Shohei Ohtani’s 10-year, record-setting $700 million contract includes unprecedented deferrals, a person briefed on the terms said. Athletic on Monday.
Ohtani agreed to defer all but $2 million of his annual salary — $68 million of his $70 million a year — until the deal is over, to allow the Dodgers to continue spending around stars Ohtani, Mookie Betts and Freddie Freeman. Deferred payments are due from 2034 to 2043 without interest.
The previously unannounced deferrals were reportedly suggested by Ohtani as negotiations raised the figure to $700 million, the person said, explaining the terms. Athletic. The deal is expected to close soon.
The unusual structure is intended to provide the Dodgers with additional cash flow and payroll flexibility. Meanwhile, Ohtani continues to bring in big dollars from endorsements and off-field endeavors. Ohtani is believed to earn $50 million a year from the diamond, the person said, describing the terms. Athletic.
Deferrers give the Dodgers more freedom, known as the competitive balance tax or luxury tax. For CBT purposes, the contract said the expected average annual value would be close to $46 million a year, the person said, explaining the terms. The Dodgers are at the top of the market, especially for pitching, with free-agent Japanese right-hander Yoshinobu Yamamoto and Rays right-hander Tyler Glasnow among their targets.
Ohtani’s deal surpasses the $426.5 million his former Angels teammate Mike Trout received in the previous record contract. Ohtani’s agent at Creative Artists Agency, Ness Paleo, mentioned the deferment arrangement when Ohtani’s decision to join the Dodgers was announced.
“He is excited to begin this partnership and has structured his agreement to reflect a true commitment from both parties to long-term success,” Paleo said in a statement at the time.
(Photo by Shohei Ohtani: Tim Nwachukwu/Getty Images))