Shohei Ohtani will only receive 20 of his $700 million contract with the Los Angeles Dodgers over the next 10 years. The other $680 million will be payable from 2034 through 2043, in an unusual structure that gives the team greater payroll flexibility in future seasons.
Ohtani’s record contract, agreed on Saturday, calls for an annual salary of $70 million. Of the annual salary, $68 million is deferred without interest and payable in equal installments on July 1 of each year between 2034 and 2043.
USA Today baseball journalist Bob Nightengale, however, specifies that Ohtani should receive almost 50 million per year in various sponsorships. The contract comes with a no-trade clause.
Furthermore, the Dodgers finally formalized the contract Monday evening. “Dodgers fans, thank you for having me,” Ohtani said in a statement. I can tell you with 100% certainty that we share the same goal of bringing a World Series parade back to the streets of Los Angeles. »
For baseball luxury tax purposes, the contract is therefore valued as an annual addition to the Dodgers’ payroll of approximately $46 million.
Ohtani’s contract, combined with those of Mookie Betts and Freddie Freeman, brings the total deferred money owed by the Dodgers to the three players to $857 million for 2033-2044.
Betts signed a $365 million contract for 2021-2032, which includes $115 million in deferred salary payable between 2033 and 2044, in addition to the final $5 million of his signing bonus payable between 2033-2035.
Freeman has a six-year, $162 million contract for 2022-27 that includes $57 million in deferred salary payable between 2028 and 2040.
The peak of deferred payments for Los Angeles will occur in 2038 and 2039, when the trio will owe $83 million, and in 2040, when they will collect $84 million.
By receiving most of the money while he likely won’t be living in the United States, Ohtani should also receive a tax benefit. In California, the top tax rate for residents is 13.3%.
Ohtani’s total compensation is 64% higher than baseball’s previous record, the 12-year, $426.5 million contract with Angels player Mike Trout, which began in 2019.
His average salary of $70 million is 62% higher than the previous record of $43,333,333, shared by pitchers Max Scherzer and Justin Verlander in their contracts with the New York Mets. Ohtani’s average salary nearly doubles the roughly $42.3 million he made with the Angels. It also exceeds the payrolls of Baltimore and Oakland this year.
However, when it comes to the luxury tax, he’ll count only slightly more than Aaron Judge, who is a $40 million annual drain on the Yankees payroll as he enters the second season of a nine-year contract worth $360 million.