Ohtani Watch: Dodgers sign - 700M over 10yrs

[Look at Ray Ray Run]

7 hours ago, South Side Hit Men said:

10 different MLB teams have won the World Series and 16 different teams (9 NL, 7 AL) reached the World Series since 2011. That’s a higher parity rate than your beloved NFL example or the other two leagues.

Few of the remaining 14 teams have even tried to reach the WS despite having the resources to do so via enormous revenue sharing plus MLB TV and Internet 1/30 shares.

The lowest valued MLB teams per Forbes in 1995 were $70M. In 2023, the lowest valued team is worth a billion, and the reason is each team is guaranteed $180M in revenue floor with a player salary floor of $30M. Any lack of parity is based on the warped incentive structure to penalize proper management of bottom market teams like the Cardinals, and reward owners like Pittsburgh’s Nutting and Oakland’s Fisher and several others for permanently tanking.

Apparently none of the Top Three MSA / DSM Market six teams got the memo they were allowed to win more than 0 playoff games last year.

The MLB playoffs are a complete crap shoot.

The NBA has less perceived parity because stars dominate the sport and one man can impact so much. The NFL is similar with the QB position -- great QB's are going to be in the hunt. Difference is, great QB's are everywhere, and great players in the NBA are everywhere.

Baseball parity problems are different. The MLB is a lot like a college sport in that the same sets of teams are typically challenging every year but they can cycle and have a couple years where their young guys come together at the right time and they're good for 2-3 years before falling off into rebuild oblivion for another 8 years.

The cycle between competitive/not-competitive is much more dramatic IMO because one player isn't going to change the tied via a draft, and if you don't spend it's your only way out so it's going to take time.

[Look at Ray Ray Run]

15 hours ago, South Side Hit Men said:

This is bullshit, all of it. 

San Francisco and Boston were always wealthy cities. Boston didn’t win dick since 1918. The Giants didn’t win duck since they played in Manhattan, even with Bonds.  Both finally broke their winless World Series streaks because they finally installed smart front offices. Guys like Bruce Bochy who Reinsdorf, Tony and Hahn had zero interest in 2023. Guys like Theo and Sabean.

Baseball collapsed over the past forty years not because of teams trying to win, but rather because too many teams are not trying to win. MLB ownership booted an at least marginally neutral Commissioner. Their mindset largely mirrors Jerry’s with the message Go f*** Yourself spoken loud and clear to every fan and player who has ever loved the sport.

That’s how you go from 33% World Series market share to 3%. That’s how the Sox went from a 50/50 Chicago split to 67/33 split. Jerry calls Harry Caray scum. Petty GMs treat Carlton Fisk and Frank Thomas like scum. Boyer treated Jason Benetti like scum. f*** you Jose, we’re paying Benintendi.  “We’re not going to be in any Ohtani race, I’ll tell you that.” What a masterclass in public relations.

Teams don't try to win because with no salary cap you have no salary floor.

A salary cap is not a bad thing; it guarantees a fair distribution of revenues to players. It's better than what they have now and it would greatly help the sport and limit this tanking issue you talk about. Even if you tank you have to spend x amount of dollars.

[Look at Ray Ray Run]

Sorry to spam; don't have much time to post/jump online these days so try to get it all out in a row!

Lets use the Jags as an example. The Jags are a small market joke who just had one of the most embarrassing seasons of all-time under Urban Meyer. They had a QB that was solid though, they brought in a new coach, and now they've been in the hunt two years in a row. A one year turnaround.

The NBA, I don't think I need to give examples of one player helping turn a franchise around.

The NFL has a TON of players that matter, and the cap forces teams to make tough choices and turn over rosters which turns the league over. Sure an elite QB can carry a team for a decade, but those guys play anywhere that drafts them for the most part. Being bad you are rewarded with that.

The important thing about everything above is it comes down to one thing; the fans feel like they always have a CHANCE. Oh my god, we're so bad but the next peyton manning is in this draft!!! In the NBA it's the exact same way, even with the lottery. This keeps engagement up and keeps teams always ready to go all-in.

In baseball, a young core as an under market team might get you, what, three years? No way do you get a decade, or 5 years even like you can get from a star QB or an elite NBA talent just from the draft alone. In the NFL too, coaching can literally change your entire opportunity.

