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Reaction to Shohei Ohtani signing the largest contract in North American sports history

Los Angeles Angels v Los Angeles Dodgers Photo by Ronald Martinez/Getty Images

Holy cow, the Dodgers actually landed Shohei Ohtani. The deal isn’t official yet, but that is expected in due time. After a paucity of information becoming public for weeks, it was Ohtani himself who broke the news on Instagram, and his agent Nez Balelo put out a statement soon after.

First, let’s get to some reaction to Ohtani’s record-setting contract, worth $700 million over 10 years with a ton of deferrals. More on those in a second.

We don’t know the name of the dog that appeared with Ohtani as he won the American League MVP. Pablo Torre on his podcast on Friday said he heard a rumor that the dog was named after one of the teams pursuing him, which is why he didn’t want the name out there.

Walker Buehler, Ohtani’s new teammate, had a guess:

Freddie Freeman and his wife Chelsea both chimed in.

Dodgers closer Evan Phillips is happy to have Ohtani on board, and joined MLB Network Radio after the deal went down.

Former Dodger Justin Turner, currently a free agent, enjoyed the implications of what Ohtani’s record-setting deal would do for the market itself.

Other players were simply stunned at the contract.

The contract

$700 million is a ridiculous number, and there’s some sticker shock here. After all, no other MLB player had signed a contract that added more than $365 million in guaranteed money before now.

Mike Trout’s 12-year, $426.5 million contract signed in 2019 replaced the two years and $66.5 million he already had coming on his previous deal. So he really added $360 million and 10 years.

Aaron Judge also signed for $360 million last offseason, over nine years. Mookie Betts’ deal is $365 million over 12 years; he’s signed through 2032. Ohtani’s contract with the Dodgers will take him through 2033.

The total value of Ohtani’s contract is almost equal to any two of those previous highest deals.

However, there are a ton of deferrals in Ohtani’s contract. This will reduce the net present value of the deal, when it comes to determining the payroll for competitive balance tax purposes. Jeff Passan did a good job of explaining this in a tweet.

This is not new to Dodgers superstar contracts. The likely top three hitters in the Dodgers lineup all have deferrals in their deals.

Mookie Betts has $115 million of his $365 million contract deferred, which means that portion of his contract will be counted — for income tax purposes — as a bonus rather than salary. Betts also gets paid through 2044, and those deferrals lower the total value of his deal for CBT purposes to roughly $306.7 million. So while his contract averages to $30.4 million, his CBT number annually is about $24.55 million.

Freeman’s $162 million contract includes $57 million of deferred money that will be paid until 2040. That lowers the total value of his contract, for CBT purposes, to about $148.2 million. So Freeman’s $27 million average annual value instead translates to a CBT number of $24.7 million.

We’ll break down Ohtani’s contract when the full details come out.

As a very rough estimate, the Dodgers have a competitive balance tax payroll of roughly $169 million for 22 players, including averaging the estimates of 11 arbitration-eligible players from Cot’s Contracts and MLB Trade Rumors. This also includes the not-yet-official Joe Kelly deal. But that payroll number is before Ohtani.

The first CBT threshold in 2024 is $237 million. Considering the Dodgers still very much need pitching, it’s quite likely they will pay the luxury tax again in 2024. But they do have more flexibility than the initial, glaring $70-million-per-year figure might suggest.

There’s also the fact that Ohtani is already a global superstar, who brings in a ton of money in endorsements.

By signing Ohtani, the Dodgers should get some sort of windfall in extra revenue as well. Mike DiGiovanna at the Los Angeles Times attempted to quantify this in a tweet:

R.I.P.

Ohtani no longer on the Angels means we can put to bed one of the best tweets in the history of the platform, from more than two years ago.

In Ohtani’s six years in Anaheim, the Angels’ highest win total was 80, when he was a rookie in 2018. They were 401-469 (.461) in Ohtani’s six seasons, the equivalent of 75-87 over a full season.

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