Shohei Ohtani‘s historic contract with the Los Angeles Dodgers will see him defer $68 million of his annual $70 million salary, sources familiar with the deal said Monday, significantly lowering his new team’s payroll and potential tax burden.
Ohtani agreed on a 10-year, $700 million contract with the Dodgers on Saturday, by far the richest in the history of North American professional sports. A source said then that the majority of the contract would come in deferred money; under this structure, however, Ohtani is deferring more than 97% of his earnings. The deferred money — totaling $680 million — will be paid to Ohtani between 2034 and 2043, a source said.
The deferrals were Ohtani’s idea, a source close to the situation said, motivated largely by the thought of helping the Dodgers sign other players but made easier by his massive off-the-field earnings. Ohtani is believed to make upwards of $45 million annually through endorsements, a source said, making him by far the most marketable player in Major League Baseball. The Los Angeles Angels were believed to make more than $20 million annually off that same marketability during his tenure there.
Ohtani’s cost toward the Dodgers’ competitive balance tax payroll — which typically uses the average annual value of contracts, in this case $70 million, but discounts deferred money — will be about $46 million after each season. That puts the combined cost of Ohtani, Freddie Freeman and Mookie Betts toward the CBT payroll at somewhere in the neighborhood of $100 million annually. The luxury-tax threshold sits at $237 million in 2024.
The Dodgers have yet to announce the Ohtani signing but are expected to do so in the near future. They created a 40-man-roster spot for Ohtani and relief pitcher Joe Kelly on Monday morning by sending reliever Victor Gonzalez and infielder Jorbit Vivas to the New York Yankees in exchange for shortstop prospect Trey Sweeney.
ESPN’s Jeff Passan contributed to this report.
