In the early morning of December 10, Beijing time, Shohei Ohtani, the two-time MLB American League Most Valuable Player, personally announced that he would join the Los Angeles Dodgers and sign a ten-year contract of $700 million. But only two days later, the details of the contract were revealed, 6 of themThe $800 million will be deferred for 10 years.
Why did Shohei Ohtani, a Japanese player, win the world's largest sports contract?What does a delay in paying more than 97% of his contract mean for the team and himself?
Wen Fu Haonan
Edited by Yang Yumeng
In the early morning of December 10, Beijing timeTwo-time MLB American League Most Valuable PlayerShohei Otani(Shohei Ohtani) personally announced an agreement with the Los Angeles Dodgers to sign a ten-year, $700 million contract- By the numbers alone, this means that he will be paid more than 134 per week$60,000 and you can earn 19$20,000, or even an average of $133 per minute.
Source: fox
Shohei Ohtani, 29 years old from Japan, is not only more than 2The gap of 500 million US dollars broke the record of the largest contract in MLB history, and also surpassed the contract amount previously signed by Messi and Ronaldo in one fell swoop, setting a new world athlete with the highest total salary in a single contract, shocking the global sports world!
But just two days later, the details of the payment in Otani's contract caused another uproarHe is willing to pay with a deferred payment (deferred payment6$800 million, a significant reduction in average annual salary.
According to the contract, Dodgers will pay the lion's share of the sky-high contract with interest over 2034-43, and will currently only pay Ohtani an annual salary of $2 million. This payment method will free up more room for Dodgers to sign more players to bolster the roster in the short-term competition window.
Why did Shohei Ohtani, an Asian player, win the world's largest sports contract?Is it worth it for Dodge to pay him a huge price of $700 million for ten years?What capital does he have to sacrifice more than 97% of the contract money at the moment to become a global team?
Shohei Otani, why is it worth so much money?
In a previous episode of The Baseball Files, we valued the first person in baseball today and mentioned the key to defining the value of Shohei Ohtani's new contract:One is his unique ability to shoot as a top-tier second-rate shooter on the court.
For three consecutive seasons, Ohtani has performed phenomenal performances in both pitching and batting, dominating both offensive and defensive ends, surpassing the legendary Babe Ruth 100 years ago, refreshing people's perceptions and concepts of baseball as a sport, and turning the impossible into possible.
Not only did he become the first player in major league history to win the MVP by multiple votes, but he also led Japan to victory over the United States in the World Baseball Classic in the first half of the year.
Therefore, Ohtani is the undisputed number one star in baseball, and he deserves the salary of a top pitcher + top hitter if he can achieve the ultimate in two very different skills in this sport, not to mention his excellent running ability. Even if Ohtani has to undergo surgery again this year due to a torn ulnar collateral ligament and can only play again as a pitcher in 2025, the improvement he will bring to the team's future strength ceiling is immeasurable.
The second is Shohei Ohtani's huge commercial influence off the court. Prior to the signing, Ohtani's off-court earnings this year had reached the highest in MLB - according to Sportico's estimate in March this year, Ohtani's sponsorship endorsement income was as high as $40 million, and no other professional baseball athlete earned more than $5 million, including former MVP winners such as Trout, Harper, and Judge.
Even if you change the field and compare Ohtani with the basketball superstars with the strongest personal brand effect in the four major leagues in North America, his sponsorship and endorsement income is second only to James, Curry, Brother Alphabet and Durant, and higher than Doncic, Harden and others. Brands that have signed contracts with Ohtani include, but are not limited to, Japan Airlines, Oakley, Hugo Boss, Descente, Porsche, TOPPS Card and New Balance, among others.
Ohtani's contract amount is comparable to Curry and James' total career contract income.
Source: clutchpoints
At the same time, Ohtani also leads the major leagues in the number of followers on social **, with 6.4 million followers on Instagram alone, which is higher than the total number of followers on the three social media platforms of MLB's second-most popular former teammate Trout. In addition, who also ranked first among major league players in jersey sales this year.
Whether from the perspective of social media influence or personal brand effect, Shohei Ohtani is the brightest star in baseball. And the huge off-field income is also why he has the confidence to accept the team's deferred payment.
Dodge's 700 million gamble, can you earn it back?
To see the answer to this question, we must first understand the other subject of this signing - the Los Angeles Dodgers.
Dodgers, based in the City of Angels, is MLB's traditional club and is second only to Forbes in terms of commercial value at $4.8 billionNew York Yankeesof the team. They not only have the world's top capital, market resources and brand **, but also a powerhouse that has entered the playoffs for 11 consecutive years.
