253 replies to this topic

[Mackus]

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.

The CBA allows and accounts for deferred payments in the luxury tax calculation. MLB and MLBPA even agree on what discount rate to use. This isn't a tax workaround, that's just lazy headline writing.

Teams often defer money, but they pay more overall for the privilege. Players just don't allow teams to pay them later. If they allow it, it's because they're getting more.

[BSLMikeLowe]

Bobby Bonilla was owed $5.9M when he was released in 2000. By the time we celebrate the last Bobby Bonilla Day, the Mets will have instead paid him $29.8M over 25 years. I think it works out to 8% on the interest. The Mets were perfectly fine with that at the time, since the Wilpon family's investments with Bernie Madoff were returning between 12-15%. Of course we know how that ended.

[mdrunning]

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.

Some of the remaining free agents will certainly try and hitch their wagons to him. Bellinger isn't going to get anywhere near $600 million, but he might now be looking for $200 or $250 million. I'm sure Snell will do something comparable as well. Try to get those who lost out on Ohtani to overreact and overpay elsewhere.

[Mike in STL]

Some of the remaining free agents will certainly try and hitch their wagons to him. Bellinger isn't going to get anywhere near $600 million, but he might now be looking for $200 or $250 million. I'm sure Snell will do something comparable as well. Try to get those who lost out on Ohtani to overreact and overpay elsewhere.

That’s what I mean. Those numbers aren’t even in the same zip code as Ohtani so I don’t see how the massive deal affects others. He’s not in the equation of what other guys will be worth. It’s not like Jalen Hurts setting the mark for LJ, Herbert and Burrow to beat.

[mdrunning]

That’s what I mean. Those numbers aren’t even in the same zip code as Ohtani so I don’t see how the massive deal affects others. He’s not in the equation of what other guys will be worth. It’s not like Jalen Hurts setting the mark for LJ, Herbert and Burrow to beat.

It established higher markets for other free agents. (If Ohtani is worth x, then my guy is most certainly worth y.) Most projections had Ohtani signing for anywhere between $500 and $600 million, but if he had taken a lesser deal, that would have put downward pressure on the rest of the free-agent market.

[mdrunning]

Reportedly no opt-outs in the deal, either.

[BaltBird 24]

Reportedly no opt-outs in the deal, either.

If I'm offering you $700 million- you lose the opportunity for some opt out clauses.

[mdrunning]

If I'm offering you $700 million- you lose the opportunity for some opt out clauses.

I meant for the Dodgers.

[BaltBird 24]

I meant for the Dodgers.

True. They'd probably prefer he opt out in 3-4 years.

[CantonJester]

True. They'd probably prefer he opt out in 3-4 years.

 

If Ohtani generates an additional billion dollars in profit over the next 3-4 years for LA, why would they want him to opt out? 

[Mackus]

If Ohtani generates an additional billion dollars in profit over the next 3-4 years for LA, why would they want him to opt out?

Lol...a billion dollars in 3-4 years?

[dude]

It established higher markets for other free agents. (If Ohtani is worth x, then my guy is most certainly worth y.) Most projections had Ohtani signing for anywhere between $500 and $600 million, but if he had taken a lesser deal, that would have put downward pressure on the rest of the free-agent market.

 

It really doesn't.  The contract has no impact on everything else. Nobody else has anything close to the opportunity leverage that Ohtani has.  US biorn players don't have the International leverage that Ohtani brings.  One report had Ohtani making 40M in endorsements....Mike trout was apparently next at 5M.

[dude]

This contract weas likely designed for shock value.  Him (and his agents) likely had the goal of beating the 674M record and they did it.

 

When we get the details, it'll probably make a little more sense.  Mackus has done some of the math, but if he does something crazy like defer 500M, then the NPV of the contract takes a big hit.  We'll see, but if the "value" of the contract is 500M (like big money deferred out over 20 or 30 years)....nobody would have batted an eye at 10/525.

 

So they agree on that number FIRST then Ohtani and his agents go play the math game and come back with the deferred structure cost to get the perception that want.  It's been done in the past (Mackus correctly points out the Chris Davis contract which was exactly this) and you have some other similar examples like Max Scherzer....but they've intentionally done this on a completely different scale.

 

In other words, they didn't agree to 10/700 and then Ohtani (per the public narrative) says he wants to defer it out for LAD flexibility....they agreed to a much lesser number then Ohtani/agents came back with the deferred structure to get them where they wanted to be in the National discourse. 

 

Each level of this is being managed to elevate Ohtani's International profile.

[dude]

Was trying to think of a more relatable way to characterize this that everyone better understands.

 

Everyone gets excited when Powerball or MegaMillions gets to "1 billion".  Everyone buys more tickets and it's something of a National discussion.

 

The Lotteries pay out "that amount" over ~30 years.  So we all understand THAT isn't the number you get unless you float out your winnings over 30 years.  If you take the "lump sum" option, you get something less than 60% of the total (one example is a 2022 winner of 206M could take 122M lump sum).

 

So if you look at each year of Ohtani's contract as 70M  paid out over 30 years, the lump sum he's actually getting would be something around 40M.  Just an example, but we'll see how far Ohtani's team went  (amount deferred and years) to get to the appearance of a 700M epic deal.

 

If Ohtani had signed a 10/450 without any deferred structure, people would be talking about him taking a discount to sign with the Dodgers.

[CantonJester]

Lol...a billion dollars in 3-4 years?

 

Maybe, maybe not. Clearly the Dodgers are thinking bigger picture. 

[Mackus]

Maybe, maybe not. Clearly the Dodgers are thinking bigger picture.

No maybe. It's just not. You can't possibly think their total revenues will increase by $250M a year after signing Shohei. I think you forgot for a second that a billion is a thousand million, not just a hundred. I'd buy that he might bring in $25M a year.

[mdrunning]

Ohtani certainly isn't going to increase revenue from ticket sales (unless the Dodgers hike the price of tickets) since they're typically among the top clubs in attendance to begin with.

 

The Angels, meanwhile, attracted some 2.6 million fans in 2023. I wonder how big of a hit their attendance takes with their superstar player performing just up the road and the prospect of a very blah team of their own.

[Mackus]

https://www.mlbtrade...oster-move.html

Couple writers talking about how much extra revenue the Angels made due to Ohtani. One guy estimated $10-20M. Another estimated $25M. I have a hard time understanding how anyone on the outside would estimate such revenue as I don't it's something teams report for revenue sharing.

[mdrunning]

It really doesn't.  The contract has no impact on everything else. Nobody else has anything close to the opportunity leverage that Ohtani has.  US biorn players don't have the International leverage that Ohtani brings.  One report had Ohtani making 40M in endorsements....Mike trout was apparently next at 5M.

I'm not talking marketing leverage. I'm talking pay. The stars set the payscale and it's always been that way. Marvin Miller drummed in that lesson almost half a century ago. Tamp down the salaries at the top and everyone else moves down accordingly.

 

What do you think the 1981 strike was about?

[Pedro Cerrano]

No maybe. It's just not. You can't possibly think their total revenues will increase by $250M a year after signing Shohei. I think you forgot for a second that a billion is a thousand million, not just a hundred. I'd buy that he might bring in $25M a year.