we had at one time the highest offer. I heard on radio that said if there is significant deferred payment, there is more people/groups that would need to sign off on this, so in this former agents mind, this was deal about 4-5 days ago, but they now needed approvals from Players Association (For any big chunk deferrals), the Commissioners office (for huge deferrals that potential work around the tax payments) and need everyone signing off it, vs. just an agent and Management conversation.

I tend to concur with others that it was not about us not offering as much money as the Dodgers. I think we were the leader in that regard, and it was used against us in the end. There is a reason we hung around in this, when it appeared many of the factors that Ohtani may have liked would not be a lean to the Jays.

The Jays spend money now - we are a top 8 payroll. Unfortunately I'm not sure we have the management to use its resources effectively.

[JN]

He'll be 30 next year. Not a chance for 10 years.

That contract is going to eat them in the next 3-5 years.

But all the best to him.

As long as Ohtani is a near elite 2 way player, the contract will have value -- because of his uniqueness, and being a Japanese hero, he drives much more additional revenue opportunities than ever a player like Aaron Judge.

But I tend to concur that the real risk starts coming in around year 5. If he is consistently hurt or has a downturn in performance by 35 or 36, not only is it a bad baseball contract, but the additional revenue will no longer be there. i could be totally wrong but what interest did Ichiro get in Japan, once he started to decline in his last 5 years or so.

[polo007]

Read on Twitter

[Cyrus]

It's likely a contract of 10 years and 350-400 mill, and 20-30 years differed payment of theother 300 mill. That's pretty reasonable for Dodgers, sign the guy for 35-40 mill per, and then pay him afterwards 3 mill a year, so their TAX number is low.

Either way had we been close, it'd be similar like structure over here.

I doubt that the deferred compensation is close to that high.

But either way, if a contract is deferred like that, you are not really saving tax money. The highest tax bracket in the USA starts at $700K (and in Canada around $270K) . So you are not really eliminating any tax consequences by paying deferred amounts that are well above the maximum number anyway.

I'm talking about Dodgers Tax savings. Not player.

REally not sour grapes, but if it's huge amount being deffered, like rumor is 300 mill, the league should step in, this is absolutely going around the spirit of tax rules.

So if really dodgers signed othani 700 mill, but 300 mill is being differed for 20-30 years, it means his contract next year is 40 mill, and then when he's retired, dodgers would just be paying 10-15 mill in like 2050, which how salaries are increasing and such, might be minimal contract by then. It's not like salaries are going down.

It gives dodgers a huge advantage, means they could go other and sign Snell or Yamaoto

[JN]

It's likely a contract of 10 years and 350-400 mill, and 20-30 years differed payment of theother 300 mill. That's pretty reasonable for Dodgers, sign the guy for 35-40 mill per, and then pay him afterwards 3 mill a year, so their TAX number is low.

Either way had we been close, it'd be similar like structure over here.

I doubt that the deferred compensation is close to that high.

But either way, if a contract is deferred like that, you are not really saving tax money. The highest tax bracket in the USA starts at $700K (and in Canada around $270K) . So you are not really eliminating any tax consequences by paying deferred amounts that are well above the maximum number anyway.

I'm talking about Dodgers Tax savings. Not player.

REally not sour grapes, but if it's huge amount being deffered, like rumor is 300 mill, the league should step in, this is absolutely going around the spirit of tax rules.

So if really dodgers signed othani 700 mill, but 300 mill is being differed for 20-30 years, it means his contract next year is 40 mill, and then when he's retired, dodgers would just be paying 3-4 mill in like 2050, which how salaries are increasing and such, might be min contract by then.

It gives dodgers a huge advantage, means they could go other and sign Snell or Yamaoto

Yes, should have realized that you were talking about Luxury Tax from the Team's Perspective. And agree this could be seen as contravention of sorts.

The deferred annual payments will need to be higher than 3 or 4 million though. Using your estimate above of a $400 million base and a 20 year deferral period, the deferred payments end up being $15 million annually. But it still achieves the same impact.

The "somewhat" simple solution would seem to be to add deferred salary to the current contract period for luxury tax calculation - and they could use prescribed formula with an agreed upon baseline rate in the CBA to discount the deferred payments to their present value.

So his $300M of deferred payments might only be worth $100M once discounted. And that $100M could then be spread over the term of his contract for calculating the luxury tax.

[Cyrus]

i feel bad whomever the jays next sign or trade for, in comparison, people are going to be out for blood, and signing JD Martinez and Chapman sure isn't going to cut it in comparison.

I also hope we don't over-react to this and go out and overpay a champman or Bellinger...

[DelAbbot]

Technically speaking there’s really no way for him to play up to the value of this contract.

You could go sign 5 guys for like 15 mill each to give you the same amount of WAR, and from those 5 guys you have so much less risk and potential for over performance but otani literally needs to win mvp 5 times to be worth half that contract

Let me preface by saying I am happy we didn't sign Ohtani to a monster contract, but your argument only works in a salary cap (opportunity cost) sport, which MLB is not.

Ohtani can generate for his team way more in terms of off the field monetary value, from advertising, additional merchandise sales, and franchise brand / value (long term) - and this effect is multiplied for a large market team like the LA dodgers. It will make LA dodgers the favourite MLB team among all Japanese baseball fans, like how HOU was the favourite NBA team among all Chinese baseketball fans (due to Yao Ming).

[RaoulDuke79]

It's a smart move by the Dodgers any way you look at it because he definitely greatly increases their chances of losing in the NLCS instead of the NLDS.

[Madvillainy2004]

Lmao pray for the social media intern that posts Chapman back

[Randle McMurphy]

Lmao pray for the social media intern that posts Chapman back

No

[polo007]

Read on Twitter

[Randle McMurphy]

Rosenthal now rejoicing that Shohei didn’t end up in Canada. There was a clear time earlier this week where you could really tell that a lot of the American media were worried about that possibility. I never really started believing (at least not until Morosi bullshitted everyone yesterday afternoon), but their annoyance alone about the nature of his free agency made me think we had a chance.

[Ranger One]

Good luck to Shatkins selling fans on their new seats this offseason by running it back with the same exact feeble lineup that shat the bed all season long this year.

[duppyy]

Yamamoto or die trying?

[Randle McMurphy]

Yamamoto or die trying?

They aren’t gonna win a bidding war with Cohen, nor realistically should they even be trying.