Ohtani to the Blue Jays? (Update: Signs w/Dodgers for $700 million over 10 yrs)

[Hank Scorpio]

3 minutes ago, 24fps said:

State taxes play out in another way as well.  I'm not sure of the specifics, but every state with an income tax that Ohtani plays in has a fractional claim on his income for the time he spends "working" (playing professional baseball) in that state.  If that fraction is calculated on $2 million instead of $70 million I can see that leading to some angry state legislatures with taxing authority looking for restitution. 

Dear Dodgers,

No Mets games, please!!!!!

Love,

Ohtani

[Rbiggs2525]

I grew up in the era of, if you can’t afford it now don’t buy it. Every deferral contract in baseball has worked out for the player. I also think MLB should step in and say no more than 25% of contract can be deferred. 

[dystopia]

55 minutes ago, Sports Guy said:

Money now is worth more than money later 

Just due to inflation, or is there more at play here? Hard to believe the value of 700M would drop that far in only 10 years.

[Hank Scorpio]

20 minutes ago, dystopia said:

Just due to inflation, or is there more at play here? Hard to believe the value of 700M would drop that far in only 10 years.

Typically it’s because you don’t control what happens to it until it’s in your grubby hands. You can’t invest money you don’t have. 

Plus, while I’m being moderately facetious regarding taxes…. they “ain’t” going DOWN in the future, almost assuredly. 

[TradeAngelos]

22 minutes ago, dystopia said:

Just due to inflation, or is there more at play here? Hard to believe the value of 700M would drop that far in only 10 years.

Due to the fact you are losing about 10% interest on every investment dollar annually you don't get and that is compounded 10x. That money snowball rolling down the hill gets real big, real fast. The Dodgers can invest that money just like the player would and reap the benefits over the first 10 years, essentially lowering what they will pay out by a massive amount. 

[24fps]

5 minutes ago, dystopia said:

Just due to inflation, or is there more at play here? Hard to believe the value of 700M would drop that far in only 10 years.

At an inflation rate of 5%, $430 million today would be $700 million 10 years from now.  The Dodgers have no control over inflation, but plenty of control over the return they can get from investing the money that Ohtani has essentially lent them and I'm sure the calculation is that they can do better than the inflation rate.

 

[backwardsk]

47 minutes ago, Rbiggs2525 said:

I grew up in the era of, if you can’t afford it now don’t buy it. Every deferral contract in baseball has worked out for the player. I also think MLB should step in and say no more than 25% of contract can be deferred. 

Max Scherzer’s Washington contract had a lot of deferred money. Win win on that one.

[Frobby]

46 minutes ago, dystopia said:

Just due to inflation, or is there more at play here? Hard to believe the value of 700M would drop that far in only 10 years.

No more to it, and obviously it depends on how high inflation is.  The Federal Reserve “targets” 2% inflation.  At that rate, $70 mm in 10 years is worth $56.6 mm today.  But if inflation turns out to be 3%, then $70 mm in 10 years is worth $51.6 mm.  At 4%, it’s $46.5 mm.  Etc.

[Billy F-Face3]

Just to put this in perspective, 18 years ago in 2005 The Orioles Payroll (according to MVP Baseball 2005) was only $48-$50 Million total. 1 guy will be making as much as the entire 2005 payroll even after inflation.

50 Million payroll in 2005 has now become 100-250 Million payroll in 2023 for most MLB clubs. Someone smart could figure out the math on that inflation.

[FlaO'sFan]

1 hour ago, TradeAngelos said:

The Dodgers can invest that money just like the player would and reap the benefits over the first 10 years, essentially lowering what they will pay out by a massive amount. 

I think I read that the collective bargaining agreement requires the team to put aside the present day value of the deferred money in an escrow account. I'm not sure if that limits how the money can be invested.

[Chavez Ravine]

This makes perfect sense for a dude about to turn 30 and staring down the maw of baseball old age. What other team has a better chance of getting him glory, fun, sunshine? Mookie can teach him how to roll. He will get by on 2 mil a year, and then get some pension checks that—even deflated—will still allow him to do most anything he wants. Maximizing the return is not the only thing in life.

[interloper]

7 minutes ago, Chavez Ravine said:

This makes perfect sense for a dude about to turn 30 and staring down the maw of baseball old age. What other team has a better chance of getting him glory, fun, sunshine? Mookie can teach him how to roll. He will get by on 2 mil a year, and then get some pension checks that—even deflated—will still allow him to do most anything he wants. Maximizing the return is not the only thing in life.

I think I read that he might get around $50 mil a year just in endorsements anyway. So... the contract money barely matters for him.

Edited December 12, 2023 by interloper

[24fps]

34 minutes ago, Billy F-Face3 said:

Just to put this in perspective, 18 years ago in 2005 The Orioles Payroll (according to MVP Baseball 2005) was only $48-$50 Million total. 1 guy will be making as much as the entire 2005 payroll even after inflation.

50 Million payroll in 2005 has now become 100-250 Million payroll in 2023 for most MLB clubs. Someone smart could figure out the math on that inflation.

The buying power of $50 million in 2005 would require $77 million in 2023 for an average inflation rate of 2.44% per year.

But what about the 2023 O's?  The $61 million O's active payroll this past season is the equivalent of $46.3 million in 2005 so punt that Melvin Mora guy and we can compare apples to apples.

[24fps]

10 minutes ago, Chavez Ravine said:

This makes perfect sense for a dude about to turn 30 and staring down the maw of baseball old age. What other team has a better chance of getting him glory, fun, sunshine? Mookie can teach him how to roll. He will get by on 2 mil a year, and then get some pension checks that—even deflated—will still allow him to do most anything he wants. Maximizing the return is not the only thing in life.

$2 million?  That's just from his daytime gig.  Reports are that he'll pull in $40 million a year from his side hustle.

[Can_of_corn]

3 hours ago, Billy F-Face3 said:

Just to put this in perspective, 18 years ago in 2005 The Orioles Payroll (according to MVP Baseball 2005) was only $48-$50 Million total. 1 guy will be making as much as the entire 2005 payroll even after inflation.

50 Million payroll in 2005 has now become 100-250 Million payroll in 2023 for most MLB clubs. Someone smart could figure out the math on that inflation.

Just to put this in perspective, the 1998 Orioles had a payroll over 70 million.

The money is there, it is just a matter of who gets it.