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Shohei Otani


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#221 dude

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Posted 11 December 2023 - 12:05 AM

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?

 

I think trying to apply that logic to this situation (especially when we find out that 700M isn't really 700M) is completely out of line with the reality of it's impact.

 

There's a general application of merit to what you're describing, but because Ohtani's team and the Dodgers do what they do, doesn't mean anything to the rest of the League.  Total payroll across the League aren't moving upward because of this.

 

Fangraphs will pretend to do the math and make more bad arguments, but that's fine (and not new).



#222 mdrunning

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Posted 11 December 2023 - 01:19 AM

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.

But Ohtani isn't actually getting more in present-day value by structuring the contract his way; he's actually getting less. Then again, as more information becomes available, maximizing salary doesn't appear to be Ohtani's main goal. If it had, maybe he would have accepted Toronto's (unlikely) offer of $600 million, although we don't know if that contract would have contained deferrals as well. It's hard imagine him in a Blue Jay uniform, but he certainly could have maximized his brand in Canada since Blue Jays games are broadcast throughout the entire country.

 

Still, as has been reported, Ohtani wanted a deferred payment structure so as to ease the Dodgers' immediate CBT obligations. As I said earlier, this sort of like NFL teams spreading signing bonuses out as much as five years on a long-term contract, or adding voidable years to ease present cap burdens (with obvious differences). More importantly, the Dodgers will now have immediate use of those funds, so they've really got the best of both worlds in this instance. What's kind of ironic, though, is that the signing of a two-way superstar didn't address the Dodgers' most pressing need--bolstering the starting rotation.



#223 ivanbalt

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Posted 11 December 2023 - 06:34 AM

A lot of money to lose in the NLCS.



#224 Mackus

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Posted 11 December 2023 - 07:15 AM

But Ohtani isn't actually getting more in present-day value by structuring the contract his way; he's actually getting less. Then again, as more information becomes available, maximizing salary doesn't appear to be Ohtani's main goal. If it had, maybe he would have accepted Toronto's (unlikely) offer of $600 million, although we don't know if that contract would have contained deferrals as well. It's hard imagine him in a Blue Jay uniform, but he certainly could have maximized his brand in Canada since Blue Jays games are broadcast throughout the entire country.

 

Still, as has been reported, Ohtani wanted a deferred payment structure so as to ease the Dodgers' immediate CBT obligations. As I said earlier, this sort of like NFL teams spreading signing bonuses out as much as five years on a long-term contract, or adding voidable years to ease present cap burdens (with obvious differences). More importantly, the Dodgers will now have immediate use of those funds, so they've really got the best of both worlds in this instance. What's kind of ironic, though, is that the signing of a two-way superstar didn't address the Dodgers' most pressing need--bolstering the starting rotation.

 

I've not claimed that the contract structure gives Ohtani more present day value, I've shown example numbers of how 10/$700M heavily deferred could be equal NPV to a 12/$528M offer without deferrals.  I don't think he took any less money to go to the Dodgers, I think he took the largest offer he got, and then allowed the Dodgers to structure it however he liked.  Ohtani and his agents surely understand that $700M paid over 40 years (or whatever it is) is equivalent value to $550M paid over 12 years (again, whatever the math works out ot).  I don't think the Dodgers offered 20% more NPV than everyone else.

 

The reporting is lazy work from people who don't understand how time value of money works or the CPT or maybe both.  Deferring money doesn't give the Dogers a CPT advantage compared to an equivalently valued non-deferred deal. It does give them an advantage over paying the same total amount over less time, but that's not an equivalent value.

 

If Ohtani went to the Dodgers for less money (in NPV, not in total dollars paid) than he was offered by other teams, then he is doing them a favor.  We haven't heard what the other teams offered, but even if we do it'll be hard to know we're comparing apples to apples with the impact of deferred money, incentives, and other non-cash value considerations like opt-outs.



#225 CantonJester

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Posted 11 December 2023 - 09:50 AM

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.

 

Thanks for the insult, but you’re thinking small, like I figured.



#226 Mackus

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Posted 11 December 2023 - 09:55 AM

Where's the insult?



#227 CantonJester

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Posted 11 December 2023 - 09:59 AM

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.



