Shohei Ohtani (left) conversing with new teammate Mookie Betts (right) after Ohtani gets on base.
On December 9th, 2023, Shohei Ohtani announced via Instagram a record-breaking 10-year contract with the Los Angeles Dodgers for a whopping $700 million dollars. Another surprising element of this contract was that $680 million of that $700 million was deferred until ten years later.
Before determining if the contract was worth it or not, we must compare it with other deals. According to the Richest Contracts in all of Sports. Shohei Ohtani leads this list with a comfortable $26 Million. Of those contracts, you can see that most of them are from soccer: superstars like Lionel Messi, Kareem Benzema, and Christiano Ronaldo. Another list, the Biggest North American Contracts, states that Ohtani leads the 2nd biggest contract, Kansas City Chiefs quarterback Patrick Mahomes’ 10-year $500 million, by a cool $200 million. Finally, in the Biggest MLB Contracts ever, you can see that he leads that list by $280 million.
What does Shohei Ohtani bring to the table? First of all, he’s a monster on offense. This season, he won the American League MVP, with dominating stats such as a .304 batting average, 44 home runs, and a league-leading 1.066 OPS. This alone would have gotten him a large sum of money, but he has more in store; he pitches and pitches well. In his last full season of pitching, he recorded 15 wins and 9 losses with a 2.33 era and 1.01 WHIP. This season, though injury-riddled and cut-short, he recorded 10 wins, and 5 losses, with a 3.14 era and 1.06 WHIP. Third, and quite underrated, is the influence he brings. As a Japanese player, he brings the entirety of not just Japan, which has 21.26 million active viewers, but most of Asia’s interest to the Dodgers. Furthermore, his ability to be both an exceptional hitter and batter brings a lot of attention to how he plays, but also the team he plays. All this combined creates a big plus factor for the Dodgers organization.
However, it’s not all smooth sailing. There are still certain uncertainties that should be considered. First off, his injury history. Of the last 5 years he played, he tore his UCL (Ulnar Collateral Ligament) twice while also receiving one of the most degrading surgeries in the Tommy John Surgery. He is also not expected to be able to pitch until the 2025 season due to current arm injuries. Another aspect we must factor in is his age. Ohtani is currently 29 years old. That means his contract will end at age 39. Who knows the production he will be able to maintain by then? An example of a failed contract due to age is that of Albert Pujols. His age caught up to him, and he lost against time. Furthermore, pitching and batting simultaneously will only deter him from maintaining constant production.
So, what would be an acceptable and reasonable contract? In my opinion, it is inevitable that the deal would be unprecedented. But with age and toll in consideration, a length of 8 years would be acceptable. The trend of the MLB players signing lengthy contracts, 8 years, does not seem too over-the-top. Also, $70 million a year would be a stretch. An annual salary of $60 million would be alright. Thus, creating an 8-year $480 million contract.
Finally, going back to the deferral on his current contract, the one that pays him $680 million over the span of the ten years after his ten-year contract, there are some interesting aspects to it. One may ask, why would Ohtani and the Dodgers agree on this crazy clause? This clause is, in fact, a win-win deal. The Dodgers get to save money, a massive $68 million, and can splurge on other superstars. Also, the remaining $680 million is without interest, meaning the value will go down quite a bit. For Ohtani, getting his $680 million later, although with inflation, is also quite beneficial. People may ask, is $2 million a year not too little for his MVP caliber production? However, Ohtani also gets tens of millions from endorsements alone, so no worries there. But why take the money later? This is because, by the time he takes the $680 million, he’ll most likely be retired and living in Japan, where no US state tax or federal tax applies. For Ohtani, that value is actually much more worth it.