Baseball needs a cap because they need to evolve and become a game that is decided by the players and not the owners, and the only way to do that is to make it so the financial playing field is even and teams can't load up or trim down to the studs.

[caulfield12]

Ohtani is going to make $60-75 million...from endorsements, and that's conservative.

Trout is second at $5 million and fading.

He's a unicorn in terms of being able to ride out a deferred deal like this...and not have to worry about his cash flow one iota.

[The Grinder]

11 minutes ago, caulfield12 said:

Ohtani is going to make $60-75 million...from endorsements, and that's conservative.

Trout is second at $5 million and fading.

He's a unicorn in terms of being able to ride out a deferred deal like this...and not have to worry about his cash flow one iota.

60-75 MILLION over what time frame?

[caulfield12]

4 minutes ago, The Grinder said:

60-75 MILLION over what time frame?

Just one season....he was already at roughly $40 million, conservatively, the last couple of seasons, as a non-playoff bound Angel.

Remember, he's getting equal or even greater amounts back in Japan for endorsing everything under the sun.

Then you're combining the Ohtani phenomenon with how dominant the Dodgers' brand is in California as well as across the Pacific Rim.

 

[caulfield12]

Ohtani’s 10-year deal, worth $700 million, would see him collect only $2 million a season until after the deal concludes. The rest will arrive without interest, Ardaya reported, between 2034 and 2043.

In other words, Ohtani will issue an interest-free loan of nearly his entire salary for more than a decade. That will free up cash flow for the Dodgers while lowering the team’s obligations under MLB’s competitive balance tax. That tax applies to big-spending teams like the Dodgers, as a collectively bargained incentive to hold salaries down and give smaller-market teams (but really just cheaper owners) a better chance to compete without making a big financial effort. Ohtani will be fine. He has been the face of baseball in his native Japan for years, and he has recently become the same in the United States. His endorsement earnings are enormous, estimated in Ardaya’s report at $50 million a year. That allowed Ohtani to not quite work for the Dodgers for free but to accept an employment agreement worth nowhere close to what $700 million indicates. Sports economists will have a field day figuring out his new contract’s present-day value.

A stock reaction to this reporting on Monday afternoon was: How is that legal? Well, it’s right there in the collective bargaining agreement between MLB’s players and owners, the one they struck up after a lockout in 2022. “There shall be no limitations on either the amount of deferred compensation or the percentage of total compensation attributable to deferred compensation” in MLB contracts, it says. The Dodgers don’t even have to have all that deferred compensation funded until years from now. The piper will need payment, but it will be a while. The world might end, or the Dodgers might get sold first. And Ohtani might be living somewhere other than California, so he might pay less in taxes.

In the meantime, the Dodgers will pay about $20 million over 10 years for the best baseball player alive. ESPN’s Jeff Passan reports that in competitive balance tax terms, Ohtani’s deal will count for $46 million, not $70 million, per season. That will save L.A. millions in tax penalties while Ohtani is on the roster, though the deal is so big that it’s not right to see the whole thing as a tax dodge.

https://www.yahoo.com/lifestyle/shohei-ohtani-700-million-contract-183057095.html

 

[caulfield12]

Ohtani accepting such a drastic portion of his compensation in deferrals will give teams ammunition when they ask other players—all of them inferior to Ohtani—to do the same. Many owners might be pissed too, insofar as a deferral like this one provides a model, albeit with strings attached, to a supersize payment total for players.

The latter theory has origins in other sports. In 2010 the NHL’s New Jersey Devils gave a $102 million contract to goal-scoring winger Ilya Kovalchuk. The sticker price was a lot, but the stunner was the term: a 17-year pact that Kovalchuk, then 27, was never going to play all the way out. The franchise built the contract that way so that Kovalchuk’s salary cap hit would be lower. A furious league office fined the Devils and took away some draft picks because New Jersey had committed a grave sin against sports’ ownership class: It had devised a creative way to enhance a player’s salary.

 

But the Dodgers now have a path to give more players more money while also snapping up Ohtani, and who knows what their down-the-road obligations might be because of Ohtani’s deferrals? The current CBA runs only through 2026. The sport could look much different by the time Ohtani needs to get his cash. Players might be angry about the money Ohtani will have to wait to get, and other owners might be angry that the Dodgers are giving it to him. Baseball’s owners aren’t a monolith, and some will be offended merely at the notion that the Dodgers got a player they’d never dare try to get for themselves.

