Shohei Ohtani’s Contract Is Patently Absurd

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Robert McGreevy Contributor
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Superstar two way slugger Shohei Ohtani broke records — and the bank — when he signed a 10-year $700 million contract with the Los Angeles Dodgers, the most expensive contract in professional sporting history, The Athletic reported.

That contract, however, is more absurd than just a regular near-billion dollar deal. $680 of the $700 million will be deferred until after the contract ends in 2034, according to The Athletic’s Fabian Ardaya. Ohtani will be paid the remaining $680 million between 2034 and 2043.

The deferral means Ohtani, who Dodgers chairman Mark Walter called “a once-in-a-generation talent,” will be paid just over $2 million per year over the course of the 10 year deal. The Dodgers will have 16 players making more than Ohtani in 2024, according to ESPN’s Jeff Passan. (RELATED: Yankees Officially Land Megastar Juan Soto In Blockbuster Deal)

The MLB is treating his contract as if it’s a 10-year $460 million deal for accounting purposes, meaning it will count as $46 million per year against the competitive balance tax, according to The Athletic.

This relatively low number allows the Dodgers to add Ohtani to an already loaded roster and still have room to sign another free agent (say, Ohtani’s countryman Yoshinobu Yamamoto) without exceeding the MLB’s competitive balance tax.

Another benefit, analyst Joe Pompliano detailed, is that under federal tax law Ohtani will be able to collect the deferral in whatever state he’s living in when it kicks in. This means he could avoid the ludicrously high California state income tax rates and collect the checks somewhere with no state income tax like Texas or Florida.