1. The wait is over. Two-way star and unanimous American League MVP Shohei Ohtani has signed with the Los Angeles Dodgers with a record-breaking 10-year, $700 million contract that smashes previous contracts in baseball and beyond.
2. Ohtani made the announcement on Instagram saying, “To all the fans and everyone involved in the baseball world, I apologize for taking so long to come to a decision.” He added to fans of the Dodgers that, “I pledge to always do what’s best for the team and always continue to give it my all to be the best version of myself. Until the last day of my playing career,”
3. The deal is unprecedented for not just Major League Baseball, but globally across all sports. To place how much more Ohtani will earn, the highest total contract in MLB prior was former LA Angels teammate Mike Trout who inked a $426.5 million deal that runs 2019-30.
Why do you think he chose to do this?
4. That means Ohtani’s deal is $273.5 million higher than Trout’s. The total value of his contract is just $25 million shy of the combined total of the contracts for Mookie Betts ($365 million) and Aaron Judge ($360 million) who now rank #3 and #4 for MLB’s total contract value.
5. Ohtani’s average annual value (AAV), which takes the total dollar amount and divides by the number of years in the contract is also eye-popping. His $70 million AAV surpasses Max Scherzer’s $43.333 million AAV by almost $27 million. But as a matter of accounting, the AAV number will eventually need to be adjusted based upon the amount of deferred compensation.
6. The competitive balance tax (CBT) is calculated using AAV, but any money deferred outside the length of the contract is calculated using its present-day value, which would make the AAV less than $70 million a year due to the increase in inflation over time. Still, the odds of Ohtani remaining the highest-paid by AAV remains exceptionally high.
Given the opportunity, what would you do with $700million, why?
How The Ohtani Deal Stacks Against Other Sports
7. Jon Rahm ranked the #1 highest-paid athlete in the world for a little over 24 hours. His deal to leave the PGA for the LIV is reported to be $566 million with $302 million paid upfront. Compared to futbol, Ohtani passes Kylian Mbappe (€630 million) and Lionel Messi (€550 million).
8. Compared to the NFL, Ohtani’s deal is $250 million over Patrick Mahome’s $503 million deal with the Kansas City Chiefs and nearly double Joe Burrow’s $275 million extension with the Bengals. In the NBA, the highest contract is Nikola Jokić with the Nuggets at $272,020,000 with an AAV of $54.505 million.
How The Dodgers Will Make It All Work
9. The deal comes with no opt-outs, meaning Ohtani will be a Dodger for the full 10 years. Reportedly, the deal will come with an “unprecedented” amount of deferred compensation which will give the Dodgers payroll flexibility.
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