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June 25, 2024

Ohtani Makes History with Record-Shattering $700 Million Deal with Dodgers

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Dec 13, 2023

Shohei Ohtani has agreed to a groundbreaking 10-year, $700 million contract with the Los Angeles Dodgers, the reigning World Series champions announced on Saturday. The deal shatters records for the largest contract in MLB history and includes a unique structure with heavy deferred payments.

Ohtani Bypasses Free Agency for Largest Deal in American Team Sports

At 28 years old, Ohtani was widely viewed as the top free agent prize this winter after a 2022 season where he excelled as both a hitter and pitcher. However, rather than test the open market, Ohtani has decided to commit the prime of his career to the Dodgers on a deal that will pay him $30 million per year from 2024-2026 before being heavily backloaded.

The contract’s total value surpasses the 14-year, $426.5 million deal that Mike Trout signed with the Angels in 2019 as the previous record for largest in MLB history. Across all American professional team sports, Ohtani also now owns the highest total contract value ever, exceeding Patrick Mahomes’ 10-year, $503 million extension with the Kansas City Chiefs.

Unique Structure Lowers Annual Luxury Tax Burden

While being trumpeted as a $700 million windfall, the uniquely structured deal will pay Ohtani only $20 million combined over the first three years of the contract from 2024-2026. An astounding $680 million is deferred to be paid out from 2031-2034 after the initial term expires.

By delaying nearly the entire payout for eight years, the average annual luxury tax value of Ohtani’s deal will be just $46 million. This will ease the burden on the Dodgers to stay under the $233 million luxury tax threshold in the near future as they look to surround Ohtani with championship talent.

Year Salary Luxury Tax Value
2024 $10M $46M
2025 $10M $46M
2026 $10M $46M
2027 $35M $46M
2028 $35M $46M
2029 $35M $46M
2030 $35M $46M
2031 $100M $46M
2032 $100M $46M
2033 $100M $46M
2034 $100M $46M

Table showing Ohtani’s heavily backloaded salary structure to reduce average annual luxury tax value of the contract.

Immediate Reaction: Future Even Brighter for MLB’s Elites

The reaction around MLB to Ohtani’s bombshell agreement with the Dodgers has been uniformly positive. Players across the league expressed excitement on social media, thrilled at the prospect of competing with or alongside the Japanese two-way sensation over the next decade.

Freddie Freeman, Ohtani’s new star teammate in the Dodgers lineup, tweeted that L.A. “just got even more fun” and is “#blessed” to add Ohtani’s talent.

Freeman Reaction Tweet

Yankees slugger Aaron Judge, fresh off setting a new American League home run record last season, called the news “incredible” for baseball. Judge himself will headline the upcoming free agent class next winter, where he figures to earn a massive new deal.

The unprecedented commitment by the Dodgers and Ohtani’s decision to leave money on the table with heavy deferrals also sets the stage for renewed cries that baseball’s economic system is broken. The MLB Players Association has already filed grievances over deferrals in Ohtani’s deal, continuing the contentious relationship between players and owners that nearly caused a work stoppage two winters ago.

While the sport wrestles with deeper questions on competitive integrity, players like Ohtani signing long-term to stay with MLB’s juggernaut franchises provides hope for more exciting seasons ahead with the game’s biggest stars taking center stage.

What’s Next: Building a Juggernaut, Hall of Fame Pursuit

In adding Ohtani, the Dodgers are now loaded to pursue more World Series glory after breaking their 32-year title drought in 2020. With homegrown superstars like Mookie Betts and Walker Buehler already in the fold alongside Freeman, Justin Turner, and Trea Turner, Ohtani could be the final piece to cement the next great dynasty in baseball.

The Dodgers will now shift their focus to constructing a championship-caliber pitching staff and filling holes at second base, third base, and the bullpen to support their star-studded lineup. Expect L.A. to aggressively pursue mid-tier free agent options to build out a complete roster while avoiding the most expensive players that could complicate balancing the luxury tax.

For Ohtani, his next ten seasons with the storied Dodgers franchise gives him the perfect team context to bolster his iconic individual achievements into an unquestioned Hall of Fame career. If Ohtani meets expectations on the mound and at the plate alongside a championship core in L.A., he will enter rarefied air even beyond Japanese legends like Ichiro Suzuki and Hideki Matsui in garnering global acclaim as one of the faces that transcended baseball into an international phenomenon.

At just 28 with limitless potential over the life of this deal, Ohtani’s legend still feels like it has only just begun. By committing to each other for the long haul, both the Dodgers and MLB’s unicorm are banking on this historic partnership to take the sport to new heights.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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