59228a38-c7f1-4a8c-b583-726e0b693f8e_tex

 

Cute. Not even close. 



#228 CantonJester

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Posted 11 December 2023 - 10:03 AM

Where's the insult?

 

Go re-read what you wrote. You poked fun at my suggestion by telling me I don’t know math.

 

Stop thinking in yesterday’s terms, Mr. Angelos. Ohtani is an international superstar. 



#229 makoman

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Posted 11 December 2023 - 10:03 AM

Thanks for the insult, but you’re thinking small, like I figured.

MLB revenue was $10B in 2022. How is Ohtani adding 10% of that to the Dodgers?

 

I'm thinking small, I'm happy to admit it. Enlighten me.



#230 CantonJester

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Posted 11 December 2023 - 10:08 AM

MLB revenue was $10B in 2022. How is Ohtani adding 10% of that to the Dodgers?

 

I'm thinking small, I'm happy to admit it. Enlighten me.

 

I suggested Ohtani generates a billion in profit over 3-4 years. You’ve got me saying he’ll generate that in one season?

 

I’ll enlighten you if I thought for a moment you were being intellectually honest. 



#231 makoman

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Posted 11 December 2023 - 10:11 AM

I suggested Ohtani generates a billion in profit over 3-4 years. You’ve got me saying he’ll generate that in one season?

 

I’ll enlighten you if I thought for a moment you were being intellectually honest. 

Ah, I made a mistake then because I wasn't following this conversation particularly closely. Not dishonesty. 



#232 Nigel Tufnel

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Posted 11 December 2023 - 10:20 AM

If Ohtani can make someone a $1B profit in 4 years, then the Angels are even more inept than I thought for not already doing it.


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#233 makoman

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Posted 11 December 2023 - 10:25 AM

This is just one article, but estimates he generated "somewhere in the low tens of millions" for the Angels. Other articles say similar, but it's all guesses. Assuming these guesses are reasonable I can't see it being 10x that just by moving across town. I could maybe see it if he was moving from say Milwaukee to LA or something, but he's already been an international superstar in a huge market. 

 

https://www.si.com/m...he-halos-nc2000

 

Now, I can definitely agree that he somewhat pays for himself, even ignoring deferrals you are getting some of that 70M back, I can't see 250M/year profit.


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#234 mweb08

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Posted 11 December 2023 - 12:31 PM

If he generated anywhere near that type of revenue, John Angelos would have even been into signing him.
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#235 Nigel Tufnel

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Posted 11 December 2023 - 02:30 PM

Frank Robinson is still the only player to win MVP in both leagues... Otani now has 10 years to be the second.


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#236 SonicAttack

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Posted 11 December 2023 - 02:35 PM

Frank Robinson is still the only player to win MVP in both leagues... Otani now has 10 years to be the second.

Mookie Betts too, I like his chances more than Otani's.


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#237 Mackus

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Posted 11 December 2023 - 06:41 PM

Wow it's all deferred. $68M per year. Will be paid out from 2034 to 2043.

#238 Mackus

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Posted 11 December 2023 - 06:44 PM

NPV assuming a 4% discount rate is $404M. Which is slightly less than the NPV of a 12/$500M contract would be if paid out in equal installments.

Maybe he did take less to go to LA. I'd be a bit surprised if nobody else offered a bigger deal that that.

#239 mdrunning

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Posted 11 December 2023 - 07:01 PM

There was so much secrecy during these negotiations that it's difficult to know what other offers were made. In fact, I remember reading that Ohtani's representatives were telling clubs to keep their offers under their hats or risk being removed from the sweepstakes. I guess they didn't want to negotiate in the press.

 

Toronto was reportedly offering $600 million over 10 years, although there were no details as to how the money would be paid. The Giants were hard after him as well, but no number ever emerged from those negotiations. 

 

Ohtani's contract will count for roughly $46 million annually against the CBT, although it isn't clear how that figure was reached.

 

Duh. Inflation at 4 percent annual inflation $70 million is worth about $46 million in 10 years.



#240 BaltBird 24

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Posted 11 December 2023 - 07:06 PM

By 2034 Ohtani will have made the Dodgers, roughly, $12 billion. Money well spent!
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