253 replies to this topic

[BaltBird 24]

Not a huge sample of guys who've had multiple TJS and still been successful.

Nathan Evoladi, Jameson Taillon, Daniel Hudson?

[TwentyThirtyFive]

70 mil DH is hilarious. Will easily be the worst contract in sports history

[mdrunning]

70 mil DH is hilarious. Will easily be the worst contract in sports history

Maybe he can fork over the cash for John Angelos's development rights.

[Mackus]

Not a huge sample of guys who've had multiple TJS and still been successful.

Nathan Evoladi, Jameson Taillon, Daniel Hudson?

He had a surgery but not Tommy John at the end of last season.

[BaltBird 24]

He had a surgery but not Tommy John at the end of last season.

Still enough for him to not be able to pitch in 2024.

Two significant surgeries to his pitching elbow isn't an encouraging sign heading into his 30s.

[You Play to Win the Game]

Didn't Cristiano Ronaldo sign a 2 1/2 year deal with Al Nassr worth an average of $75 million per season in 2022? I think with commercial endorsements, it could max out at $200 million per season.

Two and a half years. How does that work?

Wow. Probably covered them through one of the alternate tourney’s or something. Soccer is a crazy, I still can’t fully wrap my head around it all.

[CantonJester]

70 mil DH is hilarious. Will easily be the worst contract in sports history

 

Considering most of the $700 is deferred, I'm not sure how it would be. In other words, it appears to be they'll be paying him well past his retirement, but they won't be up against the luxury tax because of his contract. 

[Mackus]

"Most" of the contract will be deferred.  Will have to see what the terms are and how long the payouts are, but could pretty easily be worth the same or even less as say a 12/$600M contract paid out only over the course of the deal.  Might explain a good bit of the sticker shock.

[mdrunning]

Considering most of the $700 is deferred, I'm not sure how it would be. In other words, it appears to be they'll be paying him well past his retirement, but they won't be up against the luxury tax because of his contract. 

Assuming there's no deferred interest built in, that'll drive the AAV down significantly. I wouldn't be surprised to see $400 million or so paid out in this manner. Of course, the downside is the Dodgers might be cutting checks to Ohtani's estate.

[CantonJester]

Assuming there's no deferred interest built in, that'll drive the AAV down significantly. I wouldn't be surprised to see $400 million or so paid out in this manner. Of course, the downside is the Dodgers could still be cutting Ohtani checks until he's too old to even care anymore.

 

Agreed. I was actually thinking something crazy like $500m deferred. 

 

https://www.mlb.com/...ct-with-dodgers

 

Per MLB.com’s Mark Feinsand, Ohtani’s deal includes what one source called “unprecedented deferrals,” including the majority of his salary -- which was Ohtani’s idea. He wanted to mitigate the CBT and cash-flow burdens to let the Dodgers have the flexibility to be competitive.

 

There are also tax benefits because of the deferrals, the source told Feinsand, but they were “primarily about allowing the team to be successful on the field, because above all else, he wants to win.

[Mackus]

Assuming there's no deferred interest built in, that'll drive the AAV down significantly. I wouldn't be surprised to see $400 million or so paid out in this manner. Of course, the downside is the Dodgers might be cutting checks to Ohtani's estate.

 

Just some quick math for the point of a rough comparison, but if they pay him $35M a year for the next 10 years, then $10M a year for the following 35 years, that's about the same value of contract (using a 4% discount rate which I believe is still the MLB standard) as if someone paid him $44M for each for the next 12 years.  While 12/$528M is still an insanely huge contract, I think we all more or less expected him to get something in that range.

[mdrunning]

Just some quick math for the point of a rough comparison, but if they pay him $35M a year for the next 10 years, then $10M a year for the following 35 years, that's about the same value of contract (using a 4% discount rate which I believe is still the MLB standard) as if someone paid him $44M for each for the next 12 years.  While 12/$528M is still an insanely huge contract, I think we all more or less expected him to get something in that range.

Gee, do you think he's worried about his pension and social security benefits?

[mdrunning]

I wonder if MLB will eventually push to rein in the deferrals on some of these mega-contracts, like in the NFL where bonuses can be pro-rated no longer than five years for cap purposes. Deferred payment schedules are nothing new in baseball, but now even the most well-heeled of clubs are doing it for immediate CBT relief.

 

I wouldn't expect the MLBPA to be very receptive of any such proposal, however.

