At first glance, Shohei Ohtani’s $700 million, 10-year deal with the Los Angeles Dodgers is nothing short of a Ruthian blockbuster, topping all other free agent pacts.
Upon closer inspection, however, factoring in the ravages of compound inflation and Ohtani’s unprecedented agreement to defer massive sums of interest-free cash, the deal is still a record breaker — but one that’s probably more in the neighborhood of $462 million in current value, financial planners told NBC News on Thursday.
“That $700 million is a big headline number,” said certified financial planner Colin Gerrety, vice president and client adviser at Glassman Wealth Services in Vienna, Virginia. “But at the end of the day, it’s going to be worth less just with inflation, and the fact that it’s essentially an interest-free loan to the team.”
Ohtani, 29, ended one of the most closely followed free agent courtships in baseball history on Saturday, announcing that he’d be leaving the woeful Los Angeles Angels in favor of the perennial pennant-contending L.A. Dodgers.
The deal was originally reported as a $700 million, 10-year deal, which drastically tops all previous MLB contracts in terms of total compensation and average annual value.
But then it emerged days later that Ohtani’s deal included unprecedented deferrals in which the Dodgers would pay him only $2 million per year for 10 seasons, followed by $68 million annual payments in the following decade.
The MLB minimum wage, for the most untested minor leaguer fresh to the bigs, will be just $740,000 in 2024. The Dodgers estimated 2024 payroll should come in at about $250 million. The team has made deferred salaries a central strategy to their efforts to sign veteran stars, win now and spread liabilities down the road.
Star outfielder Mookie Betts will have $120 million coming to him from 2033 to 2044, following his current deal to play for L.A., while first baseman Freddie Freeman has $57 million put on hold until 2028-40.
The…
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