CNN –
MLB superstar Shohei Ohtani will defer more than 97% of his record-breaking $700 million contract with the Los Angeles Dodgers to the end of the 10-year term, a source familiar with the terms of the deal told CNN Monday.
According to the source, the two-time American League MVP will set aside $68 million of his $70 million each year. The remaining $680 million will be paid to Ohtani beginning with the 2033 MLB season.
“The concept of extreme deferrals in this contract comes from Shohei himself,” the source told CNN. “He had been educated about the impact and process of deferrals and believed it was the right thing to do. As negotiations neared an end, Shohei decided to defer almost all of his salary.
“And remember, as he is by far the highest earner in the game off the pitch, it was an easy decision for him,” the source added.
In a statement announcing Ohtani's signing Monday night, Dodgers chairman Mark Walter congratulated the player on the “historic contract.”
“Shohei is a once-in-a-lifetime talent and one of the most exciting professional athletes in the world. “Our players, staff, management and ownership look forward to working with Shohei to help the Dodgers continue to grow, improve and strive for excellence on the field,” Walter said.
Although Ohtani's deal is considered “historic” due to the amount of money involved, there have been delays in major contract signings in the past.
In 2015, pitcher Max Scherzer deferred $105 million of his $210 million salary when he signed with the Washington Nationals. From 2022 to 2028, Scherzer is owed $15 million per year, per MLB.
Ohtani's motivation for agreeing to such an unorthodox deal came from a commitment to winning and being “a team player,” the source said.
By delaying payment of the hundreds of millions of dollars owed to Ohtani, the Dodgers will have more money available to surround the Japanese superstar with other top players.
This means the Dodgers have the financial flexibility to pursue high-profile targets like Ohtani's compatriot Yoshinobu Yamamoto, the most sought-after pitcher on the free-agent market.
Ohtani will not pitch in the 2024 season as he recovers from elbow surgery in September. Therefore, it wouldn't be a surprise if LA attacked Yamamoto.
The franchise has also been linked to Dylan Cease of the Chicago White Sox and Tyler Glasnow of the Tampa Bay Rays, who the Dodgers are looking to acquire via a trade.
The team will also benefit from Ohtani's full salary not contributing to the MLB's luxury tax limit. For these purposes, Ohtani's average annual value will be $46 million – still the highest in MLB history – rather than the full $70 million, the source said.
The deal has sparked heated debate among fans, particularly on social media.
“Quite literally the dumbest contract I have ever seen and probably ever will,” “Locked on Giants” podcast host Ben Kaspick Posted on X, formerly Twitter. “It's hard to believe that something like this is allowed. Shohei Ohtani for $2 million a year for a decade. A joke.
Unlike other major American sports leagues such as the NBA and NFL, MLB does not have a set salary cap.
CNN has reached out to MLB for comment on the unprecedented agreement between Ohtani and the Dodgers.
While Ohtani will have to forgo almost his entire salary for the next 10 seasons, he will be more than compensated by his numerous endorsements.
His partnerships include New Balance, Fanatics and Topps – as well as countless other sponsors in Japan – and bring him at least $35 million annually, according to Forbes.
The 29-year-old Japanese phenom, who pitches and bats as a designated hitter, announced his move across town from the Los Angeles Angels – for whom he had played since 2017 – to the Dodgers on Saturday.
The Angels posted one opinion on Monday in both English and Japanese to thank the two-way star for his contributions to the team and the sport itself.
“Shohei Ohtani is a generational player and it was an honor to watch him make history in the six seasons he spent in an Angels jersey,” the team said on social media. “We are extremely fortunate that Angels fans were able to watch him redefine the possibilities of our sport.”
“We thank Shohei for his many contributions to our franchise and the game of baseball. We wish him all the best in the next chapter of his career.”