Ohtani Thread - Special Sheriff's Edition (Update: confirmed going to the Dodgers)

[connorp]

The structure is first and foremost about luxury cap evasion. Is this a 'true' $700M contract? Obviously not. We don't know the terms of the escrow, but it's quite possible this is more equivalent to a US$500M - $550M contract if they're paying $2M and putting $48M in escrow. It's also not clear who would get the interest on an escrow account - some seem to assume the Dodgers will, but we don't know.

 

Did the Dodgers pay less than the Jays were probably offering? I don't think it's unreasonable to assume so. But is this 'free' money to the Dodgers like some are claiming? Definitely not.

 

The interest is going towards paying him. $45m now to pay him the larger amount later.

[Olerud363]

This is basically all it is!

 

The rest of it is all accounting fluff. It's not a luxury tax dodge or anything.

 

It's equivalent to him buying U.S. treasury bonds with his money.

 

If interest rates go down this is a great deal for Ohtani, if interest rates go up a bad deal.

 

I wonder if he could sell his future earnings to a hedge fund? Like if the Dodgers owe him 700 million paid out from 2034 to 2044, can he sell it for 300 million dollar lump sum or something? Like a bond.

[G-Snarls]

Things I didn't know until just now

 

Ohtani was working on similar structure with other teams in his negotiations with them. Jays included.

 

Ohtani makes 40-50M a year in endorsements right now so he doesn't have to scrape by on a measly 2M a year

[connorp]

This logic stops mattering when you are so high above the marginal income tax brackets

 

His effective tax rate is near the top marginal rate whether he makes $25M or $70M

 

$600k triggers the highest Fed tax rate of 37%

[Marew]

Next we will see league min contracts and players taking payment through their corporation as “other services” where they can retain income and avoid luxury tax all together

[Laika]

Can't wait for MLB salaries and contracts to become a ponzi that is directly tied to a bunch of shady US hedge funds!

 

fun!

[burlingtonbandit]

It's kind of like an RRSP. Ohtani is earning a lot of $$ in endorsements, which will diminish as his playing days wind down. Then he starts getting deferred payments. Spread the taxable income out.

 

Well since he's going to be in the highest tax rate no matter what it doesn't really work like an RRSP. He's going to be making more than 250K or whatever amount the highest rate kicks in at for the rest of his life. If he changes his primary residence to a low tax place when his big money kicks in, thats the real saver.

 

I wonder if a player can set up a Corporation and the team pays into a corporation instead, because there are big tax savings for that kind of set up as well.

[connorp]

Well since he's going to be in the highest tax rate no matter what it doesn't really work like an RRSP. He's going to be making more than 250K or whatever amount the highest rate kicks in at for the rest of his life. If he changes his primary residence to a low tax place when his big money kicks in, thats the real saver.

 

I wonder if a player can set up a Corporation and the team pays into a corporation instead, because there are big tax savings for that kind of set up as well.

 

I don’t believe you can skirt the paycheck thing to make deductions. And if you could call yourself an independent contractor and do sketchy accounting, I think that would be the norm

[burlingtonbandit]

I don’t believe you can skirt the paycheck thing to make deductions. And if you could call yourself an independent contractor and do sketchy accounting, I think that would be the norm

 

Yeah I think salaries are all paid personally. But for a player's endorsements they can set up a corp. and get paid into that. And then through that they can pay out family members, friends etc.. while deducting their salaries from the income, which is another tax saving measure. And then he sets up a "foundation" which is another way to save in taxes.

 

The funny part is there is all this attention is on the player, yet teams have been avoiding tax with smart accounting for decades.

[Olerud363]

Can't wait for MLB salaries and contracts to become a ponzi that is directly tied to a bunch of shady US hedge funds!

 

fun!

 

This is basically bond trading. I assume each year they have to put away the 'present day' value of the deferred part. So at 5% interest rate environment it would be 45 million or so. If interest rates collapse it could be much more... if interest rates go up much less.

 

No big deal for LA Dodgers. But if KC Royals do this with Bobby Witt Jrs 575 million dollar contract they might get into issues if there is unexpected interest rate swings.

[Jimcanuck]

This logic stops mattering when you are so high above the marginal income tax brackets

 

His effective tax rate is near the top marginal rate whether he makes $25M or $70M

 

Yes i thought of that, depends on the jurisdiction. There may or may not be advantages to spreading the income out.

[BTS]

Not that MLB or the PA will care, but overly complex contracts and luxury taxes might be bad for fan engagement. A big part of NHL fan discourse is discussion about the cap, with cap hits readily available and mostly easy to calculate.

[connorp]

Not that MLB or the PA will care, but overly complex contracts and luxury taxes might be bad for fan engagement. A big part of NHL fan discourse is discussion about the cap, with cap hits readily available and mostly easy to calculate.

 

The NFL is the head honcho, NBA behind them. Both have confusing as s*** salary caps

[Dick_Pole]

We can all be rightfully pissed as the scam artistry behind this deal, but it won't have wide-ranging implications for MLB. No other player is going to agree to such an extreme deal. Ohtani is the unique combination of asexual hermit hobo lifestyle and sponsorships out the wazoo. He doesn't need the cash. He'll probably end up donating his deferred salary to a dog shelter or something once he gets it. Every other player needs to fund their lifestyle of having a wife and two girlfriends today.

