NEW YORK — Shohei Ohtani will receive just $20 million of his $700 million contract with the Los Angeles Dodgers over the next 10 years, with $680 million payable from 2034-43 in an unusual structure that gives the team greater payroll flexibility in coming seasons.
Ohtani’s record-setting deal, agreed to Saturday, calls for annual salaries of $70 million, according to details obtained by The Associated Press. Of each year’s salary, $68 million is deferred with no interest, payable in equal installments each July 1 from 2034-43.
For purposes of baseball’s luxury tax, the contract is valued as a yearly addition to the Dodgers’ payroll of about $46 million. Under the collective bargaining agreement, for the calculation of a team’s tax payroll the value of deferred money is discounted at the federal mid-term rate. For all agreements this offseason, the discounting will be at the October 2023 rate of 4.43%.
A unique two-way superstar as both a hitter and pitcher, the 29-year-old Ohtani left the Los Angeles Angels as a free agent to sign with the Dodgers in a deal they announced Monday night.
“Dodger fans, thank you for welcoming me to your team,” Ohtani said in a statement released by the club. “I can say 100 percent that you, the Dodger organization and I share the same goal — to bring World Series parades to the streets of Los Angeles.”
Ohtani’s contract, combined with those of Mookie Betts and Freddie Freeman, raises the Dodgers’ total of deferred money owed to the three to $857 million from 2033-44.
Betts has a $365 million deal covering 2021-32 that includes $115 million in deferred salaries payable from 2033-44 and has the final $5 million of his signing bonus payable from 2033-35.
Freeman has a $162 million, six-year deal for 2022-27 that includes $57 million in deferred money payable from 2028-40.
Los Angeles’ high points of the deferred payments are 2038 and ’39, when the trio will be owed $83 million, and 2040, when they will be due $84 million.
By receiving the vast majority of the money when he presumably will not be living in the United States, Ohtani also figures to have a tax benefit. California’s top tax rate for residents is 13.3%.
The two-time AL MVP has a string of endorsement deals that significantly add to his earnings beyond his baseball salary.
“On behalf of the L.A. Dodgers and our fans everywhere, we welcome Shohei Ohtani to the Dodgers, the home of Jackie Robinson, Sandy Koufax and Hideo Nomo, three of the sport’s most legendary and pathbreaking players. We congratulate him on his historic contract with our storied franchise,” said Mark Walter, Chairman of the Los Angeles Dodgers and Guggenheim Baseball. “Shohei is a once-in-a-generation talent and one of the most exciting professional athletes in the world.”
Ohtani’s total dollars are 64% higher than baseball’s previous record, a $426.5 million, 12-year deal for Angels outfielder Mike Trout that began in 2019.
His $70 million average salary is 62% above the previous high of $43,333,333, shared by pitchers Max Scherzer and Justin Verlander with deals they struck with the New York Mets. Ohtani’s average salary nearly doubles the roughly $42.3 million he earned with the Angels. It also exceeds the entire payrolls of Baltimore and Oakland this year.
However, for the luxury tax he will count only slightly more than Aaron Judge, who is a $40 million annual charge to the Yankees’ payroll as he enters the second season of a $360 million, nine-year contract.
Now, about that No. 17…
Reliever Joe Kelly is switching uniform numbers after finalizing his $8 million, one-year contract with the Dodgers on Monday, opening No. 17 for Shohei Ohtani.
Kelly will wear No. 99 with the Dodgers. Ohtani wore No. 17 with the Los Angeles Angels.
Kelly wore 58 when he started his major league career with the St. Louis Cardinals in 2012. He was No. 56 with the Boston Red Sox from 2014-18 and No. 17 with the Dodgers from 2019-21 and again last season. He also was No. 17 with the Chicago White Sox in 2022 and ’23.
Kelly’s $9.5 million option was declined by the Dodgers last month, triggering a $1 million buyout.
A 35-year-old right-hander, Kelly was 1-0 with a 1.74 ERA in 11 relief appearances after he was obtained from the White Sox along with Lance Lynn. Kelly went 2-5 with a 4.23 ERA overall in 42 games. Kelly had signed a $17 million, two-year contract with Chicago.
A 12-year big league veteran, Kelly is 53-57 with a 3.95 ERA in 81 starts and 369 relief appearances with St. Louis (2012-14), Boston (2014-18), the Dodgers (2019-21, ’23) and the White Sox (2022-23).
