New Los Angeles Dodgers star Shohei Ohtani is doing everything possible to put his team in position to win despite inking a record-breaking 10-year, $700 million contract.
We knew that Ohtani’s deal called for a nice amount of deferrals in order to help the Dodgers continue building a championship-caliber roster.
We now have more information on this via Fabian Ardaya of The Athletic. The MLB insider reports that $68 million of his $70 million-per-year salary is being deferred until his contract is up. This means that Ohtani will be counting $2 million per season against the Dodgers’ payroll. It also means that he’ll be paid $68 million per year from 2034-2043.
“The previously unreported deferrals were said to be suggested by Ohtani himself as the negotiations vaulted the figure towards $700 million, the person briefed on the terms told The Athletic. The deal is expected to soon be finalized,” report on Shohei Ohtani’s contract.
Related: Shohei Ohtani and MLB’s highest-paid players
Shohei Ohtani gets huge tax break in new Los Angeles Dodgers contract
While Ohtani’s unique contract allows the Dodgers to improve their already deep roster even more, there is an added incentive in the deferments for him personally. By filling his contract with payments a decade from now he avoids owing a huge amount of taxes on the $70 million per year average he would have earned in a standard MLB contract.
When those deferrals are paid out starting in 2034, he will be responsible for paying the tax rates for whatever locale he lives in at the time. So if he is living in a state with no income tax or abroad, he will end up saving millions in taxes. California currently has the highest income tax rate in the United States at 13.3%.
@timjsinclair How is #shohei #ohtani saving MILLIONS in taxes on his new contract. #baseball #mlb #dodgers #losangeles ♬ original sound – Timjsinclair
Despite signing Ohtani to the richest contract in MLB history, the Dodgers are still expected to be active on both the free agent and trade blocks. A recent report indicates that Los Angeles will likely add two starting pitchers to the mix. They are in on Japanese sensation Yoshinobu Yamamoto as well as reigning National League Cy Young winner Blake Snell, among others.
Los Angeles does have a major need in the starting rotation with free agent Clayton Kershaw expected to miss a good portion of the 2024 season after undergoing shoulder surgery. Lance Lynn signed with the St. Louis Cardinals. Meanwhile, Julio Urias is a free agent and is not expected to be back due to off-field issues.
Inking Ohtani to a record-breaking contract sets the Dodgers up well when it comes to their lineup. The two-way star joins Mookie Betts and Freddie Freeman in forming one of the best trios of his hitters in the same lineup in modern MLB history.
However, Shohei Ohtani is not going to pitch this upcoming season after undergoing elbow surgery. That makes it a necessity for Los Angeles to add multiple starters moving forward this winter.