In reply to I Like Mike Kind of. The deferred money will be taxed by where he lives. Which probably won't be Cali

In reply to HaveGoodGetGive Its Bobby Bonilla for a new generation!

Brilliant. Can go live anywhere else and collect the rest of his $680 million and not pay cali tax on it.

Also though that cuts the value of his contact in half though assuming a 10% interest rate.

Not sure he can avoid California taxes. California has gotten pretty aggressive trying to tax wealthy residents that leave the state.

In reply to themissinglink Sure some politicians in Cali will ***** about it, but nothing they can do really

so he signs a 10-year deal (2024 through 2034) and he will be paid $68 Million per year from 2034 to 2043 (after his contract expires). What a wild contract. Who knows what contract valuations will look like that far out. It could workout in the short term, but long term, it could be disastrous for the Dodgers...and hopefully it is.

In reply to amercer

amercer said:

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Sure some politicians in Cali will ***** about it, but nothing they can do really

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Oh, but they can try…

https://www.sambrotman.com/blog/california-exit-tax

The fact that his employer paying his salary is officed in the state and the $68 million per year is deferred for services rendered (mostly) in California will complicate his residency once he retires if he leaves the state.

There may have been some state tax considerations, but I think the structure is more meant to allow the Dodgers to be competitive and continue to spend on other players while he is there.

He's deferring 97% of his contract for an entire decade, perhaps I'm a bit of a conspiracy theorist on this one but deferring that much money for a decade to avoid CA state taxes only is ridiculous. The terms indicated there's no interest being earned on that derral so the $68MM he defers each year isn't growing, he also doesn't have the opportunity to invest that money elsewhere for an entire decade. The time value of that money being lost exceeds 10% in CA state taxes each year. I don't know what the tax situation is if he retires and goes straight back to Japan in a decade at the conclusion of the contract, perhaps that adds up. To me this feels like a way to defer compensation that will specifically become an ownership interest when his playing days are over.

In reply to Max Power

Max Power said:

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He's deferring 97% of his contract for an entire decade, perhaps I'm a bit of a conspiracy theorist on this one but deferring that much money for a decade to avoid CA state taxes only is ridiculous. The terms indicated there's no interest being earned on that derral so the $68MM he defers each year isn't growing, he also doesn't have the opportunity to invest that money elsewhere for an entire decade. The time value of that money being lost exceeds 10% in CA state taxes each year. I don't know what the tax situation is if he retires and goes straight back to Japan in a decade at the conclusion of the contract, perhaps that adds up. To me this feels like a way to defer compensation that will specifically become an ownership interest when his playing days are over.

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Supposedly he earns another $50M or so annually outside of baseball (whatever the actual number is it is significant). So he can defer some money and still get by on his $50M, plus the $2M each year from the Dodgers.

He makes about $40 mil per year in endorsements.

Here is a good article on why the contract makes sense for both sides: https://www.cbssports.com/mlb/news/shohei-ohtani-contract-explaining-the-massive-680-million-deferral-why-it-benefits-both-ohtani-and-dodgers/#:~:text=This%20past%20season%2C%20Ohtani%20made,salary%20the%20Angels%20paid%20him.

So, just hypothetically speaking here...what happens if the Dodgers were to go bankrupt in the span of 10 years? The deferred payouts could really bite SO in the ass, right?

If he doesn't live in California after 10 years does he pay state taxes on that?

In reply to crowman2010

crowman2010 said:

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So, just hypothetically speaking here...what happens if the Dodgers were to go bankrupt in the span of 10 years? The deferred payouts could really bite SO in the ass, right?

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One of the biggest misconceptions about Shohei Ohtani's contract is that the Dodgers will have an additional ten years to pay him the money.

But that's not how it works.

Major League Baseball's CBA requires teams to fully fund the present-day value of deferred payments within…

— Joe Pompliano (@JoePompliano) December 12, 2023

In reply to Panama Red Good lord those ticket prices

Avg. Ticket Prices (Before & After Ohtani)
Opening Day: $474 to $811 (+74%)
All Home Games: $327 to $482 (+47%)

In reply to Panama Red

Panama Red said:

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crowman2010 said:

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So, just hypothetically speaking here...what happens if the Dodgers were to go bankrupt in the span of 10 years? The deferred payouts could really bite SO in the ass, right?

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One of the biggest misconceptions about Shohei Ohtani's contract is that the Dodgers will have an additional ten years to pay him the money.

But that's not how it works.

Major League Baseball's CBA requires teams to fully fund the present-day value of deferred payments within…

— Joe Pompliano (@JoePompliano) December 12, 2023

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There is a luxury tax advantage for the Dodgers also, that he doesn't mention in that tweet.

In reply to double aught What's the luxury tax advantage? That the luxury tax hit is based on the NPV of the contract?