Dang, the Royals have a better rotation than that.

Ohtani will be paid 2 million a year. 680 million is deferred. Wow.

Cap hit works out to 46million. Very smart move.

I don't understand the Ohtani contract one iota, but I feel comfortable saying he's probably going to make 50+ million a year in endorsements/advertising alone, so pushing that much money to the end of contract doesn't mean much one way or the other for him.

Honestly that is such BS. But good for LA or whatever

He wanted to be in LA so bad. Why play games with all these other teams that were interested l?

Seems like it's just setting the stage for someone to create a super team.

Let's see if Monty, Hader, et al want 2MM/yr, and then we'll figure out the rest later

This will be interesting to see how MLB handles it.

Because Ohtani gets about $50M/yr in NIL money he doesn't need the money, I supposed.

But, let's see what the IRS and California Tax people have to say about this.

I know several CPAs... I'll have to ask how this will work. When it comes to Services, there are terms about completion of service and work progress. Multiple angels... Whether he gets the cash-flow money and when the "company" completes their services have tax implications.

The CBT isn't an IRS related thing.

Tksymm7 said:

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I don't understand the Ohtani contract one iota, but I feel comfortable saying he's probably going to make 50+ million a year in endorsements/advertising alone, so pushing that much money to the end of contract doesn't mean much one way or the other for him.

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It may not to him, but the State of California is going to want to collect their 13% when he earns that money playing in California and before he declares he lives in Japan or Florida to avoid Taxes.

Mr Gigem said:

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Honestly that is such BS. But good for LA or whatever

He wanted to be in LA so bad. Why play games with all these other teams that were interested l?

Seems like it's just setting the stage for someone to create a super team.

Let's see if Monty, Hader, et al want 2MM/yr, and then we'll figure out the rest later

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He used the other teams.

Some are speculating that the DodgerNation guy who reported Ohtani was flying to Toronto, was a setup that got the LAD to panic that Ohtani was going to Toronto to sign and the LAD upped their offer by like $100M, as a result.

Morosi realized he got used for more money.

We'll see how this all plays out. What will be funny is if after all that and deferring all that money, if the CBT ends up being $70M and the Dodgers either blow out the Tax or don't fund the SP they'll need.

Most deferred comp payouts are paid to a holding account. The deferral is to avoid taxes incurred in that taxable year. It's going to be very difficult for California or any other state to lay claim to it on the year it's deferred, but once he starts taking it could be a different story.

Either way he probably doesn't really give a ***** The CBT might not like it though.

So, I think clarity will come into focus. Original accounts seemed to implay he was only getting $2M per year and $68M per year was deferred.

The latest quote paints a slight different perspective.

Quote:

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most notably that $68MM of Ohtani's $70MM annual salary will be deferred, leaving him making just $2MM per year in the short term. The deferred money is to be paid out without interest from 2034 to 2043. This will reportedly reduce the CBT hit of the contract to around $46MM per year.

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This implies that Ohtani defers only $68M total. If the CBT hit is $46M per year, that means he's getting $460M of the $700M. Still doesn't make sense.

The $2M short term would imply 2024 from a cashflow. That's mean about an $11M increase for a linear increase.

Flounder Dorfman said:

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Most deferred comp payouts are paid to a holding account. The deferral is to avoid taxes incurred in that taxable year. It's going to be very difficult for California or any other state to lay claim to it on the year it's deferred, but once he starts taking it could be a different story.

Either way he probably doesn't really give a ***** The CBT might not like it though.

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Flounder... my experience to deferred comp is around selling good/products. I know from a Services perspective the way we recognize it from a Financials perspective has legal requirements.

With this being a "Service" would the Tax implication be different based on when the Services are rendered? Does the impact on the Dodgers (or a company) become different whether the employee defers comp? The company portion of the Taxes.

I'm thinking of it like this. In 2024 he will receive (from a CBT standpoint):

• $2M of base salary paid in 2024.
• $68M of deferred compensation, discounted 10 years at the IRS mid-term rate (4.69% as of Nov), $43M.

So a $45M hit. Repeat for the other 9 years, the math is the same.

This is all way above my head but, if he could still it to any government entity ala California income tax, I'm all for it. If they outsmarted the system in place, then good on them.

And some additional thoughts, the reason we haven't seen contracts like this is less to do with outsmarting the system, and more to do with recent conditions.

