Dodgers Digest Los Angeles Dodgers Baseball Blog
The long-awaited day has finally come, as the Dodgers have inked two-time MVP and baseball unicorn Shohei Ohtani to a record-breaking 10-year, $700 million contract that could mean he ends his career as a Dodger.
Ohtani announced the decision himself on Instagram.
Details of the contract then emerged, and it was unsurprisingly massive, but a bit surprising just how massive.
Shohei Ohtani's deal with the Dodgers is for 10 years and $700 million.
— Jeff Passan (@JeffPassan) December 9, 2023
Statement from Nez Balelo, the agent for Ohtani: pic.twitter.com/EQ4bjLYC8G
— Bill Shaikin (@BillShaikin) December 9, 2023
Ohtani’s deal is by far the richest in MLB history, surpassing his now-former teammate Mike Trout‘s deal of $426.5 million in total value, and he also will make the most per year in MLB history, passing Max Scherzer and Justin Verlander clocking in at $43,333,333 per.
While I expected opt-outs at some point, there are none in the contract, and there are also significant deferrals that will benefit the Dodgers.
Shohei Ohtani’s deal with the Dodgers involves no opt outs.
— Britt Ghiroli (@Britt_Ghiroli) December 9, 2023
Ohtani deal with Dodgers, per source, includes “unprecedented” deferrals – the majority of his salary. The deferrals were Ohtani’s idea to ease the Dodgers’ luxury-tax and cash flow burdens to give the team the flexibility needs to be as competitive as possible, the source said.
— Ken Rosenthal (@Ken_Rosenthal) December 9, 2023
It’s obviously a lot of money, but it appears structured in a way that allows the team flexibility to fill out the roster with even more talent.
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Update
Jeff Passan explains how the deferrals will work. All sounds great.
I’m going to explain why Shohei Ohtani’s $700 million contract with the Los Angeles Dodgers will not equal $700 million in terms of MLB accounting or the present-day value of the deal.
— Jeff Passan (@JeffPassan) December 9, 2023
When money in a contract is deferred, the competitive-balance tax number — the luxury tax — is…
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Not sure one really needs to make a case for the logic behind signing Ohtani, but he’s a two-time AL MVP, a three-time All-Star, and has put up a three-season stretch that rivals any in baseball’s history. Considering his ability to both pitch and hit at elite levels, he is probably the greatest to ever play the sport.
Ohtani has a career .274/.366/.556/.922 slash for a 146 wRC+, and an even better .277/.378/.585/.963 line for a 156 wRC+ over the last three seasons. On the mound he has a 2.84 ERA/3.23 FIP over 428.1 innings since the start of 2021, his first full season after his first elbow surgery, and that comes with a whopping 31.4% strikeout rate and a 8.3% walk rate. If that wasn’t enough, he also has elite speed and has been a positive baserunner for his career. He’s been a ~9+ WAR player from 2021-23, which is just a comical achievement and shows why he may have been the most sought-after free agent ever.
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Of course, there’s a slight caveat to all that. Other than the general risk of handing out massive, long-term deals, the concern is that Ohtani has now had surgery on his elbow twice, once in 2018 and once this year in 2023. The biggest predictor of future injury is past injury, and for a player who takes such physical punishment by playing two ways, it’s fair to have concern about whether he can return to the same levels of effectiveness again, and if he can, the question is how long that can last before another injury occurs.
There is scant literature covering the success rate of Tommy John revisions. A 2016 study found that 42.3 percent of pitchers returned to pitch at least 10 MLB games after the revision. Another study in 2020 reported that 50 percent returned to a previous competition level for at least one year. Stronger data should be available in the coming years as more pitchers undergo revisions.
“With the way technology has advanced over the years, we have a pretty good procedure that has a pretty high return-to-sport rate, you’re talking 80 to 90 percent return-to-play (rate) after (the first) Tommy John,” said Eric Bowman, an orthopedic surgeon who is the head team physician for Triple-A Nashville
Still, Ohtani would probably be worth over $400 million as just a hitter, which helps takes some edge off the price tag. Additionally, if he ever does have to give up pitching, he certainly seems athletic enough to be a competent defender in the field, which could further boost his value. However, obviously his deal would be hard to justify if he isn’t able to resume his two-way duties.
That said, yet another thing that helps to ease the financial burden on the team, which is Ohtani’s unprecedented marketability. While Dodgers fans show up whether the team is good or bad, Ohtani could still make an impact in attendance, and more importantly could bring in additional revenue streams that could help him effectively pay for his own mega-deal.
Ohtani was a boon to the Angels’ business. While the team did not disclose how much money it made off Ohtani, ESPN estimated the annual number to be in the “low tens of millions of dollars.” Signage from Japanese companies was evident at Angel Stadium. NHK, a Japanese television network, broadcast every Angels game last season until the team shut down Ohtani on Sept. 16.
Better teams from more bustling markets than Orange County surely project Ohtani making an even greater impact on their bottom line. The Dodgers and Yankees, both of which routinely draw more than 3 million, cannot dramatically increase their attendance. Ohtani, though, would provide added value through marketing, sponsorships, and local radio and television advertising, a “halo effect” on the brand.
Off-setting even the extremely low-end estimate of $10 million a year makes Ohtani’s contract a relatively simple one to justify, especially with the deferrals. Not that it was hard anyway, but it’s worth pointing out that even from a purely profit-driven ownership perspective, signing Ohtani likely works out financially when putting together all the factors at play.
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Of course, as fans the focus should simply be on celebrating getting one of the greatest players in the sport’s history instead of breaking down the minutiae of how Guggenheim Partners and Mark Walter will be able to afford … well, literally anything.
The Dodgers tried to acquire Shohei Ohtani out of high school, tried again when he came over to the MLB, and thankfully the third time was a charm as Andrew Friedman was determined to not miss. A lot of his moves in recent years seemed angled towards making sure the team didn’t have a ton of money committed when Shohei became available, and now all of that appears to have paid off with this deal.
Yes, it’s a ton of money. Yes, they still have holes in the roster. Yes, there’s inherent risk. But for a player like Ohtani, you should be willing to push the limits of your comfort zone and I’m glad the Dodgers did. Couldn’t be happier with this, and hopefully fun times are ahead.
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