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

[Olerud363]

That sounds about right. People are assuming this is free money up-front for the Dodgers, but if you're Ohtani you take zero chances on non-payment, as unlikely a scenario as that may be. You want your money sitting and waiting for you in a protected account.

 

Sadly, this structure is all about luxury cap evasion. It's ********!

 

They don't have to put 68 million away. I don't even know if they really have to put 45 million away (if they buy a 10 year U.S. treasury bond for 45 million they get 68 million in 2034).

 

It's not about luxury cap evasion.

 

It can't be true the Dodgers have to put 68 million away**. If they buy 10 year bonds they'll have 100 million in 2034.

 

It might be true that Dodgers have to put 45 million away. If so then for some reason Ohtani wants the Dodgers to invest his money in safe U.S. treasuries instead of just getting the money now. Maybe for tax purposes.

 

Or maybe Ohtani thinks the U.S. will default and demanded the Dodgers put the full 68 million in cash in a safe for him?

[connorp]

Actually the worry could be if WW3 breaks out and there’s a temporary hold on mlb baseball, Ohtani’s money would still be there without courts. I read it from a legit source but I’ll look again

[Olerud363]

Or maybe Ohtani thinks the U.S. will default and demanded the Dodgers put the full 68 million in cash in a safe for him?

 

If this is the case Ohtani for sure is an idiot. If US defaults on their debt then all hell breaks lose and when that happens for gods sakes, Toronto will be a much safer and nicer place to be than LA.

 

And also Ohtani should demand the 68 million be put into a combination of gold, bitcoin, cash, treasuries, stocks, real estate, if he really is concerned about getting value back in 2034... well essentially he should let the LA Dodgers hedge fund manage it with a risk profile that reflects his world view.

[connorp]

Where did you read that?

 

It can be an interest bearing escrow account.

 

$68M compounded 5% annually for 10 years is like $111M haha.

 

Yeah I’m sure it would be an interest bearing account, but they still have to pay out the cash for it each year. It’s not the most lucrative way to invest that much money each year.

[connorp]

Ah yes, so present day value amount in escrow, which with interest with guarantee his money in 2034 and beyond. That makes sense

[Olerud363]

Actually the worry could be if WW3 breaks out and there’s a temporary hold on mlb baseball, Ohtani’s money would still be there without courts. I read it from a legit source but I’ll look again

 

Yeah. Sort of what I was getting at. Like if you trust that the U.S. won't default, then the most you need to put away is 45 million... if Ohtani is worried about edge case scenarios, then Toronto should have been the choice. Not really kidding about that. Would you rather be in LA or Toronto when WW3 or some other weird s*** hits?

[burlingtonbandit]

Structuring a contract to save on taxes is nothing new the Leafs did it with Matthews. Almost all of his money is paid upon signing bonus so that technically is taxed where his primary residence is (Arizona, which is a non income tax state) where as his base salary is taxed where he plays. Also if there is a lockout he still gets the $ as its a signing bonus.

 

Its different than such a heavy deferral payment contract but still huge tax savings in the end.

[connorp]

Per ESPN where I read it:

 

The collective bargaining agreement does not place a limit on the amount of money that can be deferred, but teams have to set aside the present-day value of the deferred money -- in Ohtani's case, around $44 million in cash each year -- in an escrow account.

[burlingtonbandit]

Yeah. Sort of what I was getting at. Like if you trust that the U.S. won't default, then the most you need to put away is 45 million... if Ohtani is worried about edge case scenarios, then Toronto should have been the choice. Not really kidding about that. Would you rather be in LA or Toronto when WW3 or some other weird s*** hits?

 

Lol is this a joke? He's not going to pick where he wants to play baseball for the next 10 years based on some tiny chance of a world catastrophe lol. I'd rather live in LA than Toronto anyways and I've lived in TO for 7 years.

[Laika]

Per ESPN where I read it:

 

The collective bargaining agreement does not place a limit on the amount of money that can be deferred, but teams have to set aside the present-day value of the deferred money -- in Ohtani's case, around $44 million in cash each year -- in an escrow account.

 

Alright

 

So at the end of the day it's basically a 10/$440 contract for Ohtani

 

Real close to what most pundits expected going into the offseason

 

The $700M figure is just for advertising.

