I totally agree with Tom's description about who Shohei really is. He was willing to sell his service for free, but there was no player that has done so in any sports history. He is a unicorn of baseball and his personality is also the humblest.
When ohtani begins to collect, he will not be a resident of california. He will save approx $9MILLION a YEAR just on State Income Taxes. This is the advantage of deferred compensation.
Other players and superstars don’t have the international appeal of Ohtani. He’s getting paid $50m a year on endorsements so he can afford to take this deferral. And as for the Dodgers, the pending Japanese tv broadcasting rights they’re about to get paid with is going to pay the salary in of itself down the line.
🤓😎 Im sure Ohtani has plenty of accountants and lawyers working on the deferment. He will NOT lose any bit of the $700 in present and future value. He will make more than $700 when the 10yrs is done! 680m will be in a trust getting a safe interest. HE will pay very little taxes!
His new contract is "do the work first and I'll pay you after" is not a loophole. Is a compromise or even a sacrifice most aren't willing to do. Thats what makes him a 🦄 on and off the field. Yet the media is bashing shohei cuz he didn't give them any ammo to talk or write about
This is 100% the most team friendliest contract in the history of all sports. This is utter stupidity and a horrible financial move by Ohtani. It seems someone does not understand the basic concepts of finance or the TVPVFV of money...in layman's terms, $68M buys a lot more today than it will be in 20 years. Ohtani would be better off taking all of his annual salary up front and putting it in low return investment accounts. For example, park the money in luxury real estate by buying 10 houses for $7M each or just put it in a real estate ETF. JP Morgan Chase's Real Estate ETF is averaging 4% in annual returns on investment or $2,800,000 per year for Ohtani In a vacuum and in theory and not taking into account real world implications, $70M in an investment account at a LOW annual return rate of 2% would give Ohtani $1,400,000 per year!!!!! what if something happens to the dodgers or their owners in the 20 years ? What if there is a Madoff scam like the Mets, a nasty divorce, a death and estate battle, or bankruptcy ? Also this is an interest FREE loan !!!! no interest on the deferred millions. The Dodgers sold for $2B in 2021 and are the most valuable sports franchise currently worth $5B today. They could pay Ohtani in full and still build a championship around him For reference: LeBaron got $80M in endorsements and STILL makes the Lakers pay him $50M in salary!!!! Thats why Lebron is a billionaire mogul
No interest is accruing on that 680 million. The dodgers will not be paying him 680 + a decade of compounding interest. Other players charge the team interest in order to agree to defer their money.
@@Telecasterfan what I’m saying is that if deferrals weren’t part of this deal it’s actually a 10 year 460M deal in present day terms. But they are growing that to 700 because of the deferrals.
@@williamscolaro1159 okay but that isn't what Verducci was talking about when he said no interest. Yes the CBA has a predertimined discount rate of 5% to calculate NPV, but the deferrals are still without interest. So it isn't as though ohtani will be getting extra interest payments. Verducci wasn't saying that they didn't use interest to calculate the contract...
if the dodgers were willing to pay $70M per year for the first 10 years, and if ohtani said he'll defer most of it, then ohtani basically took a $232M pay cut to keep the dodgers competitive. it's that simple. -$232M=($46.8M-$70M)x10=(AAV - salary without accounting for the time value of money) x number of years. on the other hand, if the $70M per year for the first 10 years was never on the table, all this is just optics. i.e. this is not really a $700M contract. it is essentially a $468M contract, and the dodgers are getting charged as a $468M contract. illustration: any team that can pay $468M over 10 years can do the same thing as the dodgers. they just need to save $44.8M (=AAV minus $2M) each year and put it in an interest bearing account. then after 10 years, they'll have $68M to pay their player each year. any player can do it as well - a player that gets signed $468M over 10 years can save $44.8M of the $46.8M each year, and 10 years later, the player will have an income stream of $68M per year. of course you need to adjust the math for taxes, but the same argument holds. overall, i think the $468M (or $700M) over 10 years seems fair for ohtani given his injury this year. i.e. ohtani is getting paid what we thought he would get paid, between $450M to $500M because of the injury.
