MLB star Shohei Ohtani opting for $680M contract delay, sources affirm
As per sources, the dual MVP of the American League, Ohtani, is opting to forgo $68M annually out of his $70M salary. Instead, he'll receive the remaining $680M from 2033 MLB season onwards.
"The concept of extreme contract extensions stemmed from Ohtani himself," a source shared with CNN. "He was well-informed regarding contract extension procedures and outcomes, believing it to be the right move. As negotiations neared closure, Ohtani agreed." It was agreed to delay nearly all salary payments.
"Consider that he's comfortably the highest-paid player outside the field," the source added.
Ohtani's endorsement of the unconventional deal relates to his desire to win and display team spirit, sources noted.
With Ohtani delaying hundreds of millions that he owes, the Dodgers will have more cash to bolster their roster with top interests.
The team would also benefit if Ohtani's full salary does not exceed the MLB luxury tax threshold. For this purpose, Ohtani's average annual value of $46M (instead of $70M) would be calculated, sources mentioned.
The 29-year-old two-way Japanese superstar who pitches and bats announced his move from Angels to Dodgers on Saturday, having been a part of the team since 2017.
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Ohtani's decision to defer a significant portion of his $680 million contract corroborates his focus on team spirit. As a result, the Dodgers will boast additional funds to contend with other contending players for Ohtani.
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Enrichment Data:
Ohtani's choice to defer a substantial portion of his $680 million contract through deferrals signifies that he will receive the majority of the contract value over an extended period rather than making an upfront payment. This decision benefits Ohtani financially by reducing his immediate tax liability and allowing him to save on taxes over the years. The deferrals are structured in a way that minimizes the contract's present value, making it more manageable for Ohtani financially.
The LA Dodgers derive strategic benefits from Ohtani's contract deferrals. Key advantages include:
- Roster Flexibility: Ohtani's designation as a two-way player allows the Dodgers to carry one more pitcher than the standard limit of 13 on an MLB roster. This flexibility is invaluable in managing injuries and maintaining pitching depth, which is essential for a competitive team.[2]
- Financial Flexibility: The deferred payments do not impact the Dodgers' payroll immediately, providing them with financial agility to manage their finances effectively. This flexibility benefits them during the season, making strategic moves and signing other players without being tied down by immediate salary commitments.[3]
- Competitive Advantage: Dodgers' ability to roster an extra pitcher due to Ohtani's two-way status offers them a competitive edge in terms of pitching depth. This can prove beneficial, especially during the postseason, where having a robust and deep pitching staff boosts chances of success.[2]
Consequently, Ohtani's decision to delay a significant portion of his contract through deferrals benefits him financially, while the Dodgers gain strategic benefits in roster management and financial flexibility, bolstering their competitive position.
