Could the Mariners take advantage of the Shohei Ohtani contract structure?
By Tanner Vogt
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On Monday, an astonishing story came out that Ohtani will defer $68 million dollars of his annual $70 million dollar contract. This is unprecidented in the game of baseball, we have never seen anything like this. This is a huge advantage for the Dodgers that will allow them to stay under the Competitive Balance Tax and spend more money on the roster without severe tax implications.
Shohei Ohtani's $700 million contract calls for him to be paid only $2 million a year for the next 10 seasons, with $680 million deferred until the end of the deal, sources confirm to ESPN.
— Jeff Passan (@JeffPassan) December 11, 2023
The CBT hit on the contract is going to be around $46 million, a huge discount for L.A.
This is a pretty confusing situation on a contract because, again, we have never seen this before. From my understanding and the way Jon Becker of Fangraphs explains it, even though Ohtani's AAV is $70 million, and his annual salary will only be $2 million with the deferment, they still add a portion of the deferred money to the current salary for the Competitive Balance Tax hit. I would highly recommend reading some of his stuff to get a better understanding of this very unique contract.
So it's $68M deferred by ten years for each year of the deal. The CBA calls for a 5% interest rate, meaning:
— Jon Becker (@jonbecker_) December 11, 2023
•The present value of each $68M is $41,746,101.24. Add that to the $2M, and, the PV/CBT hit of each year is ~$43.7M.
•The present value of the whole deal is ~$437.5M https://t.co/s8nRsI8GC4
Could the Mariners use this same structure to sign hometown pitcher Blake Snell?
With the reports of budget issues, the Mariners will need to get very creative this offseason. So how about structuring a contract for Blake Snell in a way we haven't seen until now? They wouldn't be able to get his tax hit down into the single digits most likely, but they could very well get it down to the $12 to $15M range, which might be doable for them. Ultimately, I don't think the Mariners would structure a contract that way, as all of that money comes due at some point and I just don't see John Stanton being the type to kick money down the road like that, knowing there will be some pretty big CBT numbers coming up later.
As I said earlier, this is completely unprecedented in this sport, but it makes me wonder if we could see players do it more often? They won't be getting the same annual salary that you expect when you see a contract like that, but if someone knows that they have enough off the field money coming in, it might be something that isn't a bad idea. It doesn't seem fair, as a team like the Dodgers just gets even more money to play around with and build a super team.