By CNN
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MLB superstar Shohei Ohtani will defer more than 97% of his $700 million, record-setting contract with the Los Angeles Dodgers until after the end of the 10-year term of the agreement, a source familiar with the terms of the deal told CNN on Monday.
The two-time American League MVP will defer $68 million of his $70 million each year, according to the source. The remaining $680 million will be paid to Ohtani beginning after the 2033 MLB season.
“The concept of the extreme deferrals in this contract came from Shohei himself,” the source told CNN. “He had been educated on the implications and process of deferrals and felt it was the right thing to do. So when negotiations were getting near the level where they ended up, Shohei decided he wanted to defer almost all of his salary.
“And remember, since he’s far and away the highest earner in the game off the field, this was an easy decision for him,” the source added.
In a statement announcing Ohtani’s signing Monday night, Dodgers chairman Mark Walter congratulated the player on the “historic contract.”
“Shohei is a once-in-a-generation talent and one of the most exciting professional athletes in the world. Our players, staff, management and ownership look forward to working together with Shohei to help the Dodgers continue to add, improve and strive for excellence on the field,” Walter said.
If Ohtani’s deal is being viewed as “historic” for the amount of money it involves, deferrals when signing large contracts have been seen in the past.
In 2015, pitcher Max Scherzer deferred $105 million of his $210 million salary when he signed with the Washington Nationals. From 2022 through 2028, Scherzer is owed $15 million a year, per MLB.
Ohtani’s motivation to agree to such an unorthodox deal came from a commitment to winning and being “a team player,” according to the source.
By delaying payment of the hundreds of millions of dollars owed to Ohtani, the Dodgers will have more money available to surround the Japanese superstar with other top players.
This means that the Dodgers will have the financial flexibility to pursue high-profile targets such as Ohtani’s compatriot Yoshinobu Yamamoto, the most sought after pitcher left on the free agent market.
Ohtani will not pitch during the 2024 season as he recovers from his September elbow surgery, so it would not be a surprise to see LA go after Yamamoto.
The franchise has also been linked with Dylan Cease of the Chicago White Sox and Tyler Glasnow of the Tampa Bay Rays, who the Dodgers could look to acquire via trade.
The team will also benefit from avoiding Ohtani’s full salary contributing towards MLB’s luxury tax threshold. For those purposes, Ohtani’s average annual value will be $46 million – still the highest in MLB history – instead of the full $70 million, according to the source.
The deal has sparked heated debate among fans, particularly on social media.
“Quite literally the stupidest contract I have ever seen and likely ever will see,” ‘Locked on Giants’ podcast host Ben Kaspick posted on X, formerly Twitter. “It’s hard to believe that something like this is allowed. Shohei Ohtani for $2M a year for a decade. A joke.
Unlike other major American sports leagues like the NBA and the NFL, MLB does not have a set salary cap.
CNN has reached out to MLB for comment on the unprecedented agreement between Ohtani and the Dodgers.
While Ohtani will be going without almost the entirety of his salary for the next 10 seasons, he will be more than compensated by his array of endorsements.
His partnerships include the likes of New Balance, Fanatics and Topps – as well as a myriad of further sponsorships in Japan – and net him at least $35 million annually, per Forbes.
The 29-year-old Japanese phenom, who pitches and bats as a designated hitter, announced his move across town from the Los Angeles Angels – who he played for since 2017 – to the Dodgers on Saturday.
The Angels posted a statement in both English and Japanese on Monday thanking the two-way star for his contributions to the team and the sport itself.
“Shohei Ohtani is a generational player and it was an honor to watch him make history throughout the six seasons he spent in an Angels uniform,” the team said on social media. “We feel extremely fortunate that Angels fans were able to witness him redefine what is possible in our sport.”
“We thank Shohei for his many contributions to our franchise and the game of baseball. We wish him the best during the next chapter of his career.”
