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

[Frobby]

3 minutes ago, ChosenOne21 said:

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?

I’d say that scenario is pretty far-fetched.  For one thing, most of the top players in the game aren’t free agents yet.   They mostly peak before free agency arrives.   Second, you have to have a bunch of players who don’t mind deferring a huge chunk of their salary.  We haven’t seen a big rash of big deferrals in the couple of decades this system has been in place.  Third, the escrow requirements limit the advantage the team gets from the deferral, so I don’t think you are going to see teams wanting to go this route.  And fourth, we know that the best team doesn’t win the majority of the time in baseball.   To me, deferred comp is way down the list of issues one could raise about baseball’s payroll rules.  

[capyy]

14 minutes ago, ChosenOne21 said:

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.

What stops them is the same thing that stops them now, the salary cap / luxury tax.

 

The whole issue stems from thinking this is a 70M/year contract, it's not. it's a 45M/year contract and everyone bidding on ohtani, and ohtani all knew that. 

Unless these super stars team up and actually take less money, there's no significant advantage to the dogers here.

[ChosenOne21]

19 minutes ago, Frobby said:

I’d say that scenario is pretty far-fetched.  For one thing, most of the top players in the game aren’t free agents yet.   They mostly peak before free agency arrives.   Second, you have to have a bunch of players who don’t mind deferring a huge chunk of their salary.  We haven’t seen a big rash of big deferrals in the couple of decades this system has been in place.  Third, the escrow requirements limit the advantage the team gets from the deferral, so I don’t think you are going to see teams wanting to go this route.  And fourth, we know that the best team doesn’t win the majority of the time in baseball.   To me, deferred comp is way down the list of issues one could raise about baseball’s payroll rules.  

I understand the NPV and cap hit for the contract is $46 million a year.

Explain to me why the Dodgers are only paying him $2 million next year then. Why not just pay him the $46 million?

The answer, and what Ohtani himself seems to believe, is that the Dodgers don't have infinite money and by only paying him $2 million next year they can afford to pay more star players and build a better team around him.

And yes, I agree it would be unlikely for my proposed scenario to happen. But didn't LeBron James, Dwyane Wade, and Chris Bosh do something similar with the Miami Heat? Even if unlikely, why even allow the possibility? Is it the biggest issue facing baseball? Not even close, but that doesn't mean it's not a potential problem.

Edited December 12, 2023 by ChosenOne21

[Just Regular]

Just for context, Mookie looks like he is at about one-third of his "$365mm" deferred.     From Cot's:

12 years/$365M (2021-32)

• signed extension with LA Dodgers 7/22/20
• $65M signing bonus (paid in annual installments Nov. 1, 2021-35: $5M/year in 2021-32, $2M/year in 2033-34, $1M in 2035)
• 21:$17.5M, 22:$17.5M, 23:$20M, 24:$25M, 25:$25M, 26:$25M, 27:$25M, 28:$30M, 29:$30M, 30:$30M, 31:$27.5M, 32:$27.5M
• $115M in salary is deferred ($8M/year of 2021-25 salaries, $10M/year of 2026-27 salaries, $11M/year of 2028-32 salaries)
• deferred money to be paid each July 1, 2033-44: $8M/year in 2033-37, $10M/year in 2038-39, $11M/year in 2040-44.
• deferrals reduce present-day value to $306,657,882 (per MLBPA)

[capyy]

The sticker # never sees 700M without the deferrals, the 700M isn't real. 

[capyy]

8 minutes ago, ChosenOne21 said:

I understand the NPV and cap hit for the contract is $46 million a year.

Explain to me why the Dodgers are only paying him $2 million next year then. Why not just pay him the $46 million?

The answer, and what Ohtani himself seems to believe, is that the Dodgers don't have infinite money and by only paying him $2 million next year they can afford to pay more star players and build a better team around him.

And yes, I agree it would be unlikely for my proposed scenario to happen. But didn't LeBron James, Dwyane Wade, and Chris Bosh do something similar with the Miami Heat? Even if unlikely, why even allow the possibility? Is it the biggest issue facing baseball? Not even close, but that doesn't mean it's not a potential problem.

The dodgers not having infinite money is even more of a reason to make sure the money is set aside. 

There's also the possibility that this is being down for other reasons such as:

- Taxes?

- Diversification

- Wants cashflow once his endorsements are less 

- Wanted the massive sticker # (maybe even ohtani has some ego)

- Wanted the public perception of helping out the team

 

[Just Regular]

Zeroing in on the baseball fun of this, I just spot checked B-Ref and he's up to 2nd in WAR by players of Japanese birth - Ichiro still has him 60-35.

I hope his future includes several World Series losses to the Orioles, but imagine by the time its all over he has a chance to add some clarity to baseball Mount Rushmore after Babe and Jackie.      I think the life experience of getting to play with peak Mike Trout was part of the Angels Team 1 choice, and its interesting the contrast between Trout's GOAT mode getting wonky, and Ohtani getting closer to October and the iconic memories only that month can create.

With the playoff odds the rest of the Dodgers will provide, I bet when he returns to pitching his years >100 IP to come are zero or one, but he'll throw some October Game 1's.     Bryce's Phillies are running good right now stopping ATL-LAD showdowns, and he holds an edge on Strider until proven otherwise in the other league.

