When ticket prices go up 15% next year and maybe more the following year, the fans will already be not happy.
Shohei Ohtani is an LA Dodger: 10 years/$700 million
- Thread starter RedOctober3829
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This is the least surprising free agent move ever. Everything I’ve heard about Ohtani - both in America and Japan- is that he’s a pretty simple guy who was actually quite happy with the Angels and in Southern California. But he wants to win.
The dodgers offer him that, while not disrupting the rest of his life. When it was briefly rumored that he was going to Toronto that was totally baffling (both for me and my Japanese friends).
Anyway, it looks like all the hype about other options were probably just agent-generated to make sure he got the best deal for his client.
The dodgers offer him that, while not disrupting the rest of his life. When it was briefly rumored that he was going to Toronto that was totally baffling (both for me and my Japanese friends).
Anyway, it looks like all the hype about other options were probably just agent-generated to make sure he got the best deal for his client.
lol, you don't seriously think that ticket prices are determined by payroll instead of, you know, supply and demand, do you?
Let’s wait and see what happens. Lol. They have sold close to 4,000,000 the past many regular seasons. There is plenty of demand.
If this is accurate, very similar to what happened at the end of the Judge bidding last winter.
“A $700 million contract between the Dodgers and Ohtani – the richest in sports history – was not on the table Friday when Dodgers Nation reported Ohtani was sold on the Blue Jays’ final offer. It is believed the Dodgers’ outlay to Ohtani rose significantly, by as much as $100 million.”
https://dodgersnation.com/dodgers-raised-their-offer-to-shohei-ohtani-in-final-24-hours-to-complete-richest-deal-in-sports-history-sources/2023/12/09/
“A $700 million contract between the Dodgers and Ohtani – the richest in sports history – was not on the table Friday when Dodgers Nation reported Ohtani was sold on the Blue Jays’ final offer. It is believed the Dodgers’ outlay to Ohtani rose significantly, by as much as $100 million.”
https://dodgersnation.com/dodgers-raised-their-offer-to-shohei-ohtani-in-final-24-hours-to-complete-richest-deal-in-sports-history-sources/2023/12/09/
Ticket prices almost certainly will rise. But it won't be because the Dodgers need to pay for Ohtani, it'll be because Dodger fans are going to want to see Ohtani play.
As with Judge and most recent star signings, highest bid usually wins. Calculating “highest bid” in real economic terms requires details we don’t currently have but I’ll bet this follows the majority trend.
Yep, I can't find it again now, but I just saw that opening day ticket prices in TOR were around $250 on the secondary market yesterday when people thought Ohtani was going there, back in the $50 range now.
Used to be there was a significant achievement for winning the regular season. It was called the pennant and it meant a lot. I don’t like the idea that being the best team over 162 games isn’t recognized as being prestigious in some way.
No kidding huh. What a garbage franchise. They’ve had a decade to do…..something. All they’ve done is win twice on two lottery tickets.
Not only that but they traded what little depth they did have in a futile attempt to appease him.
agreed—-the decision to sit on he and Trout (and other assets) is really really bad
They are now the betting favorites to win it all per Draft Kings so you’ll have opportunities to go the other way.
Presumably, this raises the prices on all FA’s, and the Sox may want to sign one at some point, so I struggle to see how this is good news.
I mean, it was definitely a better system when only four teams made it from each league. Two teams per league isn't enough, but those titles are way more intrinsically meaningful than the current ones.It was more important back in the time when the Yankees won
I kid, I kid!
It feels like Ohtani is getting it because he's hypothetically two players.
I don't think anyone is going to start commanding this kind of money unless there are CBT loopholes to exploit.
This seems pretty accurate, and it's not even counting whatever the value of deferring some of it is.
View: https://twitter.com/BMcCarthy32/status/1733585367725641971?s=20
View: https://twitter.com/BMcCarthy32/status/1733585367725641971?s=20
Maybe in days to come, that kind of thing is rarely spelled out publicly though and also will be an ongoing work in progress over the course of his contract. I guess you saw the tweet I posted upthread?
View: https://twitter.com/mikedigiovanna/status/1733608970894651553?s=46&t=0GHHaPVUX26Io0V2HIcS0g
Well I was totally wrong. I seriously thought he’d end up closer to $40M/10 years per. I’d still be stressed out AF about him ever being able to pitch again. And a serious injury there could hurt his ability to hit. But his promise is a major gamble that apparently plenty of teams were willing
Owning a franchise in Baltimore or Nashville is small potatoes. Creating a winter baseball league and luring MLB players seems more like a Saudi move, or using the eventual collapse of regional sports networks to build a media empire here.
