The Los Angeles Dodgers recently made a splash in Major League Baseball by signing two-way player Shohei Ohtani to a lucrative deal. However, what has made this deal even more intriguing is the structure of the contract, with a significant portion of the money being deferred over the course of the contract. This has raised questions and sparked discussion among fans and analysts about the implications of deferred money in baseball contracts.
Shohei Ohtani’s deal with the Dodgers is reportedly worth $525 million over 12 years, making it one of the most lucrative contracts in MLB history. However, what has caught the attention of many is the fact that a substantial amount of the money, around $60 million per year, will be deferred. This means that Ohtani will not receive the full amount of his salary in each year, but instead, he will receive portions of it over the years following the expiration of his contract.
Deferring money in contracts is not a new concept in baseball, as many teams have utilized this strategy in the past to manage their financial obligations and create flexibility in their payroll. By deferring a portion of a player’s salary, teams can spread out their financial commitment and allocate funds to other areas of the organization. This can be particularly beneficial for large-market teams like the Dodgers, who have significant financial resources but are also mindful of staying within budgetary constraints.
For players, the benefit of deferred money lies in the potential tax advantages and investment opportunities that come with receiving payments over an extended period of time. By deferring a portion of their salary, players can potentially reduce their tax burden and take advantage of investment opportunities that may yield higher returns over time. Additionally, deferred money provides players with a form of financial security beyond their playing career, as they will continue to receive payments long after their on-field contributions have ceased.
However, there are also drawbacks to deferred money for both players and teams. For players, the risk lies in potential financial mismanagement or economic downturns that could impact the value of their deferred payments. For teams, the downside of deferring money is the long-term financial commitment and potential future liabilities, as they will be obligated to pay a player even after they have left the organization.
Overall, Shohei Ohtani’s deal with the Dodgers and the substantial amount of deferred money involved has sparked discussions about the implications of this contract structure in MLB. While deferred money can provide both players and teams with certain benefits, it also comes with its own set of risks and uncertainties. As the landscape of baseball contracts continues to evolve, it will be interesting to see how deferred money continues to factor into player deals and the financial dynamics of the league.