Around Baseball 2024

[Stangstag]

Not true

 

Yes it does. its not an opinion but a fact.

 

Ohtani signed for 10/700. The luxury tax hit on that contract should be 70 million per year. Because of the deferrals, the luxury hit is closer to 46 million. That means the Dodgers can spend more money on yearly team payroll without worrying about the harsh penalties as much compared to if they were accounting for 70 million per season in luxury hit.

 

And you can quote present day value and whatever to say that the contract is actually 10/460, but its not. Because the Dodgers will be paying a total of 700 million dollars to Ohtani when all is said and done.

[Stangstag]

It would be more correct to say the Ohtani contract looks more like 20/700

[Jimcanuck]

Yes it does. its not an opinion but a fact.

 

Ohtani signed for 10/700. The luxury tax hit on that contract should be 70 million per year. Because of the deferrals, the luxury hit is closer to 46 million. That means the Dodgers can spend more money on yearly team payroll without worrying about the harsh penalties as much compared to if they were accounting for 70 million per season in luxury hit.

 

And you can quote present day value and whatever to say that the contract is actually 10/460, but its not. Because the Dodgers will be paying a total of 700 million dollars to Ohtani when all is said and done.

 

Bolded part does not comply with the CBA.

[L54]

Sorting hat says L54 can pursue an English degree!

 

Not necessary to live in Canada

[L54]

Bolded part does not comply with the CBA.

 

You of all people should want the rich to pay their “fair share”

[L54]

Not true

 

Okay

[Jimcanuck]

You of all people should want the rich to pay their “fair share”

 

Using proper present value calculations, sure.

[Laika]

Why is it so hard for you guys to understand that a $70M liability 10 years from now is not actually a $70M liability?

 

Just look up what a 10 year treasury bond or 10 year GIC pays in annual interest. Throw that into a compound interest calculator for 10 years on say $45M.

 

Then share your work!

[Terminator]

Yes it does. its not an opinion but a fact.

 

Ohtani signed for 10/700. The luxury tax hit on that contract should be 70 million per year. Because of the deferrals, the luxury hit is closer to 46 million. That means the Dodgers can spend more money on yearly team payroll without worrying about the harsh penalties as much compared to if they were accounting for 70 million per season in luxury hit.

 

And you can quote present day value and whatever to say that the contract is actually 10/460, but its not. Because the Dodgers will be paying a total of 700 million dollars to Ohtani when all is said and done.

 

Yes, if we choose to ignore all concepts of basic finance then you have some great points.

 

But aside from that, hear me out. Maybe nobody, including the Dodgers, would have actually signed an injured and soon-to-be 30 year old whose pitching future is in serious jeopardy to a 10 year 700 million dollar contract if they couldn't use some financial moves to get it down to an actual number that is more like 10 years and 460 million?

[Laika]

the only actual advantage the Dodgers have is that they are owned by a hedge fund so the owner in fact has $45M or whatever to set aside each year, which will grow into $70M because math

[Terminator]

the only actual advantage the Dodgers have is that they are owned by a hedge fund so the owner in fact has $45M or whatever to set aside each year, which will grow into $70M because math

 

Correct, they have to pay him the 2 million each year and then they are required to actually put the other 44 million into an escrow account. That might be an interest bearing account but they aren't stuffing it into a hedge fund or anything to make it grow faster.

 

And this also negates the common misconception that they only have to spend an actual 2 mil per year during his tenure, thus allowing them to spend more on other free agents and stack the team while he's under contract. Nope, they actually are spending the 46 mil per year.

 

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.

 

https://www.espn.com/mlb/story/_/id/39092632/shohei-ohtani-defer-680m-deal-dodgers-sources

[Terminator]

It's weird why Ohtani wanted this. I've read that the CBA is pretty aggressive in it's present day value calculations to prevent teams from gaming the system so in the long run he likely loses money by doing this.

 

I think he might be trying to avoid CA state income tax but that's not entirely clear that he'll be successful in doing so. Perhaps he's a finance ignoramus as well (apparently so after his translator was stealing millions off of him) and just gets the satisfaction in the shock value of the 700 million dollar number.

[Laika]

It's weird why Ohtani wanted this. I've read that the CBA is pretty aggressive in it's present day value calculations to prevent teams from gaming the system so in the long run he likely loses money by doing this.

 

I think he might be trying to avoid CA state income tax but that's not entirely clear that he'll be successful in doing so. Perhaps he's a finance ignoramus as well (apparently so after his translator was stealing millions off of him) and just gets the satisfaction in the shock value of the 700 million dollar number.

 

Already has enough money

When you are a DEMONSTRATED financial moron already, it makes sense to just willingly lock up money on yourself even if the return is not ideal.

[L54]

Okay I will admit I’ve never thought that hard about the contract so obviously it’s within the CBA yada yada

 

But why is the contract AAV expressed in future dollars then? Just to stroke the ego of Ohtani and Co?

[Laika]

Okay I will admit I’ve never thought that hard about the contract so obviously it’s within the CBA yada yada

 

But why is the contract AAV expressed in future dollars then? Just to stroke the ego of Ohtani and Co?