[Marew]

Ohtani would make a great first openly out player ambassador. Brings in a whole new fan base too. I personally support that whole movement and it’s a shame some of these players have to live in secrecy.

[Stangstag]

Ohtani would make a great first openly out player ambassador. Brings in a whole new fan base too. I personally support that whole movement and it’s a shame some of these players have to live in secrecy.

 

I wouldn't be totally surprised if it turned out he was gay. Or bi. I mean we already know he goes both ways on the field...

[TheHurl]

I couldn't make it through all the misinformation to see if the correct info is here yet but my accounting degree at Fighting with people in TikTok comments U has led me to some research.

 

1. Dodgers must show proof every year that payments are made to a legal annuity (call this the Madoff rule), which would likely be Guggenheim. So they will pay $48M, or whatever that number was, every year of the contract. Essentially the deal is 10 years @ $50M per or so for them. thus this is their cap hit.

 

there are currently 75 players receiving deferred money in the MLB.

 

2. For Ohtani he chose to get his deferred payments over 10 years likely because of this U.S. tax law.

 

Residence can affect overall tax status

Your federal tax obligations for deferred compensation will be the same regardless of where you live when you receive the money. However, where you live could have a significant impact on your state tax liability—if your payments are structured the right way.

 

"Generally, deferred compensation is taxable in the state where the employee worked and earned the compensation, regardless of whether the employee moves after retirement," says David Walters of Palisades Hudson Financial Group in Portland, Oregon.

 

"However, if the employee has elected to take the deferred compensation payments over a period of 10 years or more, the deferred compensation payments are taxed in the state of residence when the payments are made." This can make a big difference if you move to a state that has no state income tax, such as Florida, Washington or Nevada, or at least to one with a lower income tax than where you earned the money. source https://turbotax.intuit.com/tax-tips/tax-payments/strategies-for-managing-your-tax-bill-on-deferred-compensation/L83l5ousH

 

some misinformation I have read. He will still pay the larger portion of tax which is Federal Tax. Moving only avoids state tax (I read $4.7M per year but have not verified this). He cannot move back to Japan to avoid this. He would have to have residency in another state. As I believe Dick said, his agents know how to work around this.

 

The jays could do this. However there would be zero tax advantage to the player as our laws state that you pay your taxes based on where the income was earned.

[Dick_Pole]

Dude is totally asexual. You alphabet people already have enough ambassadors pushing your various "agendas". Let the monks, eunuchs and chemically castrated have someone rep them for once. Society is always about pushing family and kids and love or hooking up. Let some rich dude be happy being a hermit with his pets and video games. I bet Ohtani doesn't even know how to jerk off.

[wilko]

Dude is totally asexual. You alphabet people already have enough ambassadors pushing your various "agendas". Let the monks, eunuchs and chemically castrated have someone rep them for once. Society is always about pushing family and kids and love or hooking up. Let some rich dude be happy being a hermit with his pets and video games. I bet Ohtani doesn't even know how to jerk off.

 

He uses one of those weird AI Japanese sex dolls that preform oral automatically. I'm assuming the pets watch.

[Marew]

I’ve seen the verlander nudes but honestly would pay a couple bucks to see the ohtani ones. The verlander ones were free and can be found with minimal digging online

[Dick_Pole]

He uses one of those weird AI Japanese sex dolls that preform oral automatically. I'm assuming the pets watch.

 

True. I wouldn't classify it as a doll though. Too human-like. With Ohtani it's more likely going to be in the image of a car or something. Nothing bipedal or the image of a living creature.

[max silver]

True. I wouldn't classify it as a doll though. Too human-like. With Ohtani it's more likely going to be in the image of a car or something. Nothing bipedal or the image of a living creature.

 

This thread has certainly taken an interesting turn.

[Omar]

This thread has certainly taken an interesting turn.

 

Sex dolls and chemical castration.

 

Come on mods...shut this mother down.

[Jimcanuck]

This thread has certainly taken an interesting turn.

 

Sour grapes was always going to end up like this.

[Terminator]

So the 700M number is BS. It’s 10 for 460. We could have spanked that deal if Rogers wanted to. Edited December 12, 2023 by Terminator

[JaysAllMighty]

So the 700M number is BS. It’s 10 for 460. We could have spanked that deal if Rogers wanted to.

 

Othani wanted no part of Toronto, just used them as leverage. f*** him.

[Laika]

It's just business, baby. Relax.

[JaysAllMighty]

It's just business, baby. Relax.

 

Thanks, I'm 70 and very relaxed. I never cared about having Othani, too close to being a bust with his injuries and we saw our share of players like that.

[Terminator]

Othani wanted no part of Toronto, just used them as leverage. f*** him.

 

Nope, we didn’t we offer him enough. 10 for 460 was beatable and Rogers didn’t do it.

[Frenchsoup]

Jays Braves World Series lets go.....