[Billy F-Face3]

6 hours ago, Moose Milligan said:

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

The difference is they actually signed big name free agents back then like they did with Miguel Tejada, where as last season was still considered under the rebuild (after they had dumped all the expensive players) and finally developed their new young inexpensive talent ready & producing in the Majors. When 80% of the team is making league minimum, it's hard to compare that.

Shouldn't compare a rebuild year when they weren't spending, with a non rebuild year when they were still signing the top free agents of the time. (Tejada, Javy Lopez, etc)

[ChosenOne21]

1 hour ago, capyy said:

The dodgers not having infinite money is even more of a reason to make sure the money is set aside. 

There's also the possibility that this is being down for other reasons such as:

- Taxes?

- Diversification

- Wants cashflow once his endorsements are less 

- Wanted the massive sticker # (maybe even ohtani has some ego)

- Wanted the public perception of helping out the team

 

Taxes? At the numbers we're talking about I doubt it makes that much of a difference. But possible.

Not sure what you mean by diversification here.

If Ohtani wants cashflow when his endorsements are less, he could take the money up front and invest it. Can't imagine this is it.

Massive sticker number is the best explanation I've heard other than helping the Dodgers afford more players. Could be part of it for sure.

I'm not sure how much public perception of helping he's getting. He's helping the team buck the spirit of the luxury tax rule. There have been a ton words written out there talking about what the deal really is.

[capyy]

16 minutes ago, ChosenOne21 said:

Taxes? At the numbers we're talking about I doubt it makes that much of a difference. But possible.

Not sure what you mean by diversification here.

If Ohtani wants cashflow when his endorsements are less, he could take the money up front and invest it. Can't imagine this is it.

Massive sticker number is the best explanation I've heard other than helping the Dodgers afford more players. Could be part of it for sure.

I'm not sure how much public perception of helping he's getting. He's helping the team buck the spirit of the luxury tax rule. There have been a ton words written out there talking about what the deal really is.

my point isn't to argue for any one of these items, but that there are many things that could be at play. it's hard to have considered all possibilities. 

But since you asked 

-Taxes always matter - we see the mega rich move around and play games to avoid taxes all the time

-diversification - in 10 years he could be getting cash from endorsement, and whatever investments he's made, or he could have those things AND money coming from the dodgers, its income diversification for that time frame

 

He's not helping the team buck the spirit of the luxury tax rule. I don't get why people keep saying this because it's been disprove a bunch of times in a bunch of places now.

 

Maybe you argue it helps a little with cash flow for a year or so, but otherwise i don't see how this bucks the luxury tax rules. 

 

There are actually provisions in the the CBA that would prevent things that go against the spirit of the rules, it could be disapproved if this was deemed to be the case. 

[NCRaven]

I simply take it for granted that if Ohtani actually brought this concept to the teams that were negotiating with him, this deal makes sense for Ohtani.  And, if the Dodgers were willing to sign this contract, it makes sense for them.   And, if it's not against any MLB rules or the CBA, then it makes sense (or at least isn't opposed by) the league.  So good for them.  I assume that the Orioles weren't going to go to $46 mil or $70 mil or anything like that, so I'm just glad he's in the NL guaranteeing another team as many Championships as his last one.

[Can_of_corn]

7 hours ago, drjohnnyfever1 said:

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

Assuming he doesn't have any issues with PEDs or off the field issues I don't see how it could be.

Ohtani brings in tens of million in revenue on a yearly basis.  Davis sold about a dozen season tickets.

[btdart20]

Ohtani is a competitor.  I think it's funny how he's getting praised for being sacrificial for the team.  Nah.  He just wants to win now and is willing to sacrifice whatever team is being fielded after he's retired to do so. 

Deferred money is a type of leverage.  It's good when it builds something long term.  LAD probably sees the Ohtani investment very much like the Valenzuela years.  Valenzuela and proximity brought LAD Mexican fandom.  LAD is betting Ohtani and (relative) proximity to Japan brings them the same type of fan loyalty.

[24fps]

I have been trying to find this out but so far have been unsuccessful...

The deferred money has to be put in escrow within a specified amount of time for each year, but I can't find out if any particular form is stipulated.  Could interest bearing financial tools like promissory notes, insurance products, zero-coupon bonds and the like be used to further minimize the present day impact to free up more 2024 cash for the Dodgers?

For example, $68 million in zero-coupon bonds maturing in 10 years at 5% interest discounts to $41.70 million at purchase.

Anybody know the answer?

[Can_of_corn]

34 minutes ago, btdart20 said:

Ohtani is a competitor.  I think it's funny how he's getting praised for being sacrificial for the team.  Nah.  He just wants to win now and is willing to sacrifice whatever team is being fielded after he's retired to do so. 

Deferred money is a type of leverage.  It's good when it builds something long term.  LAD probably sees the Ohtani investment very much like the Valenzuela years.  Valenzuela and proximity brought LAD Mexican fandom.  LAD is betting Ohtani and (relative) proximity to Japan brings them the same type of fan loyalty.

I don't think they will be sacrificing anything.