I don't know if it's funny or sad, but with a $700 million contract, Shohei Ohtani is a steal.
With his earnings he could become the majority owner of nine major baseball teams and 22 in the NHL. But it's a godsend.
Last season, 11 Major League Baseball teams didn't even give their 26 starters as much money as the Dodgers will give to Ohtani this year. But it's a godsend.
In Canadian money, the Japanese phenomenon earns $261,000 per day, or $10,800 per hour, or even $3 per second. Even if he doesn't play. Even when he goes to sleep. Even when using dental floss. Even when he tries a spaghetti sauce recipe. But it's a godsend.
It is the largest contract in the history of sports in North America. But it's a godsend.
For what? Because if we look at Ohtani's contribution objectively, he is underpaid at $70 million per year.
He should have received about $76 million.
Its value
We need to consider his value as both a pitcher and a hitter.
As a pitcher, Gerrit Cole earns $36 million per year for three years. Ohtani hits more often than him. Batters also have a better batting average against Cole than Ohtani. But Cole throws more often and has more catches. It should also be taken into account that it will not be launched in the first of ten years. It is therefore necessary to deduct an annual salary as a pitcher over the ten-year contract term. We also have to keep in mind that Justin Verlander and Max Scherzer earned $43 million a year last year at the ages of 41 and 39 respectively. It's crazy, but it could benefit Ohtani, who will be 39 at the end of his contract. Considering Ohtani is becoming more dominant on the mound every year and he's in danger of being the best pitcher in the world starting in 2025, he could command $40 million per year. It's important to remember that with the salary increase in five years, he certainly won't be the highest-paid pitcher at $40 million. So 9 years at $40 million = $360 million.
As for his value as a hitter, it's not easy. But 44 home runs in 135 games in 2023 come at a high price. Ohtani is already one of the best batsmen in the world and will remain so for a long time. The problem is that he will primarily be a designated hitter. Aaron Judge makes $40 million, but he's a solid outfielder. Mike Trout wins 36, but he can do anything on the field. Corey Seager hits 35, but he plays shortstop, a key position. But considering he already has more hits than Judge, I think Ohtani could command $40 million per year. Over 10 years, that’s $400 million.
In total, Ohtani is worth $760 million over 10 years. He's obviously in danger of no longer being worth $76 million at 37, 38 and 39 years old. But he risks being worth more at 32, 33 and 34 years old.
And to convince the Dodgers to offer him such an amount, the team can reassure itself by telling itself that Ohtani can bring in an additional $20 million a year thanks to sponsorships, merchandise sales and ticket revenue, the researcher said. Vince Gennaro, author of the book: The Economics of Winning in Baseball, at Bloomberg.
Spend to earn
The Dodgers are worth $4.5 billion. Only the Yankees are worth more. The California team generates around $14 million in revenue per year, according to Forbes, which isn't much despite the huge expenses ($240 million in payroll). But that's the way things are done in Major League Baseball, much more so than the NHL. Owners in big markets spend big to win.
I'm thinking of the Tampa Bay Rays, who are worth as much as Ohtani's contract and who pay all of their players $52 million. Every year the Rays perform miracles to stay on top. It is therefore another slap in the face for small markets that will soon have no chance of winning, even if they can come close at times. The Rays will look to find a rare gem to bolster their team at $4 million per year. It can work, but at some point the money is right.