None of that is the Dodgers’ problem, though. They’ve pulled a coup, and their fans will get to watch one of the most exciting athletes ever for the next decade. Ohtani has been more generous to his new employer than he had to be, but such is life when you’ve just spent six years drawing favorable comparisons to Babe Ruth while never once appearing in the postseason. Ohtani languished on a team that never deserved him. Now he will star for one that barely has to work to afford him.

 

 

Picked a really good year for the Dodgers and Padres (HaSeong Kim) to kick off the season in Korea.

They're only missing the mythical Lee, who will be patrolling CF in SF for at least the next four seasons.

 

And of course Yamamoto and Shota Imanata (big Cubs' fall back option at $75-90ish million) are still out there as well.

 

 

 

 

 

 

 

 

Edited December 13, 2023 by caulfield12

[South Side Hit Men]

2 hours ago, caulfield12 said:

Ohtani accepting such a drastic portion of his compensation in deferrals will give teams ammunition when they ask other players—all of them inferior to Ohtani—to do the same. Many owners might be pissed too, insofar as a deferral like this one provides a model, albeit with strings attached, to a supersize payment total for players.

The latter theory has origins in other sports. In 2010 the NHL’s New Jersey Devils gave a $102 million contract to goal-scoring winger Ilya Kovalchuk. The sticker price was a lot, but the stunner was the term: a 17-year pact that Kovalchuk, then 27, was never going to play all the way out. The franchise built the contract that way so that Kovalchuk’s salary cap hit would be lower. A furious league office fined the Devils and took away some draft picks because New Jersey had committed a grave sin against sports’ ownership class: It had devised a creative way to enhance a player’s salary.

 

But the Dodgers now have a path to give more players more money while also snapping up Ohtani, and who knows what their down-the-road obligations might be because of Ohtani’s deferrals? The current CBA runs only through 2026. The sport could look much different by the time Ohtani needs to get his cash. Players might be angry about the money Ohtani will have to wait to get, and other owners might be angry that the Dodgers are giving it to him. Baseball’s owners aren’t a monolith, and some will be offended merely at the notion that the Dodgers got a player they’d never dare try to get for themselves.

None of that is the Dodgers’ problem, though. They’ve pulled a coup, and their fans will get to watch one of the most exciting athletes ever for the next decade. Ohtani has been more generous to his new employer than he had to be, but such is life when you’ve just spent six years drawing favorable comparisons to Babe Ruth while never once appearing in the postseason. Ohtani languished on a team that never deserved him. Now he will star for one that barely has to work to afford him.

There is no equivalency to the Kovalchuk deal, because it was a contract through age 44, similar to the Padres 14 year Aaron Judge, also offered through his Age 44 season, which likely would have been challenged by MLB if Aaron accepted it  MLB. In both instances, these were not salary deferrals, but rather contracts nearly certain to run far past a player's playing term.

Ohtani signed a 10 year contract to serve as DH, and when healthy enough also as a SP through his age 39 season. It's a long deal, but certainly not without precedent, including Pujols' (age 32 ten year) and Cabrera's (age 33 eight years) 1B/DH deals taking them into their age 41 and 40 seasons respectively.

Close to 99% of players wouldn't accept similar terms because they don't get $40M (soon to be $70M-$80M) in endorsements to pay their living expenses. Trout is at $5M and second in MLB for player endorsements. Sure perhaps a dozen end of the line players (mid 30s to early 40s) earned nine figures and may not need day to day living expenses, but they are also not going to command a $700M contract or anything close at this stage.

Bottom line, this is a $460M contract over ten years paid over time in 2024 dollars. Sure it's the largest, but it's only $33.5M more in total than Trout's 12 year $426.5M extension, and $100M more for an additional year than Judge received.

[caulfield12]

50 minutes ago, South Side Hit Men said:

There is no equivalency to the Kovalchuk deal, because it was a contract through age 44, similar to the Padres 14 year Aaron Judge, also offered through his Age 44 season, which likely would have been challenged by MLB if Aaron accepted it  MLB. In both instances, these were not salary deferrals, but rather contracts nearly certain to run far past a player's playing term.

