How Shohei Ohtani can opt out of his Dodgers contract

Shohei OtaniThe Dodgers’ historic contract with the Dodgers has sparked endless discussion, debate and criticism due to the unprecedented scope of deferrals it includes, but that’s not the only cool thing about the 10-year deal.

Sports Illustrated’s Tom Verducci reports The contract contains language that “confirms that the club will fulfill its promise to use the savings it has created to build a competitive team around itself.” Ohtani’s agent, Nez Balilo of CAA Sports, told Verducci that Ohtani asked him early in the free-agent process about whether the majority or all of his salary could be deferred in order to give his club more flexibility with current salaries.

As far as we can tell at MLBTR, this is the first such clause in any player’s contract. Additional details of the condition and how it will be implemented remain unclear. The Dodgers have reported trade prosecutions involving… Tyler Glasnow And Manuel MargotIn addition to their last meeting with Yoshinobu Yamamotoseems to indicate that the team is already taking steps to meet this requirement.

The luxury tax associated with Ohtani’s contract is $46.06 million, according to Verducci, which is roughly in line with projections at the start of his free agency. But the way the contract was announced sparked significant criticism. It’s fair to wonder if the contract had been announced for 10 years and deferred $460 million with interest, it would have sparked the same backlash as the initial announcement of the $700 million deal… which was later reported to have been delayed by 97%.

The initial figure of $700 million sounds good in the recruiting ballpark for future CAA clients, but the league’s approximate valuation of $460 million for net present value is a completely different story. MLBPA ratings are a little lower so far; John Heyman of the New York Post Tweet The league values ​​the contract at $437,830,563, but the luxury tax will depend on the league’s calculations.

There has been a lot of talk about the contract as a way to game the luxury tax system, although the CBT amount of $46.06 million is in line with the league’s valuation of the deal. If anything, the contract is less about circumventing the luxury tax and more about artificially deflating the team’s actual salaries from 2024-33.

The unprecedented contractual language doesn’t stop at the competitive team clause. Ken Rosenthal of The Athletic Reports That the contract states: “In the event of a specified change in the Dodger staff, the player may cancel the contract at the end of the season, when the change occurs.”

The contract does not specify the person(s) who may cause Ohtani to withdraw from the contract. Given the massive list of deferred funds — just $2 million will be paid to Ohtani annually from 2024 to 2033, with the remaining $680 million to be paid from 2034 to 2043 — it’s hard to see Ohtani pulling out at any juncture, unless there Language Allows A portion of these deferrals will be paid in conjunction with the opt-out.

It’s technically possible that if Ohtani can return to the mound in 2025, he could re-establish himself as a viable starter with more earning power than the roughly $460 million net present value of his current contract. However, if only about 1-2% of the total collateral has been paid at the time of the theoretical opt-out opportunity, it will still be difficult to withdraw from the deal.

Then again, Ohtani showed with his original move to MLB (and to a lesser extent with the astonishing nature of his current deferrals) that money isn’t necessarily his top priority on any contract. He’s also said to earn up to $50 million a year in terms of endorsements and other marketing opportunities, so the idea that he would leave a staggering chunk of his record-breaking contract on the table in order to pursue a return to free agency is not a go-to. like Out of reach as it would be for many other players.

The news regarding the unprecedented clause (as we know it) in Ohtani’s contract will invite a lot of speculation. Fans on social media have already asked about ownership changes, front office changes, management changes, or perhaps even trades of fellow stars like… Mookie Betts And Freddie Freeman. Since the contract itself does not clearly state the nature of the change, there is no way to know the specific nature of the personnel change that would trigger this right for Ohtani. The clause is further evidence of the lengths to which the Dodgers — and likely other teams — were willing to go in order to secure star, two-way generational talent.

Giants president of baseball operations Farhan Zaidi has already indicated that the terms of Ohtani’s contract with the Dodgers were proposed by Ohtani and his agents, and that the Giants were comfortable effectively matching them. Presumably, if Ohtani’s camp included conditions regarding investing existing savings and a conditional clause in terms with the Dodgers, those factors were also present in discussions with the Giants, Blue Jays and other finalists for his services.