[connorp]

From Ohtani, seems to be a pure Tom Brady move, while still getting mega money at the end.

Dodgers have to lay out $45m each year still, into a non-lucrative return.

LAD has the track record of winning where they could be trusted in what Ohtani wanted to do.

 

We probably weren’t as close as people thought. We just got used to inflate the numbers

[Olerud363]

Per ESPN where I read it:

 

The collective bargaining agreement does not place a limit on the amount of money that can be deferred, but teams have to set aside the present-day value of the deferred money -- in Ohtani's case, around $44 million in cash each year -- in an escrow account.

 

 

That clears up a lot

 

1. It's a 10 year 450 million dollar (or so) Contract

2. Luxury tax hit will be 45 million dollars a year.

3. Ohtani (for his own reasons) prefers the Dodgers set aside the 45 million dollars in a safe interest accruing investment.

4. I assume above has to be U.S. treasuries or aaa graded investment bonds? (you can't just put your 45 million into your 5% CIBC savings account, well maybe you can, but there is no guarantee you get 5% even early next year).

5. Ohtani is not protected against U.S. default or WW3. He should have came to Toronto where they would bought him a private plane stationed at Billy Bishop airport (short Helicopter ride from Rogers Center) which would be ready to fly to Yellowknife if an edge case scenario arose.

[Olerud363]

Lol is this a joke? He's not going to pick where he wants to play baseball for the next 10 years based on some tiny chance of a world catastrophe lol. I'd rather live in LA than Toronto anyways and I've lived in TO for 7 years.

 

It's half a joke. The rich guys, like the real rich hedge fund and tech guys, put significant effort into planning for this. Though most have an escape plan from LA. Just saying if you really are worried about it escape from Toronto would be easier.

 

The joke was just based on the idea that Ohtani needed the Dodgers to put away 68 million in cash, which wouldn't make sense unless you really thought the world could go to hell.

[Olerud363]

And the sad hard truth is

 

1. Toronto did not get outbid

2. Rogers could easily have beat the deal he got.

2. Toronto did not sell him on coming to Toronto.

[connorp]

It's half a joke. The rich guys, like the real rich hedge fund and tech guys, put significant effort into planning for this. Though most have an escape plan from LA. Just saying if you really are worried about it escape from Toronto would be easier.

 

The joke was just based on the idea that Ohtani needed the Dodgers to put away 68 million in cash, which wouldn't make sense unless you really thought the world could go to hell.

 

I mean, it wouldn’t be dramatically different if LAD had to put $68m away each year. They would be the beneficiaries of the interest accrued at the back end. It’s just laying out less up front

[Laika]

And the sad hard truth is

 

1. Toronto did not get outbid

2. Rogers could easily have beat the deal he got.

2. Toronto did not sell him on coming to Toronto.

 

Only so much you can do

[Jimcanuck]

Well Ohtani's hobbies are sleeping 10 hrs a day and playing video games. He'll be fine with this deal.

[BatFlip]

They don't have to put 68 million away. I don't even know if they really have to put 45 million away (if they buy a 10 year U.S. treasury bond for 45 million they get 68 million in 2034).

 

It's not about luxury cap evasion.

 

It can't be true the Dodgers have to put 68 million away**. If they buy 10 year bonds they'll have 100 million in 2034.

 

It might be true that Dodgers have to put 45 million away. If so then for some reason Ohtani wants the Dodgers to invest his money in safe U.S. treasuries instead of just getting the money now. Maybe for tax purposes.

 

Or maybe Ohtani thinks the U.S. will default and demanded the Dodgers put the full 68 million in cash in a safe for him?

 

 

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.

[John_Havok]

They don't have to put 68 million away. I don't even know if they really have to put 45 million away (if they buy a 10 year U.S. treasury bond for 45 million they get 68 million in 2034).

 

It's not about luxury cap evasion.

 

It can't be true the Dodgers have to put 68 million away**. If they buy 10 year bonds they'll have 100 million in 2034.

 

It might be true that Dodgers have to put 45 million away. If so then for some reason Ohtani wants the Dodgers to invest his money in safe U.S. treasuries instead of just getting the money now. Maybe for tax purposes.

 

Or maybe Ohtani thinks the U.S. will default and demanded the Dodgers put the full 68 million in cash in a safe for him?

