I look at the bright side: presumably, the Dodgers bid against themselves the last $20M per year. I’d rather Ohtani have the money than the Dodgers.
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Passan is wild-ass-guessing, just like moriarty’s guy, that the CBT hit will be 40-50 million.
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There’s a non-zero chance that the Dodgers have paid $700 million for a decade of designated hitting.
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If he doesn’t pitch I think he’d end up in the outfield.
Maybe, but if he can’t pitch, he probably can’t play right field either. So, a $70 MM / year left fielder.
That would be even worse. If Ohtani is getting $70M in average annual salary over the life of the contract, that’s what needs to count towards the CBT.
The only benefit of deferring money should the owner gets to spend a less total money on payroll that season. It shouldn’t be a way to circumvent the luxury tax.
But “Dodgers”.
Yeah, that should cause a riot if true.
Update: Passan was right, Becker corrects himself here. Could be as low as a $40M CBT hit. That’s wild.
I guess on further reflection there shouldn’t be a riot, there should be a collective reflection from the owners on why they stomped on their own dicks so hard. The luxury tax overall isn’t good for the game, but what’s worse is when its rules incentivize insanely long-term liabilities as the cost of winning.
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So per CBS (and others), it seems the CBT basis is not pure AAV but incorporates NPV. using a 5% discount rate and not as the NHL’s straight AAV.
While fans may complain, it’s not the case all owners will, or even a majority. The Dodgers spending as this increases the perception as to the market value of baseball, making it easier for current owners to borrow money against their franchise as collateral. There are many owners who are not trying to win the WS and for them they are fully “Dodgers Fans” (and “Yankees Fans” and …). I expect vacuous words from Manfred that signify nothing.
If Ohtani’s CBT hit ends up being $20-30 million less than his annual salary under the terms of his contract due to creative financing (deferred money), every small-market owner should be pissed and demand changes when it’s time to draft the next CBA before the 2027 season. They also need to look in the mirror and realize they got played when it comes to how stringent the CBT really is.
It’s absolutely absurd that the Dodgers can knock off over 40% of Ohtani’s annual salary for CBT purposes by deferring salary until he retires. They are almost paying double to Ohtani what the Yankees gave Aaron Judge, but Ohtani only counts a little more than Aaron Judge’s annual salary towards the Dodgers’ AAV for CBT purposes.
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When the next television contract is renewed for half the money of the current one, I hope that nobody pays any attention to the Dodgers’ pleas for help.
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Presumably, a decent chunk of Ohtani’s salary will be offset in increased revenue from merchandising, ad sales, and increased ratings and distribution in Japan (and in the US). Which really goes to show how the Angels must’ve been making money hand over fist the past six years.
No doubt Ohtani’s brand is worth a ton. Kind of like how the Rockets were once the most popular basketball team, possibly sports team overall, in the world, thanks entirely to Yao Ming’s status in China. I don’t know how much extra they made in merchandising and brand sales in China, but it wasn’t nothing.
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I know from the negotiations that Toyota wasn’t going to get outbid for the naming rights to the arena, solely due to Yao.
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Passan:
Shohei Ohtani’s $700 million contract calls for him to be paid only $2 million a year for the next 10 seasons, with $680 million deferred until the end of the deal, sources confirm to ESPN.
The CBT hit on the contract is going to be around $46 million, a huge discount for L.A.
Holy fucking shit.
What in the living fuck?!?!
ETA: that is a contract negotiated by a guy really serious about winning.
How is that even possible?
Didn’t the MLB learn anything from Bobby Bonilla?
There is no fucking way a contract like that should be permitted. What is the fucking point of having years in the deal if 97% of the money is paid after the contract is over?
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I’m guessing MLB does nothing but this is as blatant as it gets for luxury tax manipulation and needs to stamped down on right now. If MLB had any backbone they would void this contract and tell the sides to negotiate a new one.
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For what it’s worth, given that the Dodgers won’t owe Ohtani any interest on the deferrals, the present value of the contract is under $500M. The top-line $700M is window dressing. I’m not saying the CBT rules don’t need changing, more just putting into perspective that Ohtani’s contract is less of an outlier in real value than it looks like.