[Mackus]

I wonder if MLB will eventually push to rein in the deferrals on some of these mega-contracts, like in the NFL where bonuses can be pro-rated no longer than five years for cap purposes. Deferred payment schedules are nothing new in baseball, but now even the most well-heeled of clubs are doing it for immediate CBT relief.

 

I wouldn't expect the MLBPA to be very receptive of any such proposal, however.

 

Isn't the CBT value already the average?  It's not like they can backload the amount that costs against the luxury tax.  MLB still calculates and average value of the contract, just with standard discounting of any long-term deferred money in that calculation, as they should.  

 

I think the luxury tax implications of the two deals I gave as example above would be about the same.  Of course $700M paid out over 10 years would have a much higher tax calculation than $700M paid out over 30 years, but that is because it has more real-world value as well.  The numerator is the total money payout including future discounts and the denominator is the years of play that the contract covers.

[Mike in STL]

Wish the Orioles offered $800M. It’s not my money.

[CantonJester]

I wonder if MLB will eventually push to rein in the deferrals on some of these mega-contracts, like in the NFL where bonuses can be pro-rated no longer than five years for cap purposes. Deferred payment schedules are nothing new in baseball, but now even the most well-heeled of clubs are doing it for immediate CBT relief.

 

I wouldn't expect the MLBPA to be very receptive of any such proposal, however.

 

I’m guessing the teams that are legit low-budget, and the teams that pretend to be low-budget (like the Angelos-led O’s) will lead the charge to rein in deferrals. 

[mdrunning]

Isn't the CBT value already the average?  It's not like they can backload the amount that costs against the luxury tax.  MLB still calculates and average value of the contract, just with standard discounting of any long-term deferred money in that calculation, as they should.  

I thought that as well until I saw this from Jeff Passan.

 

I also read where Ohtani insisted on the deferred payments so as to not hamper the Dodgers going forward in terms of the CBT. Sort of like Brady taking below-market contracts to help the Patriots cap-wise. Nice of him, huh?

[Mike in STL]

I feel like Ohtani is a special player to the point of him not being the one to set any bar for other free agents.

I mean is Cody Bellinger all of a sudden looking for 10/$600M minimum? I doubt it. Bellinger might set the market for guys like Chapman, Solar.

Ohtani being done shouldn’t alter anything. Guy is in another stratosphere.

[Mackus]

I thought that as well until I saw this from Jeff Passan.

I also read where Ohtani insisted on the deferred payments so as to not hamper the Dodgers going forward in terms of the CBT. Sort of like Brady taking below-market contracts to help the Patriots cap-wise. Nice of him, huh?

So no, this doesn't change anything at all. It's still the average value. Value doesn't mean total dollars divided by playing years. It means net present value divided by playing years.

Ohtani won't count $70M a year against the luxury tax if it's heavily deferred. Like I showed before, it could be the same present value (and annual luxury charge) as of his contract was 12/$528M paid without deferrals.

This payment structure isn't to game the luxury tax. It's to game the sticker shock of the contract. Like what Boras and Davis did in allowing the O's to defer a ton of the money. Agent/player get to say they got more overall money. Team gets to issue out a contract that impacts their bottom line the same as a smaller contract paid out evenly.

If someone else was offering close to 10/$700M with minimal or no deferrals and Ohtani just let the Dodgers defer a huge portion of the same total money, then he's doing a favor. But that's really no different than literally giving back money, since deferring then money makes it worth less.

[CantonJester]

So no, this doesn't change anything at all. It's still the average value. Value doesn't mean total dollars divided by playing years. It means net present value divided by playing years.

Ohtani won't count $70M a year against the luxury tax if it's heavily deferred. Like I showed before, it could be the same present value (and annual luxury charge) as of his contract was 12/$528M paid without deferrals.

This payment structure isn't to game the luxury tax. It's to game the sticker shock of the contract. Like what Boras and Davis did in allowing the O's to defer a ton of the money. Agent/player get to say they got more overall money. Team gets to issue out a contract that impacts their bottom line the same as a smaller contract paid out evenly.

If someone else was offering close to 10/$700M with minimal or no deferrals and Ohtani just let the Dodgers defer a huge portion of the same total money, then he's doing a favor. But that's really no different than literally giving back money, since deferring then money makes it worth less.

 

They need a reason to defer money in the contract, because the CBA says teams cannot directly circumvent the CBT by deferring payments. The results are the same, but they get to use plausible deniability of what you described.