LA Dodgers’ deal with the Japanese superstar Shohei Ohtani broke the internet. This will make him one of the world’s highest-earning athletes. But behind the $700 million deal there is a catch. According to reports from major publications, the Dodgers threw a curve ball with Shohei Ohtani contract deferred payments.
Ohtani will only cash out $ 2 Million/ year for the next 10 years and the rest of the payment will be lump sum at the end of the contract. We explore the details of this deal and explain it in layman’s terms.
| Value | 700 Million USD |
| Duration of contract | 10 years |
| Annual Payout (2024 to 2033) | 2 Million USD |
| Deferred payment (2034 to 2043) | 68 Million USD |
Shohei Ohtani Contract Deferred: LA Dodgers have a master plan
Ohtani, a two time MVP plans to work with the Dodgers to build a championship winning team. This arrangement is giving greater flexibility to the Dodgers as they are still under the threshold of MLB’s Competitive Balance Tax (CBT) i.e., $237m. Reports say that the team will hire a few more athletes to build a stronger team around the star.
What is CBT? And does it work?
In layman’s terms it is a ‘Luxury Tax’ imposed on the teams for overshooting the budget.
First offense will attract a 20% fine whereas a second offense will attract a 30% fine.
These special payment terms allow the team to consider it as $46 Million for CBT rules. As per MLB, this deal fits perfectly within the guidelines of the CBT and doesn’t bend any rules.
Shohei Ohtani will defer $68M per year of his $70M annual salary to allow Dodgers to keep spending, per @FabianArdaya pic.twitter.com/38ze5ON8vC
— Bleacher Report (@BleacherReport) December 11, 2023
What is Ohtani’s annual income?
In addition to the bumper deal with the MLB, he has a plethora of sponsors and partners. Ohtani is expected to pocket another $ 45-50 million per annum from his endorsement deals outside of the MLB.
The Japanese ace is currently undergoing treatment for a Tommy John surgery under LA Dodgers team physician Dr. Neal El Attrache. The team is confident that he will be fit to play before the opening of the upcoming season as a better and will be able to take his duel duties from 2025 onwards.
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