 

Yes probably

 

And that is the most annoying thing of this new trend. Juan Soto is going to want a "$60M AAV" even if the present value is $40M.

 

In 5 years it will be out of hand. Cavan Biggio will sign for the major league minimum but defer it for 20 years so that the MLBTR headline is "Rays sign Craig Biggio's son to one year, $1.08M deal"

[Brownie19]

Okay I will admit I’ve never thought that hard about the contract so obviously it’s within the CBA yada yada

 

But why is the contract AAV expressed in future dollars then? Just to stroke the ego of Ohtani and Co?

 

Why would you say "It’s dumb. I don’t care what anyone says" then?

 

It's all just semantics. We don't know all the reasons why they wanted the contract to be prepared that way, but it's a 10 year $460M deal. End of story.

[L54]

Why would you say "It’s dumb. I don’t care what anyone says" then?

 

It's all just semantics. We don't know all the reasons why they wanted the contract to be prepared that way, but it's a 10 year $460M deal. End of story.

 

Because it is dumb lol

 

OHTANI SIGNS FOR 7/10 of ONE BILLION DOLLARS

 

Actually it’s less than half a billion

[Terminator]

Okay I will admit I’ve never thought that hard about the contract so obviously it’s within the CBA yada yada

 

But why is the contract AAV expressed in future dollars then? Just to stroke the ego of Ohtani and Co?

 

It's all good. It's pretty confusing after hearing the 10 for 700 number for so long, especially if you don't care to dig into it (and it's a contract so not that exciting anyway).

 

But yeah, it all seems like one huge ego stroke for Ohtani, who is someone who doesn't know much about finances themselves.

[Brownie19]

Because it is dumb lol

 

OHTANI SIGNS FOR 7/10 of ONE BILLION DOLLARS

 

Actually it’s less than half a billion

 

The media fooling people into believe something that isn't true is pretty common these days...create strong opinions like that isn't wise.

Edited November 1, 2024 by Brownie19

[Brownie19]

Angels trade for Scott Kingery.

 

Man - there must be a story of what happened to this guy. He signed that pre-arb deal with the Phillies - was good in 2019 (2.1 WAR, 100 wRC+) and then fell off the face of the earth. He's coming off a 25/25 season in AAA, but it's with a 104 wRC+. I wonder if all that early money he got lead him down a dark path (drugs, booze, etc.)? I haven't heard anything - just speculating. The Phillies essentially gave up on him after the 2020 season.

[G-Snarls]

Blake Snell opts out

[L54]

The media fooling people into believe something that isn't true is pretty common these days...create strong opinions like that isn't wise.

 

Oh okay

[L54]

It's all good. It's pretty confusing after hearing the 10 for 700 number for so long, especially if you don't care to dig into it (and it's a contract so not that exciting anyway).

 

But yeah, it all seems like one huge ego stroke for Ohtani, who is someone who doesn't know much about finances themselves.

 

That’s exactly what it is I guess. Good for them

[L54]

Angels trade for Scott Kingery.

 

Man - there must be a story of what happened to this guy. He signed that pre-arb deal with the Phillies - was good in 2019 (2.1 WAR, 100 wRC+) and then fell off the face of the earth. He's coming off a 25/25 season in AAA, but it's with a 104 wRC+. I wonder if all that early money he got lead him down a dark path (drugs, booze, etc.)? I haven't heard anything - just speculating. The Phillies essentially gave up on him after the 2020 season.

 

maybe fentanyl? Just speculating

[Spanky__99]

Ohtani spitting English at the parade today, hahaha!

 

Minasian the new SF GM, lol.

[jaysblue]

Nick Martinez declined his $12 million player option for 2025 on Friday and became a free agent. Likely trying to seek a multi-year deal with higher AAV. Wonder how much he gets? He's already 34 and pretty much has shifted between the bullpen and rotation throughout his career. Likely going after a similar deal Seth Lugo signed last offseason (3 years, $45M).

[Spanky__99]

I believe the Yankees will add the extra year...

 

Right-hander Gerrit Cole has triggered the opt-out in his deal with the Yankees, per Kiley McDaniel and Jeff Passan of ESPN on X. However, he is not yet a free agent, as the club has a chance to void the opt-out by tacking on an extra year at the same $36MM salary as the rest of the contract.

[Spanky__99]

Cubs might not like how this contract ends up with Belly, lol... I know I wanted no part of that.

[jaysblue]

Cubs might not like how this contract ends up with Belly, lol... I know I wanted no part of that.

 

At least it's only a 3 year deal lol. So long term, it's not like he's locked up for 6 or 7 years. Needs to at least put up 3 WAR seasons minimal.

[Spanky__99]

At least it's only a 3 year deal lol. So long term, it's not like he's locked up for 6 or 7 years. Needs to at least put up 3 WAR seasons minimal.

 

Thanks tips, that's a lot of money and was a big risk is what I'm saying. Bad deal thus far. 3/80 is/was nuts. As soon as he takes the player option tells you it went bad. Haha!