 

For Ohtani it’s about being paid little now in order to put a winning product on the field. The incredible side benefit being that he’s going to sidestep American income taxes on 97% of his salary over the next 20 years.

 

For the Dodgers, it’s about paying a guy less and later for what he gives you now, and the side benefit is absolutely about boning the luxury tax system.

[Terminator]

It's pretty weird because it's not even really a luxury tax evasion thing.

 

It's like he really cared that the number was reported as 700M even when it's not really 700 at all. It's not even close. It's all just accounting ******** to make a 460M dollar deal look like 700.

 

Does he really care that the plebs will be losing their minds over the number that much? Because that's really the only benefit he is getting. And the Dodgers aren't really getting much of a benefit either with this escrow stuff. It's just a 10 year 460 mil deal for them.

[Olerud363]

Only so much you can do

 

The failure of Vladimir Guerrero Jr. The Alek Manoah implosion and feud? The Berrios getting pulled after 2 innings. All the 2023 Toronto hitters under-performing.

 

Compared to the 100 win a year operation that is the LA Dodgers with mid-late career guys like Betts, Freeman, and JDM playing like gang-busters?

 

The evidence is in terms of training, coaching staff, and operational environment the LA Dodgers > Toronto Blue Jays.

[BatFlip]

For Ohtani it’s about being paid little now in order to put a winning product on the field. The incredible side benefit being that he’s going to sidestep American income taxes on 97% of his salary over the next 20 years.

 

For the Dodgers, it’s about paying a guy less and later for what he gives you now, and the side benefit is absolutely about boning the luxury tax system.

 

Yeah, that about nails it.

[Laika]

The failure of Vladimir Guerrero Jr. The Alek Manoah implosion and feud? The Berrios getting pulled after 2 innings. All the 2023 Toronto hitters under-performing.

 

Compared to the 100 win a year operation that is the LA Dodgers with mid-late career guys like Betts, Freeman, and JDM playing like gang-busters?

 

The evidence is in terms of training, coaching staff, and operational environment the LA Dodgers > Toronto Blue Jays.

 

It would take Toronto decades of success to be seen on the same pedestal as the Dodgers or Yankees

 

The current players and recent events are almost completely irrelevant

[Laika]

For Ohtani it’s about being paid little now in order to put a winning product on the field. The incredible side benefit being that he’s going to sidestep American income taxes on 97% of his salary over the next 20 years.

 

For the Dodgers, it’s about paying a guy less and later for what he gives you now, and the side benefit is absolutely about boning the luxury tax system.

 

It can't be an income tax dodge. I bet the highest marginal tax rate in Japan is as bad as California. The difference may only be a few points.

 

I guess he could take up permanent residency somewhere else. Weird though.

[Marew]

The 700m figure is solely for his agent and bragging rights.

 

Also maybe ohtani thinks we will be going into a deflation period and wants to wait for things to go down in price.

 

I also don’t think he can be that smart considering he never learned English.

 

I’ve travelled to poorest parts all over the world and basically everyone that age learned English. Everyone knows it’s the most important language especially if you know you will be a star baseball player wanting to come to USA

[Terminator]

The 700m figure is solely for his agent and bragging rights.

 

This is basically all it is!

 

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

[Jimcanuck]

It can't be an income tax dodge. I bet the highest marginal tax rate in Japan is as bad as California. The difference may only be a few points.

 

I guess he could take up permanent residency somewhere else. Weird though.

 

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.

[BatFlip]

I also don’t think he can be that smart considering he never learned English.

 

I’ve travelled to poorest parts all over the world and basically everyone that age learned English. Everyone knows it’s the most important language especially if you know you will be a star baseball player wanting to come to USA

 

 

Oh brother

[connorp]

For Ohtani it’s about being paid little now in order to put a winning product on the field. The incredible side benefit being that he’s going to sidestep American income taxes on 97% of his salary over the next 20 years.

 

For the Dodgers, it’s about paying a guy less and later for what he gives you now, and the side benefit is absolutely about boning the luxury tax system.

 

No way he sidesteps. The US will support you changing your 5yo’s gender, but I’d like to see them try to get out of paying Uncle Sam on the Fed portion. State tax, forget it. Can get rid of that in Texas and FL.

[Laika]

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.

 

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