Over the weekend, Shohei Ohtani rocked the sports world by announcing he had signed a ten-year, $700 million contract with the Los Angeles Dodgers. It's the largest contract in sports history, as well as the most guaranteed money ever. As more details have emerged, we're also learning the deal is one of the more unique ones a player has signed.
While negotiating the deal, Ohtani suggested the team defer his payments, giving the team more financial flexibility to add to a roster that includes him, Mookie Betts, and Freddie Freeman. Deferred salary, in general, is not a new concept, but Ohtani is taking it to the extreme.
He's only taking $2 million of his annual salary for the next ten years. That means a whopping $680 million will be paid after the contract is completed. Ohtani will make $68 million from 2034 until 2043, when he'll be 49 years old.
Michael Reaves/Getty Images
Though he'll make much more money, Ohtani's situation is not quite on the level of Bobby Bonilla's because Ohtani's earnings won't accrue any interest. Per ESPN's Jeff Passan, the Dodgers will owe a competitive balance tax of $46 million per season, which is significantly less than they would have had to pay if Ohtani was making his full salary each year.
Ohtani can afford to push back so much of his salary because his popularity as a superstar gives him a ton of earnings potential off the field. The Athletic reported Ohtani will earn about $50 million per year in endorsement and sponsorship opportunities.
Even with the deferred money, Ohtani's deal helped him surpass his former teammate Mike Trout as the recipient of the largest contract in MLB history. Trout signed a 12-year deal worth $426.5 million before the 2019 season to stay with the Los Angeles Angels.
While the Angels are mourning the loss of the two-time MVP Ohtani, the Dodgers are planning to build around him. They'll look to add another quality pitcher or two. After all, though Ohtani is expected to be ready to hit by the start of the 2024 season after undergoing elbow surgery, he won't take the mound again until 2025.
Thanks to Ohtani's creative thinking with his contract, the Dodgers are in an even better position to improve their roster — and their championship odds.
