Baseball provided sports fans with big news over the past several days. The biggest – – and most surprising – – news was the contract that Shohei Ohtani signed with the LA Dodgers. All the details of that contract have not been revealed yet but what we do know is stunning:
- The total value of the contract is $700M over 10 years.
- Remember, all MLB contracts are fully guaranteed save for outrageous circumstances such as suspensions or moral turpitude or … you get the idea.
- According to reports, there are no “outs” in the contract for either party. Ohtani will not be able to get another shot at free agency for a decade and the Dodgers have him signed up for that same period even if his arm falls off.
- According to reports, a “significant portion” of the contract consists of deferred payments. That means Ohtani will not receive $70M every year for the next 10 years. The amounts and the timing of the deferrals have not been reported yet, but this is an advantage for the Dodgers as a team because it reduces the “luxury tax” burden. [Aside: Reports also say that the Dodgers’ contracts with Mookie Betts and Freddie Freeman also have “significant amounts” of deferred money.]
Ohtani will not be able to pitch next season due to elbow surgery that he had recently so on one hand, the Dodgers will not have his unique “two-way skills” on the team for the first 10 percent of the deal. Nonetheless, Ohtani should provide significant value with his bat. Even with a truncated season as a pitcher last year, Ohtani won the MVP award (for the second time) with these stats:
- Batting average = .304
- OPS = 1.066 (best in the AL)
- HR = 44 (best in the AL)
- RBI = 95
The Dodgers along with Ohtani and Dodgers’ fans all feel like winners about now. I do think there is a loser in all this, and I don’t mean one of the other teams who were hoping to sign Shohei Ohtani. I think Mike Trout is a loser here. Other than Trout, quick – – name an All-Star on the Angels’ roster. I have no idea if the Angels are loaded with hot prospects in their minor league system; I do not follow West Coast minor league baseball at all. However, if the Angels are not on the verge of fielding a bunch of guys ready to explode onto the scene, Mike Trout will play on a team with little to no hope of making the playoffs any time soon. The Angels finished 2023 with a record of 73-89 which put them 17 games behind the Astros in the AL West. The only reason they did not finish dead last is because the Oakland A’s are in the same division and are even more bereft of talent.
Mike Trout is a great player who will be in the Hall of Fame one of these days. However, his contract with the Angels runs through 2030, so he may play out those days with a sad sack roster around him.
Another possible group of “losers” based on this contract agreement might be any MLB owners seeking to sell their teams about now. Remember, the Angels were on the market until owner Arte Moreno could not get any bids in the neighborhood of what he wanted for the team. The same situation existed in Washington when the Lerner family could not scare up any bids close enough to their asking price for the franchise. Now, potential franchise buyers will need to project future salary figures that were probably outside the range of consideration 6 months ago.
And if you think that is a “Chicken Little interpretation”, consider the other major MLB story from late last week. The Padres traded away Juan Soto to the Yankees for a bunch of young pitching prospects and some serious baseball writers have attributed the Padres’ motivation for making that trade to “liquidity issues” with Padres’ ownership. One report said that the team had to take out a short-term loan last year to meet payroll; the Soto trade is widely referred to as “salary slashing” by the Padres. Soto is entering his “arbitration years” and will surely earn $20-25M next year in arbitration before he too enters the free agency marketplace at the end of the 2024 season. [Aside: I saw one report saying that Soto could get as much as $32M in arbitration this season and then negotiate from that number as an unrestricted free agent next winter.]
Now the baseball signing focus can settle on 25-year-old Yoshinobu Yamamoto who has excelled in the Japanese Pacific League for the last several years and is the winner of that league’s MVP Award in each of the last 3 seasons. Yamamoto is a starting pitcher who went 16-6 last year with an ERA of 1.16. Over a career of 7 seasons in Japan, Yamamoto has logged 967.2 innings and a career ERA of 1.72. Who wants to start the bidding at 10 years and $350M?
Finally, since today has been about lots of money, let me close with three observations about money:
“When it comes to the question of money, everyone is of the same religion.” [Voltaire]
And …
“Those who have some means think that the most important thing in the world is love. The poor know that it is money.” [Gerald Brenan]
And …
“Money cannot buy health, but I’d settle for a diamond-studded wheelchair.” [Dorothy Parker]
But don’t get me wrong, I love sports………