You need a superstar willing to defer compensation for competitive and financial purposes. This isn't necessarily rare.
You need interest rates to make it viable. Not sure if the deferred compensation rules have changed substantially, but if the rules have been the same, then there hasn't been the ability to actually significantly reduce the AAV with deferrals. The rules state that essentially the player is loaning the club the salary. If they're paying him within 1.5% of the published IRS rate, then they don't get to decrease the AAV at all. With interest rates being low for basically a decade, it didn't make a difference. For example, this same deal in 2017-2022, and the AAV would've still been around $60M a year.

COTS has the LAD CBT numbers updated with the projected Ohtani amounts.

https://docs.google.com/spreadsheets/d/1YX_O-LZuYfE9n8u3s3EICLAjp1hixwovsrTIJaaAXng/edit#gid=1520401900

Looks like they are currently under $14.5M for 2024. That includes the impacts from Joe Kelly and Ohtani.

I'm guessing they sign one of: Yamamoto, Snell, Montgomery.
I'm guessing they trade for a SP: Cease?

I hope their desperateness for SP causes them to make some poor decisions.

I wonder if the AAV is recalculated every year or if it gets set to present value?

Seems like it would be appropriate to recalculate it every year, in which case the Dodgers just bought a house with a variable interest rate mortgage that could make future payments a bear.

So it appears AAV is locked in based on imputed loan interest rate based on the Fed midterm interest for the October previous to the contract year, which was 5.2%.

Bleacher Report with new minor league rankings. Rangers are #5.

https://bleacherreport.com/articles/10099866-updated-mlb-farm-system-rankings-for-the-2023-24-offseason

Top 10 Prospects

1. OF Evan Carter (Tier 1)
2. OF Wyatt Langford (Tier 1)
3. RHP Brock Porter (Tier 1)
4. SS Sebastian Walcott (Tier 1)
5. RHP Owen White (Tier 1)
6. 2B Justin Foscue (Tier 2)
7. RHP Jack Leiter (Tier 2)
8. OF Anthony Gutierrez (Tier 3)
9. OF Dustin Harris (Tier 3)
10. RHP Emiliano Teodo (Tier 3)

BTW - I disagree with Teodo being Tier 3 (projected MLB fringe player). Dude has big league stuff and could be in our bullpen by this summer.

Mr Gigem said:

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Getting fitted for my World Series ring today

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You deserve it.

For your longtime clients (like me) - promise to come by my seats next year, let me slip the ring on and snap a pic. Would be awesome.

Old friend Luisangel Acuna is the Mets #1 Prospect and #38 Overall. The trade was worth it since we won the whole damn thing but I'd still feel better about it if he were a bust

And it could be closing fast.

They are already projecting over the CBT in 2024 and they have a number of holes to fill.

After 2024,
Altuve (34 in '24) = FA after '24
Bregman (30) = FA after '24
Verlander (41) (player opt vest at 140IP in '24 to $35M in '25)
Tucker (27) Arb3 in '25
Framber (29) Arb4 in '25

They'll resign Altuve. Bregman they're already considering effectively gone.

They can go right ahead and sign 35 year old Altuve. That would be awesome.

Mr Gigem said:

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Getting fitted for my World Series ring today

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Make sure you drop by the trash talk thread when you get it so they can see what a non-replica ring looks like lol

https://theathletic.com/5129329/2023/12/12/mlb-free-agents-contracts-teams-predictions/?source=emp_shared_article


Don't have the athletic. Anyone with a sub know if there's anything significant in it?

sburg2007 said:

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https://theathletic.com/5129329/2023/12/12/mlb-free-agents-contracts-teams-predictions/?source=emp_shared_article


Don't have the athletic. Anyone with a sub know if there's anything significant in it?

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Yamamoto - Yankees
Montgomery - Rangers
Snell - Mets
Bellinger - Cubs
Matt Chapman - Blue Jays
Hader - Rangers
Jung Ho Lee - Giants
JD Martinez - DBacks
Lourdes Gurriel Jr - DBacks
Rhys Hoskins - Giants

I have a feeling the Dodgers are about to turn around and use the money saved from Ohtani's contract structure on Yamamoto or Monty.

Kansas City making a few moves today.

TheNotoriousP.I.P. said:

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I have a feeling the Dodgers are about to turn around and use the money saved from Ohtani's contract structure on Yamamoto or Monty.

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Yep, they will sign and/or trade for some SP.