SHOHEI WILL ADORE HIS NEW L.A. LIFE, BUT HE WON’T PAY $680 MILLION IN TAXES
Salary deferrals can’t be banned by Major League Baseball or double-checked by California Gov. Gavin Newsom, which means the Los Angeles Dodgers have more flexibility to win championships with Ohtani
The anime shakes on your computer screen, with Shohei Ohtani hitting a home run and shouting in Japanese, manufacturing red-and-yellow vigor highlighted by enormously glowing white eyeballs. His new boys, the Los Angeles Dodgers, sent a spectacular version of manga to season-ticket possibilities everywhere.
They also let us know about an atypical way of paying him $700 million. He will enjoy the sunshine and perform in baseball’s most pleasurable ballpark, yet Ohtani won’t be paying California taxes for almost all of his massive fortune: $680 million. His wish is to accept only $2 million each season for the next 10 years, giving the Dodgers a wealth of payroll stretchability while he avoids paying the state’s heavy tax rate — 13.3 percent — when living elsewhere between 2034 and 2043.
Don’t worry for Ohtani. He doesn’t have to rent an apartment in Echo Park or lease a Kia. He makes about $50 million a year in endorsements and already has pocketed six seasons of big-league earnings, so he can conduct life royally. What’s fascinating is that he can love the region and benefit from his Hollywood baseball perks yet won’t pay much to help, say, a homelessness crisis.
The state governor, Gavin Newsom, would be roasted for this lapse in a debate with Ron DeSantis. For all we know, politicians may require Ohtani to pay up later. But the baseball commissioner, Rob Manfred, can’t challenge or ban the deferrals thanks to Article XVI of the collective bargaining agreement — “There shall be no limitations on either the amount of deferred compensation or the percentage of total compensation,” it reads. In the end, yes, the Dodgers will pay him $680 million with no interest, on July 1 of those 10 distant years. But at present, the luxury-tax figure is about $46 million, with current discounting of 4.43 percent.
Suddenly, the $700 million might be a bargain for the Dodgers, a boon for front-office chief Andrew Friedman, a joy for October-battered local fans … and a crime to his home state. It was Ohtani’s wish to save a monstrous tax bill but to create easier maneuvering for management, which continues to seek another Japanese pitching ace, Yoshinobu Yamamoto, along with Tampa Bay’s Tyler Glasnow. The Dodgers already have Mookie Betts, Freddie Freeman and Ohtani creating dreams atop the batting order. Now they’re capable of putting together an all-time club.
“Dodger fans, thank you for welcoming me to your team. I can say 100 percent that you, the Dodger organization and I share the same goal — to bring World Series parades to the streets of Los Angeles,” Ohtani said in a statement that will make local fans hyperventilate until his news conference.
He means it, rather than slipping away with $70 million a year, as many athletes eagerly would have done in his spot. Said agent Nez Balelo: “He is excited to begin this partnership, and he structured his contract to reflect a true commitment from both sides to long-term success.”
By 2043, Elon Musk can’t project the world’s potential economic condition. By then, $700 million might seem a middling figure. Ohtani will lose out on making money from his own salary and, we should hope, he’ll still be alive and well. Let’s assume he won’t be the next Bobby Bonilla, who received a compensation deal from the New York Mets in 2000 that will keep shipping him $1.2 million a year through 2035. Wrote Steve Phillips, the general manager who approved that deal: “I want to clarify reports that the @Dodgers consulted with me before giving all of the deferred comp to Shohei Ohtani. They did not. But I am sure glad they did, because it takes me off the hook for Bobby Bonilla. July 1, 2024 just got way better for me.”
The beauty of watching Ohtani is knowing money isn’t his weigh station. Sports superstars aren’t even certain the cosmic axis will function in 20 years and would maximize their annual $70 million. In 2038, the Dodgers will owe $83 million to Ohtani, Betts and Freeman and keep paying around that amount through 2040. All three will be blessed in Cooperstown by then. This is Ohtani’s way of proving how passionate he is to win in Los Angeles.
“On behalf of the L.A. Dodgers and our fans everywhere, we welcome Shohei Ohtani to the Dodgers, the home of Jackie Robinson, Sandy Koufax and Hideo Nomo, three of the sport’s most legendary and pathbreaking players,” Dodgers chairman Mark Walter said. “We congratulate him on his historic contract with our storied franchise. Shohei is a once-in-a-generation talent and one of the most exciting professional athletes in the world. Our players, staff, management and ownership look forward to working together with Shohei to help the Dodgers continue to add, improve and strive for excellence on the field. Together with Shohei, we will work to help grow the number and breadth of people around the world who enjoy the excitement of Major League Baseball.”
It’s easier to be Walter today than it was Saturday, when the $700 million figure was announced without knowledge of deferrals. Seems Ohtani’s luxury-tax figure isn’t much higher than Aaron Judge, who assumes a $40 million charge to the New York Yankees’ payroll. With Juan Soto in the same camp for at least a season, there are hopes the Yankees and Dodgers will meet in a World Series that might attract an audience. Fifteen million, you might say.
The Yankees are acting like the Yankees again. “The future is always now,” general manager Brian Cashman said.
And the Dodgers are acting like the sport’s mightiest money-makers. Forget the nonsense about baseball returning to the American roll call because of the Ohtani jackpot. What we have are two ultra franchises, in Los Angeles and New York, positioned to rule a sport without a hard salary cap. It’s time they win, with the Dodgers on a 1-for-35 streak and the Yankees doing nothing since 2009.
I just wonder how The Sho will react when The Show — $68 million — pops in every summer starting at 40. He should have enough to change the anime.
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Jay Mariotti, called “without question the most impacting Chicago sportswriter of the past quarter-century,’’ writes general sports columns for Substack while appearing on some of the 1,678,498 podcasts and shows in production today. He is an accomplished columnist, TV panelist and talk/podcast host. Living in Los Angeles, he gravitated by osmosis to film projects.