@@Vic-Vega let's say my salary is $50k per year, but my employer decides to pay me $25k this year and $25k ten years from now (hypothetical). would you call that a $50k salary?
@@abcdef-h4nThat's a terrible comparison, because it was Ohtani's decision to defer & not the Dodgers'. But to answer your (irrelevant) question, yes. Those numbers add up to 50k, don't they?
@@mr.perksy no because $68M is not the value of money when he's earning his contract. i.e. when he is playing. it has to be converted to the value of money when he is playing. that translates to $44.8M and when you add the $2M he gets paid immediately, you get the $46.8M AAV that goes towards the luxury tax threshold.
Other players can do this is they want but they don’t want to. And it’s not a loophole, it’s in black and white on the CBA. Any player and team can do this.
Everyone congratulating Ohtani but this is dumb. Basically the Dodgers are saying they wont try to win from 2033-2043. This money will be paid no matter what. This will help the dodgers now a little but basically destroy the team in 10 years.
You make no sense. As a team, you'd rather pay him $70M now and have no money left to acquire other players? Dodgers will make $40M, $50M+ off Shohei every single year from sponsorship alone. They are paying him only $2M per year. The Dodgers are making profits from signing him.
The money paid out after 2033 WILL NOT count toward the luxury tax. It Dodgers are willing to pay him 70 million now, they're willing to pay him later.
@@onespeedlite we don’t know any of that will happen. You and the dodgers are assuming things will go perfectly and there will be 10 years of amazing baseball. The hype of Hideo Nomo lasted how long? I’m sure they didn’t profit from that. If they plan on profiting from this why not just pay him now instead of hindering the 2033-2043 dodgers with a $68 million a season contract with no player to show for it? This guy isn’t an iron man. He’s a walking injury machine. The contract is only worth it if 100% goes perfectly and we know baseball never goes according to plan.
@@pandemic7 debt always needs to be paid. Let’s just imagine if the dodgers don’t win a World Series in these 10 years with ohtani. You think the next 10 years when they are paying $68 million to an imaginary players isn’t going to impact them? Let’s just imagine ohtani getting injured in year 5 and not playing like himself. How many teams are going to want to trade for him with that insane contract? He is now the most untradable player in the majors.
If this isn't common knowledge There's no way for him to know. Besides that he's playing baseball. Not keep everyone happy. All he wanted was to play and win and live. Why don't you do something to help these people in trouble besides just randomly commenting under some video to randomly hate and add no value whatsoever.
They bought a injured prone player if he pitches he will get hurt again dodgers are going to regret this later when august comes around when he gets injured again n go to injured list
His present day value IS $600-$700m, but they arent paying him that. Which is the problem, his payroll hit should be $30-$40m and his AAV hit should be $50-$55m and it isnt.
@@fortress7493 i understand completely how it works and what they are doing... my point is this. He is a top 5 hitter, yes? AND a top 10-15 pitcher, yes? Yet they are paying him just $6m more than Judge AAV and LESS than $3m more than Verlander and Scherzer AAV. His AAV hit should be MORE if you want to pay him a mega contract and his ACTUAL payroll hit should be way more than $2m This is a BULLSHIT 10/$460m contract because it allows them to skirt actual payroll hits, thats why nobody would care if he signed a 10/$460m contract because it would at least prevent them from affording 2 more stars like Yamamoto/Hader without going super far into the tax
@@fortress7493 how is that present day value calculated? I haven't seen how they got to that exact $46m per year cbt number. And will his cbt number be $68m per against the cap from 2034-2043?
@@mr.perksy nope after his contract the 68m after the contract doesn't count for CBT. Because the luxury tax for ohtani currently is 44m instead of 68m since CBT uses present value to calculate how much 68m is worth today
