Good morning, I’m Dan Gartland. Don’t look now, but the Giants have won three in a row and are just one game out of a playoff spot.
In today’s SI:AM:
💵 Ohtani’s unique contract
🎙️ An interview with the NCAA president
The Dodgers got a bargain
The details of Shohei Ohtani’s $700 million contract with the Dodgers have come out, and they’re absolutely fascinating.
As first reported by The Athletic, Ohtani will earn only $2 million in salary over the length of the 10-year deal, deferring a whopping $680 million to be paid later. The deferral payments will be made over the course of 10 years without interest—$68 million every July 1 starting in 2034.
It’s a clever bit of accounting that will have significant benefits for both Ohtani and the franchise. For the Dodgers, the deferrals decrease the calculated average annual value of the contact for luxury tax purposes. Instead of being charged $70 million per year against the tax, the present day value of Ohtani’s contract will be $46.06 million annually. The team can use that yearly savings of nearly $24 million to build around Ohtani. Rather than putting all their eggs in the Ohtani basket, the deferrals allow them the payroll flexibility to add to a team that is already stacked. In fact, Tom Verducci reports that they are seriously pursuing Japanese pitcher Yoshinobu Yamamoto, who is expected to command around $300 million, as well as former Brewers and Padres closer Josh Hader.
Verducci landed an exclusive interview with Ohtani’s agent, Nez Balelo, who said that the contract’s structure was evidence of his client’s desire to win.
“Nobody should be surprised,” Balelo told Verducci. “Everything he does is unique and impeccably well thought out. Who in their right mind gets to this level and decides he wants to help the team and the city compete above all else and basically says, ‘I don’t need it.’ Nobody does that. But there is nobody like him. This is the epitome of thinking about others, of pure intentions.
“This is who he is, who he always has been. He is coming in not as someone above all others, but as a complementary player to help the team win.”
The deferred compensation was Ohtani’s idea, Balelo said. It isn’t hard to imagine why a guy who spent six years playing the role of Tungsten Arm O’Doyle on some depressingly mediocre Angels teams would want to ensure that his contract provided leeway for his next team to add other players. Deferring the vast majority of his pay until he’s past playing age could also have tax benefits for Ohtani if he’s no longer living in California when the payments are made. And Ohtani won’t be pinching pennies on his relatively meager $2 million salary while waiting for that first big payday in 2034. He’s expected to earn $50 million in endorsements next season, up from the $40 million he made this year, according to Verducci.
Ohtani and the Dodgers were able to agree to the contract’s unique structure because the collective bargaining agreement does not place a limit on how much of a player’s salary can be deferred. Other players have deferred significant amounts of their salary, but nothing like this. The previous record for deferred compensation was 50% by Max Scherzer on his seven-year, $210 million contract he signed with the Nationals in 2015.
Other teams can’t be happy with how the Dodgers managed to lower their luxury tax bill with all the deferred money, but does it really make sense for owners to fight to outlaw similar deals when it comes time to negotiate the next CBA? Probably not. Ohtani is a unique player who signed a unique contract to fit his unique circumstances. It’ll be a long time before another player signs a contract worth $700 million—and even longer before one signs a deal like Ohtani’s.
The best of Sports Illustrated
Jim Rassol/USA TODAY NETWORK
- The Dolphins totally collapsed against the Titans last night in a loss that Gilberto Mazano believes will hurt the team in more ways than one.
- The Cowboys were the big winners in Conor Orr’s latest NFL power rankings.
- Albert Breer spoke with Bills linebacker Terrel Bernard about how the team stayed focused when coach Sean McDermott’s tasteless 9/11 comments came out last week.
- The Pelicans’ loss to the Lakers in the in-season tournament led to a renewed focus on Zion Williamson’s conditioning and questions about his future with the franchise.
- Pat Forde landed an interview with NCAA president Charlie Baker about his proposal to shake up college sports with a new subdivision that would allow schools to pay athletes directly.
- On Friday, Canadian businessman Robert Herjavec of Shark Tank fame unexpectedly found himself at the center of a baseball news cycle when fans became convinced that the plane carrying Herjavec was actually taking Shohei Ohtani to Toronto. Emma Baccellieri interviewed Herjavec, who said he had no idea about the plane saga until he touched down in Canada and customs agents came on board.
The top five...
… things I saw last night:
5. French amateur soccer team US Revel’s reaction to learning it would face Paris-St. Germain in the next round of the French Cup.
4. Tommy DeVito’s dad and agent kissing in the stands after a Giants touchdown.
3. Dodgers pitcher Joe Kelly’s wife’s video announcing his new jersey number after he gave No. 17 to Shohei Ohtani.
2. Victor Wembanyama’s vicious dunk over Alperen Şengün.
1. Sabres rinkside reporter Rob Ray’s toughness after getting hit in the face with a puck. He got patched up and kept calling the game.
SIQ
Which now-ubiquitous piece of sporting equipment was first patented on this day in 1899?
- Batting helmet
- Wooden golf tee
- Glass backboard
- Vulcanized rubber hockey puck
Yesterday’s SIQ: Which team traded future two-time MVP Roger Maris to the Yankees on Dec. 11, 1959?
- A’s
- Senators
- Cubs
- Cardinals
Answer: A’s. In the mid- to late-’50s, the A’s, who were playing in Kansas City, controversially functioned almost as a farm team for the Yankees. The two teams cooperated on several trades during that period, the majority of which were lopsided in New York’s favor.
The Maris trade was a seven-player deal in which the A’s sent him, Joe DeMaestri and Kent Hadley to New York in exchange for Hank Bauer, Don Larsen, Norm Siebern and Marv Throneberry. Larsen, famous for his perfect game in the 1956 World Series, had the worst season of his career in ’60 with the A’s. Throneberry was an average hitter who Kansas City traded away less than two years later. Bauer was an aging player who lasted two seasons with the A’s before retiring. Siebern developed into a good player who made three All-Star teams (two with K.C.), but Maris was so excellent in New York that the trade looks shockingly terrible in retrospect.
Maris took a big leap forward in his first season in pinstripes, leading the AL with a .581 slugging percentage and winning his first MVP. The next year, of course, was his record-setting 61-homer MVP season. The A’s finished tied for last in the AL that year.