Ohtani signed a 10 year contract to serve as DH, and when healthy enough also as a SP through his age 39 season. It's a long deal, but certainly not without precedent, including Pujols' (age 32 ten year) and Cabrera's (age 33 eight years) 1B/DH deals taking them into their age 41 and 40 seasons respectively.

Close to 99% of players wouldn't accept similar terms because they don't get $40M (soon to be $70M-$80M) in endorsements to pay their living expenses. Trout is at $5M and second in MLB for player endorsements. Sure perhaps a dozen end of the line players (mid 30s to early 40s) earned nine figures and may not need day to day living expenses, but they are also not going to command a $700M contract or anything close at this stage.

Bottom line, this is a $460M contract over ten years paid over time in 2024 dollars. Sure it's the largest, but it's only $33.5M more in total than Trout's 12 year $426.5M extension, and $100M more for an additional year than Judge received.

It does have everyone in the world (temporarily at least) talking baseball, Dodgers, Ohtani...even all the other professional leagues.

[South Side Hit Men]

3 hours ago, caulfield12 said:

It does have everyone in the world (temporarily at least) talking baseball, Dodgers, Ohtani...even all the other professional leagues.

Ironic that Jerry had the most popular team athlete in the history of sports and was ecstatic to get rid of him after limiting a fair contract to Jordan's final two seasons.

Jordan earned $33M, or less than $3M a year, over his first twelve seasons. Still 50% more than Pippen for 11 year stint ($22.3M). Couldn't even afford to tip people.

Jerry loved getting rid of Jordan, Pippen and Jackson. He sold out the UC for decades with garbage teams beyond the Thibodeau/Rose stretch. Had seven 13 to 23 win seasons, finished with over 50 wins once over the 25 seasons that followed.

[caulfield12]

Lance Lynn and Yoan both make it into Paul Sullivan’s Shohei article

 

According to reports, agent Nez Balelo said it was Ohtani himself who came up with the idea of annually deferring $68 million per year of his 10-year, $700 million deal and paying out the bulk of the money between 2034-43 to ensure the Dodgers had enough money left to spend on other free agents who can help them win championships.

What a swell guy.

Ohtani hasn’t spoken to the media, so for now we can only speculate on how he became so fluent in contract construction, and why he’s so willing to put his team ahead of his own financial interests.

Everyone was aghast when the news leaked about the deferrals. Many on social media thought it was unfair to the other billionaires who can’t keep up with the Dodgers’ owners. But as it turned out, any player can defer as much money as he wants, and any team can offer to do so.

It’s seldom done because the value of money decreases over time, so why would anyone willingly take less now knowing the rest of the contract won’t be worth as much 10 years later? Ohtani’s deal will work out to about $46 million per year instead of $70 million, and though $460 million is nothing to sneeze at, it doesn’t sound nearly as cool as $700 million.

But Ohtani makes so much off the field — perhaps $50 million according to some estimates — that he doesn’t need another $70 million a year to pay his bills. He reportedly lives in a relatively modest home in Newport Beach, Calif., and doesn’t splurge on sports cars like Yoán Moncada, so he’ll be able to get by fine until the deferrals kick in 10 years from now.

The Dodgers are now well situated to make the postseason annually, just as they were before the signing. But as we saw this year when the Dodgers, Atlanta Braves and Baltimore Orioles all won 100 or more games and failed to make it to their League Championship Series, the postseason is a crapshoot that renders the regular season meaningless.

The Dodgers started Lance Lynn in a playoff loss last October and watched him give up four home runs in an inning. Having money to spend doesn’t make you a genius.

The overreaction to Ohtani’s signing was to be expected, with Los Angeles Angels fans crying, Toronto Blue Jays fans angry and everyone else just shaking their heads over the massive figure.

The Athletic sent a reporter to Angels Stadium when the news was revealed Saturday on Ohtani’s Instagram account. Someone placed flowers on an Ohtani marker as though he was dead, not moving to Dodger Stadium.

https://www.yahoo.com/sports/paul-sullivan-shohei-ohtani-unique-023200291.html

 

[ptatc]

12 hours ago, Look at Ray Ray Run said:

Teams don't try to win because with no salary cap you have no salary floor.

