Even before he signed his historic $700 million contract with the Los Angeles Dodgers, everybody was talking about Shohei Ohtani as baseball’s biggest, and most marketable, star.
Ever since he joined the Los Angeles Angels six years ago, Ohtani has redefined baseball, able to stamp his authority on a game from either the pitcher’s mound or batter’s box, though he will not pitch again until 2025 after undergoing elbow surgery and will only serve as a designated hitter in 2024.
With the Dodgers, one of the sport’s most famous and successful franchises who have won 10 of the last 11 division titles in the National League West, Ohtani’s stardom will surely stretch even further as it intersects with the LA team’s own brand and the expectation that he and the team will likely make deep postseason runs.
Last year, Ohtani became the first player to finish in the top-15 in both home runs hit and strikeouts pitched in a season since the mound was moved to its current distance in 1893.
His record-breaking achievements are now matched by a contract of such value that it easily eclipsed the previously best paid player, Mike Trout, who agreed to a $426.5 million extension over 12 years with the Angels in 2019.
Ohtani’s deal is almost double the league’s next largest free agent deal that Aaron Judge reached with the New York Yankees – nine years and $360 million – in 2023.
“Shohei is a once-in-a-generation talent and one of the most exciting professional athletes in the world,” said Dodgers chairman Mark Walter on Monday as he congratulated the 29-year-old Japanese star on his “historic” contract.
However, Ohtani will defer more than 97% of his $700 million, record-setting contract with the Los Angeles Dodgers until after the end of the 10-year term of the agreement, a source familiar with the terms of the deal told CNN on Monday.
The two-time American League MVP will defer $68 million of his $70 million dollars each year, according to the source. The remaining $680 million will be paid to Ohtani beginning after the 2033 MLB season.
“The concept of the extreme deferrals in this contract came from Shohei himself,” the source told CNN. “He had been educated on the implications and process of deferrals and felt it was the right thing to do. So when negotiations were getting near the level where they ended up, Shohei decided he wanted to defer almost all of his salary.”
Meanwhile, MLB Network Insider Mark Feinsand said Ohtani’s decision helped LA chase after more talent to surround the two-time MVP.
“Ohtani wanted to mitigate the CBT (competitive balance tax) and cash-flow burdens to let the Dodgers have flexibility to be competitive,” said Feinsand.
Backloading the contract will also reduce Ohtani’s personal tax liability, as reported by The Wall Street Journal.
While playing home games in California — a state with very high income tax rates — Ohtani will only be making $2 million a year. Players also pay taxes on road games played elsewhere.
After that — when he will get the rest of his $680 million in pay — Ohtani would be free to live in a state with a lower tax burden, or perhaps one like Florida with no income tax, or in Japan.
But, even with the caveats surrounding the deferral, the deal is one that seals Ohtani as a transcendent star of the sport.
His contract alone is worth 70% of the Miami Marlins’ total estimated value, according to Forbes, highlighting the increased value of an individual in a league that has a dearth of nationally popular, marquee stars.
Alongside his ability on the field, Ohtani will arrive at the Dodgers armed with commercial clout both in the US and in his native Japan, earning at least $35 million in endorsement earnings last year, Forbes estimated, considerably higher than the second biggest total of $6.5 million earned by Bryce Harper in 2022.
Ohtani’s record-breaking deal has drawn a frenzied reaction from across the world of American sport and in Japan, too, after a fraught free agency period in which his every move was scrutinized.
“Bro like what!” said Kansas City Chiefs quarterback Patrick Mahomes, whose $450million contract over 10 years is the most expensive in the NFL, according to Spotrac. “Congrats to him!”
“700M’s is crazy!! [sic] And he deserves every Penny of that too! Sheesh,” the Cleveland Cavaliers’ Donovan Mitchell posted on X, formerly Twitter.
Meanwhile, news of Ohtani’s contract decorated the front pages of newspapers in his native Japan, with social media awash with good wishes.
“I feel joy and pride that such a superman is Japanese. He is a supernatural being in the flesh, bringing us light from faraway space, and I am happy to see a person who appears once every 100 years or more in my lifetime,” one fan wrote on X.
Another user wrote: “A moment that made me feel glad to be alive. I never thought this day would really come.”
Meanwhile, Japan’s Chief Cabinet Secretary Yoshimasa Hayashi pointed out that the Dodgers have had many Japanese players in the past. “I hope that Otani will continue to perform well in his new team,” said Hayashi.
Ohtani’s continued ability to generate interest in baseball comes at a time when the TV ratings for “America’s pastime” are faltering.
This year’s World Series drew the smallest ever TV audience, averaging 9.11 million viewers, according to widely-reported figures released by Nielsen and Fox, a decline of 23% from last year’s series which averaged 11.78 million.
Baseball placed third in a recent Washington Post survey which asked Americans about their favorite sport to watch, coming in at 9% behind football (34%) and basketball (12%), a steep drop from the 30% of Americans in the mid-20th century who said it was their preferred sport.
CNN’s Matt Egan, Hanako Montgomery and Junko Ogura contributed reporting.