Shohei Ohtani’s massive $700 million contract with the Los Angeles Dodgers caused ripples throughout the baseball community this offseason, catching many by surprise, including the Dodgers themselves.
In a recent Sports Illustrated feature penned by Tom Verducci, published just before Ohtani’s anticipated debut with the Dodgers in South Korea, fresh details emerged regarding the negotiation process that led to this historic contract.
Particularly noteworthy was the arrangement to defer a staggering $680 million of the total sum until after the contract’s conclusion—an unprecedented move in baseball contract structures.
The proposition, initiated by Ohtani’s agent Nez Balelo, was presented to Dodgers’ president of baseball operations, Andrew Friedman, on December 7, a mere two days before the official announcement of the deal. This unconventional approach sparked debates within the baseball community, with many questioning whether such a tactic exploited a loophole in MLB’s regulations.
Friedman’s immediate reaction upon hearing the proposal was one of astonishment, quickly followed by a flurry of discussions with stakeholders, including Dodgers’ president and CEO Stan Kasten. The agreement was met with excitement within the Dodgers’ organization, albeit with a hint of disbelief at its audacity.
Under the terms of the contract, Ohtani will receive a nominal sum annually in the initial years, with the bulk of the compensation deferred to later dates. This unique arrangement not only benefits the Dodgers financially in the short term but also aligns with Ohtani’s aspirations to enhance the team’s competitiveness.
Despite the eye-popping figures associated with the contract, financial calculations reveal a nuanced reality. The present-day value of Ohtani’s deal, factoring in the deferred payments, differs significantly from its nominal total. Additionally, the contract offers strategic advantages, such as potential tax savings for Ohtani should he relocate from California post-contract.
Nevertheless, the Dodgers wasted no time in utilizing their newfound financial flexibility to bolster their roster further. In a flurry of offseason moves, they secured the services of notable talents like Tyler Glasnow, Yoshinobu Yamamoto, Teoscar Hernández, and James Paxton, ensuring Ohtani wouldn’t be their sole marquee acquisition.
Reflecting on the unconventional negotiations, Friedman expressed admiration for the boldness of Ohtani and his representatives, acknowledging that such a proposition was beyond his own imagination. As the Dodgers gear up for the season opener against the San Diego Padres, the impact of Ohtani’s groundbreaking contract reverberates across the baseball landscape, marking a paradigm shift in player-team negotiations.