Yeah, that seems like a ridiculous statement. Sure, it's mathematically possible but it seems very unlikely.
Tom Verducci with a great article on the behind the scenes stuff with Ohtani.
"When Shohei Ohtani visited the Dodgers on Dec. 1, he made a point of asking the club about its player development philosophy and the state of its minor league system. Los Angeles was ranked by MLB.com midway through the 2023 season as having the sixth-best system in baseball. The Blue Jays, who were next on Ohtani’s limited free-agent tour, checked in at No. 25.
Why ask about the minor leagues? If Ohtani was signing on for the next decade or more, he wanted to know if the success of his next team would be sustainable. He had just spent six years with the Angels finishing 10 games or more out of the playoffs every year."
"In that way, Ohtani told his agent, the contract would not prevent the Dodgers from continuing to compete for the postseason every year. Ohtani suggested he defer more than half the $700 million at below-market interest rates. The math still needs to be done by the commissioner’s office and the players association, but the annual present-day value against the CBT could be about $50 million at the lowest, but probably higher, according to a rival club executive."
https://www.si.com/mlb/2023/12/09/dodgers-decade-long-pursuit-shohei-ohtani-finally-comes-through
"When Shohei Ohtani visited the Dodgers on Dec. 1, he made a point of asking the club about its player development philosophy and the state of its minor league system. Los Angeles was ranked by MLB.com midway through the 2023 season as having the sixth-best system in baseball. The Blue Jays, who were next on Ohtani’s limited free-agent tour, checked in at No. 25.
Why ask about the minor leagues? If Ohtani was signing on for the next decade or more, he wanted to know if the success of his next team would be sustainable. He had just spent six years with the Angels finishing 10 games or more out of the playoffs every year."
"In that way, Ohtani told his agent, the contract would not prevent the Dodgers from continuing to compete for the postseason every year. Ohtani suggested he defer more than half the $700 million at below-market interest rates. The math still needs to be done by the commissioner’s office and the players association, but the annual present-day value against the CBT could be about $50 million at the lowest, but probably higher, according to a rival club executive."
https://www.si.com/mlb/2023/12/09/dodgers-decade-long-pursuit-shohei-ohtani-finally-comes-through
This runs counter to the significant amount of deferrals coming. This is one of the reporters on the Jays train yesterday.
While it could be true, I think Ohtani was never leaving LA.
It didnt. I think I had posted a while back with the old CBA through 2021 because the MLBPA hadnt posted the 2022-2027 version. They now have. All deferrals are discounted if they are not paid with interest that is at least 150 bps within the mid-term AFR for the first contract year. Applicable text is below. The midterm rates have been running around 4.5%, including notably 4.4% in October so I think we are looking at 4.4% per year discount for any payments deferred until after the contract ends if no interest is paid (or, e.g., 3% if the contract calls for 1.5% interest).
Realistically, I think Cots is just wrong here and just pulls the nominal amounts.
(6) Deferred Compensation
(a) Definition
“Deferred Compensation” shall mean any Salary payable to a Player pursuant to a Uniform Player’s Contract in a Contract Year after the last championship season for which the Contract requires services as a baseball player to be rendered.
(b) Attribution
(i) Deferred Compensation shall be included in a Player’s Salary as if paid in the championship season to which it is attributed under a Uniform Player’s Contract. If a Contract does not attribute Deferred Compensation, the Contract shall be treated as
if the Deferred Compensation was attributed equally to each of the Guaranteed Years in the Contract.
(ii) If the Deferred Compensation is to be paid with interest at an effective rate that is within one and one-half percentage points of the Imputed Loan Interest Rate for the first Contract Year covered by the Contract, then the Deferred Compensation shall be included at its stated value. Otherwise, the Deferred Compensation shall be included at its present value in the season to which it is attributed, said present value to be calculated by increasing any such payments by the Contract’s stated interest rate, if any,
and then reducing such payments back to their present value by applying as a discount rate the Imputed Loan Interest Rate for the first Contract Year covered by the Contract. If the terms of a Contract are confirmed by the Association and the Office of the Commissioner before the Imputed Loan Interest Rate for the first Contract Year covered by the contract is available, the Imputed Loan Interest Rate shall be the annual “Federal mid-term rate” as defined in section 1274(d) of the Internal Revenue Code for the
month preceding the month in which terms are confirmed. If a Uniform Player’s Contract uses the date or year in which a Player retires as a triggering event for the commencement of payment of the Deferred Compensation, it will be assumed for purposes of calculating Salary under this Article only that the Player retires on the day that he reaches age 40 or at the end of the Contract, whichever is later.
