MLB has become increasingly reliant on deferred payment programs to manage its payrolls. Such programs assist teams in circumventing luxury tax penalties. Yet, there are many questions concerning the long-term viability of such an approach. As a result of the ability to stretch player compensation out over extended periods, teams like the Los Angeles Dodgers can now quickly sign big-name talent without breaching tax thresholds. The Dodgers’ 10-year, $700 million deal with Shohei Ohtani includes $680 million in deferred payments. These payments will be spread out from 2034 to 2043. On the surface, it sounds like a win-win. But dig a little deeper, and it becomes clear that this strategy is fraught with risks—not just for the teams but for the players and the league as a whole.

The notion of deferrals for the player is huge-appearing. In actuality, this concept is much more complicated than it sounds. Inflation, as well as economic insecurity, can really tear apart these contract values so players have significantly fewer purchasing power moments than they can envision. It’s bad enough that postponing a bulk of the paycheck immediately leaves players in worse shape for creating long-term, short-lived in-game career planning. The potential tax implications of these delayed payouts could further chip away at what players ultimately receive. These risks undermine the financial security that players depend on, both during and after their playing days.

Conversely, teams relieve short-term payroll pressure but receive huge long-term liabilities that can hinder them later on. In the case of the Dodgers, they are already facing nearly $1 billion in deferred payments due to players like Shohei Ohtani and Mookie Betts. Once these payments become due, it is quite simple to envision the scenario in which teams would go broke and are unable to hold onto their stars and sign new ones. It might cripple their competitiveness and even jeopardize their operational stability.

In addition, these plans increase the disparity between rich, high-market franchises and their low-market counterparts, which further destabilizes MLB’s competitive balance. The richer teams can use deferred payments to avoid luxury tax penalties and accumulate elite talent, leaving the smaller teams playing catch-up. This creates an uneven playing field, with inequities that damage the integrity of the league and erode fan trust. Iconic cases, such as that of Bobby Bonilla’s notorious deferred payments, have already triggered heated debates regarding the wisdom of such strategies.

MLB needs to address this issue before it gets out of hand. While deferred payments might work well in the short term, they carry long-term implications that threaten the league’s financial, competitive fairness, and credibility. If the objective is to make sure the future of the game is there, then today’s fixes must balanced with sustainable and forward-looking practices.

Behind the paycheck: unpacking the Dodgers’ deferred salary tactics

The Los Angeles Dodgers have mastered the art of deferred payments. This strategy has allowed them to build a dream team without crossing the luxury tax threshold. While this strategy is impressive, I cannot help but wonder if it is sustainable in the long run. Take Shohei Ohtani‘s $700 million deal, with $680 million deferred until 2043, as an example of how the Dodgers are pushing financial commitments far into the future. This feels like kicking the can down the road rather than a sound fiscal plan.

This has earned Mookie Betts a deferred $115 million. The payment will be spread across his 2033 to 2044 period. This structure provides short-term flexibility to the club. It allows them to maintain other talent within their system. On the other hand, it would be hard to miss the pending financial burden. Once upon a time, these mammoth liabilities became due. This could likely curtail its operations. Juggling operational costs with a deferred salary would be a huge risk. Such a risk cannot be overlooked.

The latest contract signed by Blake Snell also falls into this category. The Dodgers inked him to a big contract with a huge chunk of his salary deferred to future years. This gives them the ability to keep payroll manageable in the short term but compounds long-term financial risks. As with Ohtani and Betts, the deferred payments create a heavy load of future obligations that must be met at a time when other financial pressures may arise.

What’s worse, this tactic further worsens MLB’s competitive imbalance. Teams like the Dodgers can use deferred payments to avoid luxury taxes. This allows them to build all-star rosters, leaving smaller-market franchises in the dust. It’s a loophole that undermines the league’s efforts to maintain a level playing field. As a fan, it’s disheartening to see wealthier teams gain an advantage at the expense of competitive fairness.

Ultimately, though the Dodgers’ approach yields short-term gains, it is a gamble with their future. You need a short-term gain balance to achieve long-term stability. However, the heavy dependence on deferred salaries leaves too much room for financial missteps. If MLB doesn’t correct this trend, the league is likely to experience a reckoning. This reckoning could undermine both its financial integrity and fan trust. The league must take the necessary steps to secure its future.