(CNN) I couldn’t help but feel some kind of reflexive surprise when I saw that Shohei Ohtani of the US Major League Baseball signed a record-breaking 10-year contract worth $700 million (approximately 101.5 billion yen) with the Los Angeles Dodgers. do not have. Anyway, the amount is too large.
Courtesy of Frederic Frommer
But if you look closely at the contract details, you’ll see that rare pitcher-bitter hybrids like Ohtani’s are worth spending a lot of money on. This is especially true if the person in question has agreed to pay most of the contract amount in arrears after the end of the 10-year contract.
Ohtani is a top-notch pitcher and hitter, but such players are rare not only in today’s baseball world, but in the last century as well. That’s why he is often compared to Babe Ruth. Ruth is the only player in the history of baseball who was as good at both skills as Ohtani.
However, there is one major difference between the two. By the time Ruth joined the New York Yankees in 1920 at the age of 25, he had almost finished his career as a pitcher and was focused solely on hitting. However, at 29 years old, Otani still reigns as a two-way superstar. His career ERA as a pitcher is an impressive 3.01. He hit 44 home runs this year and became the American League’s home run leader. He has also been named the AL MVP twice in the past three seasons.
It is true that Ohtani will not be active as a pitcher next season. He had elbow surgery in September. Still, his plan is to return to the mound in 2025. That means the Dodgers will essentially be acquiring two star players at once. A true treasure of the baseball world. Looking at the top annual salaries in baseball (below Ohtani) in 2024, Max Scherzer of the Texas Rangers and Justin Verlander of the Houston Astros both lead the pitcher category with $43.3 million. Meanwhile, Yankees slugger Aaron Judge is leading the way in terms of batters. This was revealed by the US data site Spotrac. Otani, who is active as a pitcher and hitter, has an annual salary of $70 million, which reflects his market value. Essentially, the Dodgers will be paying $35 million a year for each of Ohtani’s skills.
However, as multiple media outlets including CNN reported this week, Ohtani has agreed to receive $68 million of his $70 million annual salary in arrears. This would significantly reduce short-term financial pain for the Dodgers. According to sports network ESPN, Otani’s annual salary is roughly $46 million, including the team’s balance of strength tax (luxury tax). The team is required to rebate the deferred payments back to their current value, so the rebate amount is approximately $44 million, plus the actual annual salary of $2 million during the contract period. The $46 million earned will be his average annual salary. According to a report by sports site The Athletic, the deferred payments will be paid interest-free from 2034 to 2043.
And as sports site The Ringer points out, the deferred payment could save Ohtani from a huge tax bill down the road. California is the state with the heaviest tax burden when large sums of money are acquired, so if Otani does not live in the state after his contract ends, the $68 million in deferred payments will likely not be subject to high state income taxes. is large.
The deferred payment contract was concluded at Otani’s own suggestion. According to The Athletic, this will allow the team to free up more funds to add to other players.
Naturally, the Dodgers are not paying Ohtani’s annual salary solely for his batting and pitching abilities. The team has already resolved concerns about attendance, but Otani’s addition will likely contribute to increased merchandise sales. There is no doubt that the number of fans who watch the games on TV will increase. This second part is the important one. Baseball was once the most popular sport in the United States, but now it is having a difficult time competing with American football and basketball in attracting fan attention.
As sportswriter Tom Burducci, who writes for Sports Illustrated, writes, Ohtani “could bring in returns of up to $25 million a year in ancillary income and brand value.” That’s what the owner of the company estimates.
Americans have long been obsessed with the compensation paid to top athletes. What I felt was a mixture of envy and admiration. There is also a belief among some people that such amounts should be allocated differently in society.
In 1930, Ruth was asking for a salary of $80,000 ($1.4 million in today’s dollars). When a reporter pointed out that he earned $5,000 more than then-President Hoover, Ruth reportedly replied: “Of course. I had a better season.”
To give an example of how much player salaries have skyrocketed over the past century, the current US president’s salary of $400,000 is barely more than half of Major League Baseball’s minimum salary of $740,000 next season.
In 1979, the Houston Astros signed pitcher Nolan Ryan to a four-year, $4.5 million contract, which was shocking at the time. Ryan now becomes the first player in baseball history to earn more than $1 million in a single season. In a satirical column for the Boston Globe at the time, author Lee Montville described a hypothetical conversation. There, high school career advisors encourage highly talented students to pursue careers in baseball.
“What kind of career do you want to pursue?” the teacher asks the students. Students express an interest in law, teaching, politics, and medicine. Here is the teacher’s reaction: “Do you want to be just a useless person? Or do you want to be a millionaire? Play baseball.”
Nowadays, of course, if anyone were to faint upon hearing that a professional athlete’s salary was $1 million, they would look like the ruthless Dr. Evil from the 1997 movie “Austin Powers.” . In the movie, he proposes a plan to steal a nuclear warhead. He confidently announces that he will hold the world hostage and demand a ransom of “one million dollars,” but his friends warn him that “one million dollars is not that much money these days.”
In the narrow world of professional sports, $1 million is no longer considered a lot of money. However, if it is worth 700 million dollars, it is undoubtedly a large amount of money.
The amount makes clear just how attractive a player who can be a top hitter and pitcher is, and how enticing the marketing opportunities that come with him are. After all, no player had played like that in over a century.
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Frederick J. Frommer is an author, sports historian, and political historian. He is the author of several books, including “You Gotta Have Heart: Washington Baseball From Walter Johnson to the 2019 World Series Champion Nationals.” The content of this article is his personal opinion.
2023-12-15 05:47:40
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