A salary cap is not a bad thing; it guarantees a fair distribution of revenues to players. It's better than what they have now and it would greatly help the sport and limit this tanking issue you talk about. Even if you tank you have to spend x amount of dollars.

I agree. A salary cap along with a floor would really help the game. 

Unfortunately the union will never go for it. 

[caulfield12]

Greg is going to flip…
 

“According to data by Logitix, tickets for the Dodgers home opener have jumped 152%. Before the Ohtani signing, the average ticket for opening night was priced at $390.95 per ticket. Now? The average price for the highly anticipated game scheduled for March 28, 2024, has soared to $983.71.

However, the data also reveals ticket prices won’t be so bad for the wallet for other Dodger games. In the 2023 season, Dodger fans were paying an average of $171.67 per ticket. Next year, tickets are expected to go for an average of $295, which is a 71% increase.”

 

https://www.yahoo.com/news/dodgers-ticket-prices-soar-shohei-182748256.html

[BamaDoc]

For those interested, I did the math.  His salary cap number is 46 million.  That is right in line with most predictions.  He gets 2 million.  What rate of return do you have to generate on the "44" million deferred to equal 68 million in ten years?  It is 4.5%.  So while they claim there is no interest on the deferred money, I would argue there is.  Ohtani got the money everyone thought he would but 700 sounds cooler than 460.  He is actually just locking in a guaranteed 4.5% return on the 44 million for ten years.  Creative and a win for him as he stated his biggest desire is to WIN!  Lowering the cost while he plays allows for more money to put better players around him.  As many pointed out, his endorsement deals will provide the cash flow while playing.  Additionally, he can move to a state without income tax after playing when he gets the 68 million a year and save around 4 million a year in taxes.

[oldsox]

The more I think about the Ohtani deal, the more I lean toward the Commish stepping in and disallowing the deal.  Either that or treat the prorated annual salary as being earned and paid this season for luxury tax purposes. They obviously are using this deferral as a means of not paying taxes in the USA.  f*** 'em. You earned it here, pay taxes here.  This is a big-time charade on both levels and should not be allowed.  The competitive advantage given the Dodgers is off the charts.

[JoeC]

I bet Jerry would have been willing to match 10 years / $2MM per year.

[Tnetennba]

34 minutes ago, JoeC said:

I bet Jerry would have been willing to match 10 years / $2MM per year.

IDK, Jerry hates lengthy deals.

[pettie4sox]

Doesn't it blow to root for a team with one of the worst owners in sports?  Most of us probably have decent lives and just want to watch a good baseball team.  Is that too much to ask?  For Jerry, it is.

I don't hate people (strong dislike for sure but hate... not at all), but Jerry makes it really difficult to keep it together and not be a homicidal maniac.

[fathom]

Kinda awesome that Shohei, Betts and Freeman were at the Yamamoto meeting at Dodgers Stadium yesterday

[Bob Sacamano]

12 minutes ago, fathom said:

Kinda awesome that Shohei, Betts and Freeman were at the Yamamoto meeting at Dodgers Stadium yesterday

And Will Smith too. From what I can tell, no one was slapped.

[Chicago White Sox]

Ohtani can opt-out at the end of any given season if there is a change in ownership or if Friedman.

Andrew just got himself some leverage when negotiating future contracts…lol.

[caulfield12]

44 minutes ago, Chicago White Sox said:

Ohtani can opt-out at the end of any given season if there is a change in ownership or if Friedman.

Andrew just got himself some leverage when negotiating future contracts…lol.

If Friedman leaves or is fired...?

That could work the other way around if Ohtani's pitching totally fell apart and he was "just" an 825-850 hitter for a couple of seasons...due to lingering injuries for example.

Interesting clause, at the very least.

Of course, the real financial consequences are far down the line.

[Bob Sacamano]

Just now, caulfield12 said:

If Friedman leaves or is fired...?

That could work the other way around if Ohtani's pitching totally fell apart and he was "just" an 825-850 hitter for a couple of seasons...due to lingering injuries for example.

Interesting clause, at the very least.

Of course, the real financial consequences are far down the line.

Well if that happened, then Ohtani wouldn’t want to opt out.

[Tnetennba]