In the 2023 season, the Dodgers have the highest average attendance at home in the major leagues (over 4.).70,000 people), while ESPN reportedIn their home opener against the Cardinals next year after signing Ohtani, the lowest second-hand ticket price in the pre-owned ticket market has soared above $220.
In addition, according to SponsorUnited statistics, the cumulative sponsorship revenue of MLB teams in 2023 reached $1.5 billion, an increase of 23% from last year and a new high in recent years. In such an environment, the Dodgers themselves are one of the most money-absorbing teams in the major leagues, and signing the MLB superstar with the strongest money ability today is a match made in heaven.
It's no wonder that many sports ** people in North America laugh at it:Dodger's salary for Ohtani is afraid that it will be able to recoup the cost in the first year by relying on ticketing, merchandise, sponsorship and other income.
In particular, we have to count the Japanese capital brought by Otani and the attention in East Asia:According to Axios, 22 billboards were sold to Japanese brands at the Angels' home stadium last season, as Japan's national television station NHK signed an early broadcast deal with Angels, with a fixed multi-camera broadcast in the stadium, including an exclusive view of Ohtani that tracks the whole stadium.
As a result, Dodger's huge investment in Ohtani has paid off considerably, both in terms of the assets he brings on and off the court.
MLB's all-time top 10 stars have contract lengths and values.
Source: fox
In addition to money, what do both sides value?
The deal is not without risk — as a pitcher, Ohtani's return to peak form after two elbow ligament surgeries is still in question.
Not only that, but even if Ohtani accepts the contract extension, but the Dodgers have spent hundreds of millions of dollars to sign Murkey Bates and Freddie Freeman, two MVP-level superstars, then how much competitive balance tax (i.e., MLB's luxury tax) will be paid on the team's salary in the future and how much room it can leave for the future is equally important.
We may be able to speculateFirst of all, it was Dodgers team doctor Neal Elattarche who performed Ohtani's second surgery, and his inside information gave the team high hopes that Ohtani would return to his full form.
Second, Bates and Freeman actually accepted the deferred payment, the former 12 years 31The $1.5 billion was deferred to 2033-2044, with the latter being 1 year for 6 yearsOf the $6.2 billion contract, $57 million is deferred until 2028-2040.
Even if that means that between 2033 and 2044, the Dodgers will have to pay a total of 8$5.7 billion in contract extensions, but at least for now, their combined salaries only account for about $100 million a year for the Dodgers, and the amount of the competitive balance tax triggered for the 2024 season is 2$3.7 billion.
Source: MLB
As a result, the team has a strong guarantee for both roster operations and box office, and the Dodgers can even continue to look for pitchers in the free agent market, such as Ohtani's national team teammate Yushin Yamamoto (No. 2 in the free agent market this year).
As reported by Sports Illustrated,When Otani approached Dodger's top management, he repeatedly emphasized that victory and success were far more important to him than money.
The Wizards have spent six seasons without a playoff in the major leagues and is about to turn 30 looking to make a breakthrough in the next phase of his career. Coupled with the fact that his off-field earnings will only continue to rise, the amount of cash provided by the team's contract may not mean much to him.
It is worth mentioning that although the Dodgers were widely regarded as Ohtani's most likely next home from the beginning (geographical location, Japanese fan base, team capital, squad strength, market and other advantageous factors), Ohtani, as the biggest free agent in MLB history, has not made a big splash for himself in the past few weeks, he has mysteriously visited various teams and warned everyone through the team not to reveal too much information.
This even annoyed ESPN and other major **s, who were originally planning to use Ohtani Movement to drive offseason topic traffic, and they called on Ohtani to make more contributions to the promotion of baseball and stop hiding his whereabouts and intentions like protecting top-secret intelligence. Dodgers were also nervous because of the eventual rumors that the Toronto Blue Jays had become one of Ohtani's strongest contenders.
But in the end, Shohei Ohtani chose to stay in Southern California, choosing the Dodgers who wanted to sign him 10 years ago - the team in the top 10 of the minor league farm system (future potential stocks), the team with a winning culture and a pure attitude to baseball, the team that has the best chance of winning the World Series and achieving his greatest dream.
Previously, even ESPN was in a hurry, calling on Ohtani to reveal more information.
The impact of the two major topics of $700 million and deferred payments not only satisfied the appetite of all walks of life, but also pushed baseball and MLB to the forefront of the hot spot.
But overall, congratulations to Shohei Ohtani and the Los Angeles Dodgers, and we'll see what happens next spring.