NEW YORK (AP) — Shohei Ohtani will receive just $20 million of his $700 million contract with the Los Angeles Dodgers over the next 10 years, with $680 million payable from 2034-43.
Ohtani’s deal, agreed to Saturday, calls for annual salaries of $70 million, according to details obtained by The Associated Press. Of each year’s salary, $68 million is deferred with no interest, payable in equal installments each July 1 from 2034-43.
For purposes of the luxury tax, the contract is valued as a yearly addition to the Dodgers’ payroll of about $46 million. Under the collective bargaining agreement, for the calculation of a team’s tax payroll the value of deferred money is discounted at the federal mid-term rate. For all agreements this offseason, the discounting will be at the October 2023 rate of 4.43%.
Shohei Ohtani #17 of the Los Angeles Angels celebrates with teammates after hitting a home run during the fourth inning of game two of a doubleheader at Comerica Park on July 27, 2023 in Detroit, Michigan. (Photo by Duane Burleson/Getty Images)
Ohtani’s contract, combined with those of Mookie Betts and Freddie Freeman, raises the Dodgers’ total of deferred money owed to the three to $857 million from 2033-44.
Betts has a $365 million deal covering 2021-32 that includes $115 million in deferred salaries payable from 2033-44 and has the final $5 million of his signing bonus payable from 2033-35.
Freeman has a $162 million, six-year deal for 2022-27 that includes $57 million in deferred money payable from 2028-40.
Los Angeles’ high points of the deferred payments are 2038 and ’39, when the trio will be owed $83 million, and 2040, when they will be due $84 million.
By receiving the vast majority of the money when he presumably will not be living in the United States, Ohtani also figures to have a tax benefit. California’s top tax rate for residents is 13.3%.