It all depends on his other offers. The CBT sees it as a $460M/10yr deal. If he didn’t receive any offers greater than that (with no deferred money) then he still secured his highest offer.
Agreed. I just assumed it had to be with interest if it's deferred. Seeing that there is no interest associated with this is absurd. MLB can't allow this to happen. It sets a terrible precedent.
Going to? He’s already minted in that regard. Yes the Dodgers are going to profit more with the Japan endorsements, but it’s not like Ohtani was in some podunk market like Houston these last several years…lol.
Yes, but Ohtani is an extremely unique case due to his absurd endorsement earnings. Every other player would tell the team to get f**ked if they asked them to defer a massive part of their earnings. The only caveat is if the rich teams start overpaying players to accommodate lost investment earnings while cutting down on yearly CBA tax...then I imagine the league would step in.
I’m sorry but this does not sit well with me. teams like the dodgers, Yankees, Red Sox, cubs etc already have an unfair advantage. this should not be allowed imo
No - he just wanted a big headline number, but the value of his contract is less. The luxury tax number will be about $46MM per year because that's what it's actually costing the Dodgers. This is why all the hand-wringing over $700MM was silly without knowing the deferment details. Ohtani effectively really signed for $460MM / 10 years, which is the range that was talked about all year. But due to the structure, he gets to say he signed a $700MM contract. Any team could have structured a contract like this for him or anyone else.
But he wasn't getting $700MM from anyone else either. He's getting $460MM or so after accounting for the lost value - that's likely the range he would have gotten from others for a non-deferred contract. He's investing in 4% 10-yr treasury bonds essentially. Get paid $46MM today, invest it at 4% for 10 years, and get $68MM in 10 years. If he wants the money early to invest more aggressively, there are plenty of companies that will loan him his 46MM in exchange for getting $68MM from the Dodgers 10 years down the road, especially if risk-free rates go down from here.
But can any team afford to pay that large amount at the end? Also how many players would do this for non legacy teams?
Another thing to consider. Ohtani can move out of California and not have to pay California income tax because the payments will be made after he moves.
What do you mean? Money in 10 years is worth less than today. If a team was going to pay him $46MM/yr today, they just invest that money in treasury bonds and they'll have $70MM in 10 years. It comes out exactly the same for both the player and the team as paying a $46MM/10 year contract. $460MM/10 year contract is identical to his $700MM/10 year deferred contract.
