Dodgers announce Ohtani signing; $680M of deal deferred, sources say

Shohei Ohtani's historic contract with the Los Angeles Dodgers will allow him to defer $68 million of his $70 million annual salary, sources familiar with the matter said Monday, which would significantly reduce payroll and tax burden potential of his new team.

The Dodgers announced Monday they had signed the two-time MVP, after Ohtani agreed Saturday to a 10-year, $700 million contract, by far the richest in the history of North American professional sports. A source then declared that the majority of the contract would be paid in deferred money; However, under this structure, Ohtani defers more than 97% of its revenue. The deferred money – totaling $680 million – will be paid to Ohtani between 2034 and 2043, a source said.

The postponements were Ohtani's idea, a source familiar with the matter said, driven largely by the idea of ​​helping the Dodgers sign other players and facilitated by his huge off-the-field earnings. Ohtani reportedly earns more than $45 million a year from sponsorships, a source said, making him clearly the most marketable player in Major League Baseball. The Los Angeles Angels were thought to make over $20 million per year from that same market value during his tenure there.

“Dodgers fans, thank you for welcoming me to your team,” Ohtani said Monday in the team’s press release. “I can say 100 percent that you, the Dodgers organization and I share the same goal: bringing World Series parades to the streets of Los Angeles.”

Ohtani's cost to the Dodgers' competitive fiscal balance — which typically uses the average annual value of contracts, in this case $70 million, but reduces deferred money — will be about $46 million after each season . That puts the combined cost of Ohtani, Freddie Freeman and Mookie Betts on the CBT payroll at around $100 million per year. The luxury tax threshold rises to $237 million in 2024.

The collective bargaining agreement does not set a limit on the amount of money that can be deferred, but teams must set aside the current value of the deferred money — in Ohtani's case, about $44 million in cash each year – in an escrow account.

The Dodgers created a 40-man roster Monday morning for Ohtani and relief pitcher Joe Kelly by sending reliever Victor Gonzalez and infielder Jorbit Vivas to the New York Yankees in exchange for the shortstop prospect Trey Sweeney.

“On behalf of the LA Dodgers and our fans around the world, we welcome Shohei Ohtani to the Dodgers, the home of Jackie Robinson, Sandy Koufax and Hideo Nomo, three of the most legendary and innovative players in sports,” said said Mark Walter, president of the Dodgers. and Guggenheim Baseball Management, said in the team's release. Shohei is a once-in-a-generation talent and one of the most exciting professional athletes in the world. Our players, staff, management and owners look forward to working with Shohei to help the Dodgers continue to add, improve and strive for excellence on the field. Together with Shohei, we will work to help increase the number and scope of people around the world who enjoy the excitement of Major League Baseball.

The Angels, with whom Ohtani spent the first six seasons of his MLB career, bid him farewell on social media Monday evening.

“Shohei Ohtani is a generational player and it was an honor to watch him make history throughout his six seasons in an Angels uniform,” the team said. “We feel extremely fortunate that Angels fans were able to watch him redefine what is possible in our sport. We thank Shohei for his many contributions to our franchise and to baseball. We wish him the best in the next chapter of his career .”

The Athletic was first to report the details of Ohtani's postponements.

ESPN's Jeff Passan contributed to this report.