Not Really $700 Million? Breaking Down Shohei Ohtani’s 10-Year-Contract With Los Angeles Dodgers

Who could have ever imagined? But, MLB has shaken up American Sports history with the biggest contract so far, all thanks to the Los Angeles Dodgers. Notably, the 2020 champions have agreed to pay $70 million a year to Shohei Ohtani for next season, making him the highest-paid athlete in the multiple sports spectrum. However, is it indeed $70 million annually?

This news has become big as no other athlete has fetched a contract like this before. Plus, a sum of $700 million is itself huge. It is also beyond the yearly spending of multiple organizations. As the two-time MVP is the recipient of it, the notion is Ohtani will earn this exact amount in his career. However, it appears that is not the situation. What is the reason for this?

A Deeper Dive into the Complex Factors That Bring the Figure Down from $700 Million

Since the contract evaluation has come up, Shohei Ohtani has become the center of attraction. Many are calling him an earner of 700 million dollars. However, according to Jeff Passan, this might not be the case due to the deferments involved in the contract.

Passan explained his viewpoint and wrote, “When money in a contract is deferred, the competitive-balance tax number — the luxury tax — is discounted. With a source saying a “majority” of Ohtani’s contract is deferred, the discount could be significant. Typically, a CBT number is the average annual value of a deal — in this case, $70 million. But depending on the size and length of the deferrals, Ohtani’s CBT number is likelier to wind up in the $40-50 million-a-year range, an enormous benefit for the Dodgers.”

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This is interesting. It has lowered the likely spending of the Dodgers, who will have services at a discounted rate for the rest of his career. However, if the numbers are concerned, the contract is as big as multiple organizations, which further adds to the rarity of it.

A Contract That Leaves Many Sporting Entities Behind

Last night concluded with a dreamlike ending for many as the lingering question of Ohtani’s signing destination was finally answered. Though it was in itself big news, the context of it has further increased its relevance with some mind-boggling comparisons.

Reportedly, with this deal, the World Baseball Classic champion has left behind the worth of more than six different NHL franchises and 23 different MLS franchises. Apart from this, he has also overleaped the 2024 expected payroll of eight MLB teams.

This certainly adds to the impact of this contract, even after a decrease in the cost to the Dodgers after the deferments. The reason is the entire sum value that would make Ohtani 50 dollars richer per second. Isn’t it worth admiring? What do you think about it? Share your thoughts in the comments.

Read More:- Decoding the Financial Wisdom Behind Shohei Ohtani’s $700 Million Deal.