Shohei Ohtani is joining the Los Angeles Dodgers, Ohtani has announced, via his agent. The deal is for $700 million over ten years, but includes what multiple reports indicate are extremely substantial deferrals — most of his salary, per both Jeff Passan and Robert Murray. There are no opt outs, per reports.
So at the end of the day, Ohtani goes to the team that was generally seen as the favorite to sign him, and he gets a record-breaking contract, as was predicted. What isn’t clear is the terms of the deferrals, which will determine what the contract is actually worth in present dollars. The valuation of the contract after present valuing the deferrals is what will determine the AAV for luxury tax purposes.
Multiple reports indicate that the deferrals were Ohtani’s idea, as he sought to minimize the impact of the deal on the Dodgers’ cash flow and luxury tax obligations, in order to make it easier to spend on other players. I’d expect that, at the end of the day, the deal will be calculated to be “only” $50 million or so in annual average value.
And this has to be a bitter day for Toronto Blue Jays fans, given that yesterday it was reported that Ohtani had decided to be a Jay.