Shohei Ohtani’s free agency has been the talk of baseball ever since the Japanese star signed a one-year contract with the Los Angeles Angels before the start of the 2023 MLB season.
The contract, which avoided arbitration, meant that the modern-day Babe Ruth would hit the open market.
Shohei Ohtani is shown at a press conference at Dodger Stadium in Los Angeles on December 14, 2023. (Frederic J. Brown/AFP via Getty Images)
Projections for his contract were difficult to accurately predict as Ohtani’s unique skill set has not been seen since the 1930s.
But no one could have predicted what was to come.
DODGERS WEREN’T ONLY TEAM TO OFFER SHOHEI OHTANI $700 MILLION DEAL
On Saturday, Ohtani agreed to a deal with the Los Angeles Dodgers, signing a 10-year, $700 million contract to head north on the 5 freeway.
The financials of the contract are mind-blowing as the $700 million is the largest contract in baseball history by more than $250 million, easily surpassing Mike Trout’s 2019 $426.5 million extension.
“I think he was the player with the most leverage and the most bargaining power of anyone I’ve ever seen in free agency,” renowned sports agent Leigh Steinberg told Fox News Digital. “He plays two positions, so he counts for two on the roster. He won’t in 2024, but after that, he’s someone who is at the penultimate top of the field. Both in hitting and in pitching and is a real box-office draw. So, I thought there would be an explosive contract, but $700 million is the biggest sports contract ever. And then we saw how to really value it by noticing there is deferred money in it.”
The nitty-gritty details of Ohtani’s astronomical contract were revealed Monday, and it reportedly saves the Dodgers hundreds of thousands of dollars while helping them remain competitive in free agency.
Shohei Ohtani of the Los Angeles Dodgers speaks to the media at Dodger Stadium on December 14, 2023. (Meg Oliphant/Getty Images)
Ohtani agreed to defer all but $2 million annually until his contract ends, The Athletic reported. The deferred money — $68 million annually — will reportedly be paid without interest from 2034 to 2043.
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The unprecedented deferral of money will lower the amount it costs toward the Dodgers’ luxury tax payroll, the Associated Press reported over the weekend.
“When money is deferred that way, the way we value it is by taking the percentage of inflation and discounting the dollars,” Steinberg said. “And when you do that, it comes out to $46 million per year. So, against the luxury tax, what will count is $46 million.”
“But this is one player who can actually make money for a team,” he added. “He can sell what they call the ‘Sandy Koufax effect’ with the Dodgers. He can sell extra tickets every time he pitches. He opens up worlds of marketing for the franchise, certainly in the Far East, but it gives them branding ability. They can make money in merchandising. So, he’s actually the one player in baseball, with the exception maybe of Aaron Judge, that is a pure box office and marketing bonanza.”
The contract is unprecedented, and one that Steinberg believes is specific to Ohtani.
“I think it’s a bit of a unicorn because he so clearly prioritized being on a winning team,” Steinberg told Fox News Digital. “The reason that he left the Angels was not because he was uncomfortable in Southern California or disliked the team in any way, he left because he made it clear he wants to play in the postseason. He wants to get to the World Series.”
Shohei Ohtani poses for a photo with manager Dave Roberts after being introduced by the Los Angeles Dodgers at Dodger Stadium on December 14, 2023. (Meg Oliphant/Getty Images)
“So, the structure of this contract in a way is a favor to a team because it allows a lighter hit against the salary cap. Most players would want every single dollar, whether it’s $70 or $46 million a year in that current year, and would not want to defer money. So, teams want to defer money because it means they don’t have to come up with it today. Players generally want every penny coming to them.”
While deferrals have been seen before in baseball, they have never been to the degree of Ohtani’s contract.
Max Scherzer deferred $105 million of his $210 million deal with the Washington Nationals prior to the start of the 2015 season, which called for the Nationals to pay Scherzer $15 million per year from 2022-2028, according to MLB.com.
Ohtani is deferring the majority of his deal, which is a huge advantage for the Dodgers moving forward.
“This money is guaranteed for skill and injury. Meaning that at a point that Ohtani is not so effective as a player, he still gets the whole 10 years of compensation,” Steinberg said. “So, they’re really buying years at the end where it’s highly unlikely he’ll be the Shohei Ohtani that we’re thinking of today, because he’ll be 39. Second of all, it’s guaranteed for injury. So, he will get that money and the Dodgers are obligated to pay him every penny.
A general view of the stage before Shohei Ohtani is introduced by the Los Angeles Dodgers at Dodger Stadium on December 14, 2023. (Meg Oliphant/Getty Images)
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“However, money has value and any time a team can defer payment of money beyond the current calendar year, they would love to do it because it means they would hold onto the money. It means they’re not obligated to pay that year. So, is this favorable for teams? Yes. They would love to defer money.”
“This is a unique player in that he probably makes $50 million a year on endorsements. So, he’s got ample revenue, and now he’s set up a stream that will essentially fund him for the rest of his life.”
Now that the dust has settled, Ohtani will join a lineup alongside Mookie Betts and Freddie Freeman as the Dodgers look to bounce back from their disappointing early exit from the 2023 postseason.
Fox News’ Ryan Gaydos contributed to this report.
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