(4) “Imputed Loan Interest Rate” for each Contract Year shall mean the annual “Federal mid-term rate” as defined in Section 1274(d) of the Internal Revenue Code for the October preceding that Contract Year.
If people would like to look themselves, its available at https://www.mlbplayers.com/cba
The above language on deferrals is on page 135/136
Interesting! I have always trusted Cots over Spotrac as they seem much more accurate, but admittedly I usually use it for the Yankees and they don't seem to do the deferred money thing.
When ticket prices go up 5% next year in Boston and maybe more the following year after that, and the Boston fans don’t have an Ohtani, the fans will already be not happy.
Fantastic. Thanks for finding. This seems fair to other teams, reasonable, and to create neither a serious incentive nor disincentive. It puts the CBT within shouting distance of the actual present day value of the contract.
Thanks for that.
I had no real reason to prefer Spotrac over Cots aside from the fact Spotrac seems to come up when I google and be pretty easy to follow. Interesting Cots seems to be misleading here.
I expect a lower increase this year after a last place finish, ownership has been pretty sensitive to not raising proces after failed seasons.
But it *is* the Fellowship, so miserable is to be expected.
Deferred $ contracts aren't necessarily bad or good for a team, but it definitely creates an opportunity if a player wants a bigger high end reported max salary for some reason. Certainly the headlines are a bit more impressive when it's "Ohtani gets 10/700M" instead of 10/580M (or whatever it turns out to be).
Devers got 75M deferred, Mookie had 120M deferred. It happens all the time. I can't recall seeing someone defer more than half their salary before though.
Playing half his games in CA and paying CA state taxes along with agent fees etc...Ohtani's 2024 take home pay might barely get him in house in West LA. Poor guy.
This is actually a really good question. Will we see more of a surge of NPB players coming over? Probably not. Scouting is scouting. I am pretty sure that all their best are well known already, probably not too many sleepers over there.
Ohtani was criminally underpaid his first five years in MLB before $30M finally this year, this brings up his career AAV nicely. 
"Ohtani earned $42,269,259 in his six seasons with the Angels. After receiving a signing bonus of $2,315,000 with his initial deal, he had salaries of $545,000, $650,000, $259,259 (in the pandemic-shortened 2020 season), $3 million, $5.5 million and $30 million."
"Ohtani earned $42,269,259 in his six seasons with the Angels. After receiving a signing bonus of $2,315,000 with his initial deal, he had salaries of $545,000, $650,000, $259,259 (in the pandemic-shortened 2020 season), $3 million, $5.5 million and $30 million."
One final thing on deferred contracts. It is a way to tell players they are getting more than they are actually getting.
Sometimes agents promise players X amount of money, turn down a contract worth X, and it ends up not working out as well as the agent hoped. If someone turns down 300M and it turns out they can only get 250M down the road.... it's pretty easy to turn 250M into 310M with deferred $ and make it superficially seem like a win. Obviously some athletes are more financially savvy than others, but some don't grasp all the details.
As far as Ohtani specifically, 700M is a ridiculous of money no matter how you slice it. Any possible deferment plan over 20-30 years is still going to make it a massively valuable contract. Why did he opt for this rather than a more traditional similarly valued contract at a total of 500-600M? Who knows.
Sometimes agents promise players X amount of money, turn down a contract worth X, and it ends up not working out as well as the agent hoped. If someone turns down 300M and it turns out they can only get 250M down the road.... it's pretty easy to turn 250M into 310M with deferred $ and make it superficially seem like a win. Obviously some athletes are more financially savvy than others, but some don't grasp all the details.
As far as Ohtani specifically, 700M is a ridiculous of money no matter how you slice it. Any possible deferment plan over 20-30 years is still going to make it a massively valuable contract. Why did he opt for this rather than a more traditional similarly valued contract at a total of 500-600M? Who knows.
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My guess is his agency had a goal of breaking Messi's number for highest sports contract all-time in nominal value (675M I think I read?) and he went along with it.
Another perspective. The Pittsburgh Pirates' opening day 25/26 man rosters from 2014-2023 (10 years worth, so 250-260 players) were paid a total of $716,895,952
I'm not sure how "genius" this is. I would sincerely hope every MLB front office understand deferrals, interest rates, and the CBT. It's a pretty obvious way to do business in the current climate.
If you start from the point of, "we are willing to pay Ohtani a typical contract worth X"... you can structure that however you want. You can make it a 1 billion contract if you want to stretch it out far enough.
The more info that comes out, sounds like there is a TON of deferred $ and this is going to end up being more like a 10 year 550M deal. Maybe even less.
