The Los Angeles Dodgers have made headlines with their record-setting 10-year, $700 million deal with star player Shohei Ohtani. The deal includes a series of unprecedented deferrals, with Ohtani deferring all but $2 million of his annual salary until after the completion of the contract. The deferred money, totaling $68 million per year, will be paid out without interest from 2034 to 2043.
The negotiations were said to have been suggested by Ohtani himself as the figure vaulted towards $700 million, and the deal is expected to be finalized soon. The unusual structure of the contract is intended to provide the Dodgers with additional cash flow and payroll flexibility, while Ohtani continues to bring in big dollars from endorsements and off-the-field ventures.
The deferrals also give the Dodgers extra freedom navigating the competitive balance tax, with the expected average annual value on the contract is about $46 million per year. The $46 million average annual value is the highest in MLB history, topping the $43.3 million average annual value Max Scherzer received in a previous deal in 2021.
For the 10 years that he is to play for the Dodgers, Ohtani’s deal could be thought of as being worth $46 million on average every year. But over the full 20-year lifespan of the deal — including the following 10 years when the deferrals are paid out, a time when Ohtani is no longer under contract with the team — he is to make a total of $700 million.
The Dodgers remain in the mix at the top of the market, particularly for pitching, with free-agent Japanese right-hander Yoshinobu Yamamoto and Tampa Bay Rays right-hander Tyler Glasnow among their targets.
Ohtani’s contract well surpasses the previous record deal of $426.5 million received by his former Angels teammate, Mike Trout. Ohtani’s agent, Nez Balelo, hinted at the deferral arrangement when Ohtani’s decision to join the Dodgers was announced, stating that Ohtani structured his contract to reflect a true commitment from both sides to long-term success.