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

[Moose Milligan]

6 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.

Lol 18 years ago? Did you see what it was last year?

[ChosenOne21]

7 hours ago, FlaO'sFan said:

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.

I would imagine they force the team to do this, but then what's the actual point? Why not just give Shohei the $46 million now and let him grow it into $70 instead of you doing that yourself?

[ChosenOne21]

9 hours ago, Can_of_corn said:

That's an opinion.  I don't agree.

 

9 hours ago, Moose Milligan said:

Hard disagree. 

You're certainly allowed to disagree, but I'd like to understand why. Isn't the point of the luxury tax to make it harder for rich teams to just buy all the good players? Paying Shohei Ohtani $2 million now so you can buy a bunch more good players to support him seems to fly in the face of that, even if it (possibly) hurts their financial flexibility the ten years after he's done playing for them.

Edited December 12, 2023 by ChosenOne21

[drjohnnyfever1]

This contract has the potential to overcome the dumb Chris Davis deal by monumental proportions...

[Just Regular]

27 minutes ago, ChosenOne21 said:

 

You're certainly allowed to disagree, but I'd like to understand why. Isn't the point of the luxury tax to make it harder for rich teams to just buy all the good players? Paying Shohei Ohtani $2 million now so you can buy a bunch more good players to support him seems to fly in the face of that, even if it (possibly) hurts their financial flexibility the ten years after he's done playing for them.

It is.    Shohei is helping them with cashflow, not tax liability.     The Competitive Balance Tax calculations for the '24-'33 Dodgers will still count him at the big number.    The scheme might change after 2026 when this CBA runs out.

[Frobby]

52 minutes ago, Just Regular said:

It is.    Shohei is helping them with cashflow, not tax liability.     The Competitive Balance Tax calculations for the '24-'33 Dodgers will still count him at the big number.    The scheme might change after 2026 when this CBA runs out.

No, it doesn’t count it at the full $70 mm.  It accounts for the time value of money.  

[deward]

1 hour ago, drjohnnyfever1 said:

This contract has the potential to overcome the dumb Chris Davis deal by monumental proportions...

Doubt it. If Ohtani helps the Dodgers win a couple of titles, then anything else is gravy. Unless you're expecting him to show up next year looking much skinnier and suddenly unable to hit fastballs right down the middle. 

[Frobby]

1 hour ago, drjohnnyfever1 said:

This contract has the potential to overcome the dumb Chris Davis deal by monumental proportions...

Depends how you look at it.  If you pay a guy $700 mm and only get $350 mm of value, is that worse than paying a guy $161 mm and getting -$20 mm in value?  On the one hand, the first contract produces a -$350 mm deficit of cost to value, while the second “only” produces a -$161 mm deficit. On the other hand, in the first contract you’re only getting half the value you paid for, but in the second you’re actually getting negative value.   So you can see it either way.  And of course, the deferrals in the Ohtani deal are far greater than in the Davis deal, so you have to factor that in.  

[Moose Milligan]

2 hours ago, ChosenOne21 said:

 

You're certainly allowed to disagree, but I'd like to understand why. Isn't the point of the luxury tax to make it harder for rich teams to just buy all the good players? Paying Shohei Ohtani $2 million now so you can buy a bunch more good players to support him seems to fly in the face of that, even if it (possibly) hurts their financial flexibility the ten years after he's done playing for them.

Because the players and the owners have agreed to it.  This isn't breaking any rules.  

Not only that, but this is something that every team could conceivably do.  The Jays could have done this if they wanted to.  The Orioles could do this in an effort to keep their burgeoning core.  

 

[capyy]

1 hour ago, Just Regular said:

It is.    Shohei is helping them with cashflow, not tax liability.     The Competitive Balance Tax calculations for the '24-'33 Dodgers will still count him at the big number.    The scheme might change after 2026 when this CBA runs out.

It doesn't help with cash flow either. That money gets set aside to ensure they have it available when the future liability comes due.

 

I haven't actually logged on in years but how misunderstood this situation is made me have to do it. Reddit is going absolutely insane and there's nothing nefarious here that I can see. 

[capyy]

There could be a short window where it helps with cashflow if you go strictly by the CBA:

"

Deferred compensation obligations incurred in a Contract executed on or after September 30, 2002 must be fully funded by the Club, in an amount equal to the present value of the total deferred compensation obligation, on or before the second July 1 following the championship season in which the deferred compensation is earned. For purposes of this Article XVI, full funding of the present value of deferred compensation obligations shall mean that the Club must have funded, for the duration of and without interruption in each year, the current present value of the then outstanding deferred payments, discounted by 5% annually. If the prime interest rate in effect at The J.P. Morgan Chase Bank on the immediately preceding November 1 is 7% or higher, the Parties shall meet and confer regarding this Article XVI discount rate and may, with due notice to the Clubs, amend such discount rate effective the next succeeding July 1.

"

 

But it would be bad business practice not to start in 2024, especially on a liability of this size and they may be otherwise required to do so.

 

 

[Tony-OH]

14 hours ago, DirtyBird said:

Stupid thread

Then scroll past. Stop with all the little comments. We always loosen up the rules in the main thread in the offseason when it's slow. 

Last I checked, you are not a moderator. 

[Just Regular]

2 hours ago, Frobby said:

No, it doesn’t count it at the full $70 mm.  It accounts for the time value of money.  

Right.    I should have clarified in the 1st post by "big number" I meant the inflation-adjusted figure, not the $70mm.     

I thought the post I was responding to had the impression Ohtani would only be counted at the $2mm for Dodgers CBT purposes as they build the newest version of their super team.

[ChosenOne21]

1 hour ago, Moose Milligan said:

Because the players and the owners have agreed to it.  This isn't breaking any rules.  

Not only that, but this is something that every team could conceivably do.  The Jays could have done this if they wanted to.  The Orioles could do this in an effort to keep their burgeoning core.  

 

I know it's not breaking any rules. I'm saying it should be against the rules.

If we allow this sort of thing, what's to stop the top handful of players in the sport from getting together, agreeing to sign with the same team, and agreeing to defer huge amounts of money so they can win a bunch of championships? Would that be good for baseball? Are you okay with that being allowed because the team they choose might be the Orioles?

To be crystal clear, I'm not saying teams shouldn't be allowed to defer any money. I think they should set a reasonable limit on it like 25% of the contract so you don't end up paying a bunch of superstars chump change in order to have a hypercompetitive window.

Edited December 12, 2023 by ChosenOne21

[interloper]

Not sure if posted already, but this is the best explanation I've seen on his contract thus far:

https://www.mlbtraderumors.com/2023/12/why-shohei-ohtanis-contract-structure-is-not-a-luxury-tax-dodge.html