Show Me the Money… Only Later
The big free agent sweepstakes of the MLB offseason was Shoei Ohtani. While only a handful of teams were realistically a possible destination, everyone was waiting with anticipation of where he would sign. The last couple days were wild with all kinds of reports, one even going so far as to track a plane to Toronto that was believed to be Ohtani’s plane – it wasn’t. In the end the Dodgers offered the most, and that was the favorite to land him in the first place.
But several other story lines have emerged, that may be even more intriguing than “Where is he going to sign?”
First, some are saying the Dodgers are ruining baseball. With this offseason embarrassment of riches. I understand where they are coming from, but those people are forgetting the Yankees basically spent like this in the late 90’s and early 2000’s to supplement the already incredible core they had from their farm system. Only won 1 WS in 2009, after a lot of those high paid free agents they had signed had moved on to other places. Spending does not equal winning. It never has in baseball. Yes, it makes it a lot more likely your team will win over the long season and be in the playoffs, but history has shown that the playoffs are a different animal, being more about who is peaking at the right time, rather than who had the best regular season. That is one of the great things to me about being a fan of baseball, even when you try to stack the deck, it is still baseball, and you still have to play the games.
Second, signing Ohtani and Yamamoto virtually assures the entire nation of Japan will be watching the Dodgers. They will make back the money they spent on those two guys 10-fold, maybe more. That’s why they were willing to pay. The fans over there have already been relentlessly buying Dodger gear. Between apparel sales, TV and radio contracts – and the AD revenue that comes from those media deals – the dodgers will have no problem recouping what they’ve spent.
Third, the Dodgers set themselves up for this. They were very conservative the last couple of years in free agency, not siging too many guys for too much money so that they could get under the luxury tax threshold to reset the benchmarks and start anew. They even let a few guys walk like Bellinger, Seager, Trea Turner, that they probably could have kept, so that they would accomplish the goal of getting under the tax threshold, and have the room to sign Ohtani to this record breaking deal. Ohtani promptly returned the favor by negotiating the deal he did.
Lastly, his contract was unlike any other we have seen, Bobby Bonilla’s Mets contract to the 100th power! He deferred the vast majority of his yearly salary to AFTER the contract is up. Initially it was thought he was doing this to help the team be able to sign Yamamoto and Glasnow, and others, and that may be his real reason. However, some, like a few members of the California state government, think he did it to avoid paying taxes on most of that money. In fact, Ohtani has already been sued by a legislator to force him to pay taxes on that money. It seems like a very uphill battle, you can’t tax unrealized money, his agent/lawyers are shrewd and were able to craft this utilizing the language of the tax code, and there are no laws or ordinances directly prohibiting this kind of a contract. Baseball also has special protections afforded it by the US Congress and the US Supreme Court. Even if California passed a law today to prevent this, as a result of a legal doctrine called “ex post facto”, it may not be able to cover this particular contract as it has already been entered into. It will be very interesting to see how this plays out and how far it gets in the courts.
While there is much controversy surrounding Ohtani’s new deal with L.A. there is one thing for certain Dodger fans everywhere can’t hardly wait for this season to begin. Pitchers and Catchers report soon, and that day can’t come soon enough.
Article submitted by Scott Carter