Quote from fenn68 on December 10, 2023, 11:26 am

Quote from WindsorUK on December 10, 2023, 10:40 am

Can someone explain how the Duds are "deferring" money to Ohtani? Isn't that basically circumventing any salary/tax threshold?

Certainly he should count for $70 million every year, for 10 years, right? Or does the salary start low and go high, or vice versa?

The way I understand … the $70MM is the AAV for tax purposes. The “deferral” comes into the cash payment schedule that in some form likely run for years and years after his contract runs out (think Bobby Bonilla).

Now at this point it gets to be a somewhat complicated financial calculation since I think the $700MM is viewed as over 10 years probably at $70MM per year (does not have to be though). IF Ohtani wants (is willing) to get his $700MM over 20 years ($35MM per year) the LAD could a series of annuities for less than $35MM each year that pay out in 10 years and actually “save” money with the insurance company (after taking their profit) adding inflation to what LAD pays to hit the $35MM payout in the future. Longer they defer payments and larger the deferred payments the less actual cash LAD have to pay over the 10 year deal. That is only one option … there a lot of financial tools to get Ohtani his money in the timeline he wants while lowering the cash in by LAD. LAD and Boras had to be in agreement on the financial end for both sides to make this work.

If they wanted to lower the AAV a little … they could have called the $700MM over longer than 10 years even if they did not expect Ohtani to play more than 10. Boras may not have liked that IF he thinks in 10 years Ohtani will still want to play and he could do better as all salaries increase. MLB also would intervene IF they think the extra years are a sham. Then maybe everyone just wants to be honest and Ohtani plans to retire after 10 years.

 

Quote from Randy Manese on December 10, 2023, 11:27 am

Agree that SF will likely drive up the salary for Lee IF they can't sign Bellinger, whose price they will also drive up.  In the meantime, still think Lee will get a lot of love in San Diego and may take a lower salary but maybe for a shorter period of time to sign with us.  I believe that initially he wants to be where he will be most comfortable in his adaptation to the major leagues and that has to be San Diego with good friend Kim (unless, of course, Preller trades Kim!).

Quote from fenn68 on December 10, 2023, 11:43 am

Quote from JasonE135 on December 10, 2023, 10:27 am

Quote from fenn68 on December 10, 2023, 8:07 am

Mental gymnastics given multiple needs and limited funds … what is the “best case” performance scenario for the limited FA SP requiring maybe $10MM to sign vs the “worst case” performance scenario for one of the SP prospects (Thorpe, Snelling, Mazur, Iriate, Bergert)? How close do they believe the prospects can be to the FA to justify going with the prospect and avoid a $10MM payroll hit … and deploy that elsewhere?

Need to be wary of believing that they can replicate the “luck” they had in 2023 with Wacha and Lugo with sub-4.00 ERA and maybe more likely get a 4.00+ ERA arm. Can a prospect deliver a mid 4 ERA? A Preller debate.

I think that both Profar and Kepler could be within the Padres price range. Honestly, $25-$30 million buys you a total of 3-4 WAR. Between 3 players? I don't know if $10 million per year is even enough for 1 below average but reliable starting pitcher anymore.

That is my point … I question getting a good SP at the $10MM price point so why waste that money IF they can get better impact for a position player and one of the SP prospects taking that SP slot. Thorpe … Snelling … Iriate … Bergert … Mazur plus the new guys in Brito and Vazquez … can they get two SP that can deliver at least a 4.5 ERA which is league average and probably as good as they would get via a $10MM FA.

Of course, same mental exercise on any FA position player … are they that much better than the projections of Merrill, Marsee, Pauley in 2024 to justify the cost differential? Bader at $10MM or Marsee at league minimum?

If they like (and are willing to gamble) on a number of the prospects … that $25MM could be directed primarily towards one impact FA.

Quote from WindsorUK on December 10, 2023, 11:50 am

I'd really like to see Lee in San Diego at this point.

And you're right Fenn, for the money, an impact position player will have more impact on our season than a lesser SP.

Be nice if Preller can pry Bieber or Burnes free, though.

Quote from fenn68 on December 10, 2023, 11:53 am

Quote from Randy Manese on December 10, 2023, 11:27 am

Agree that SF will likely drive up the salary for Lee IF they can't sign Bellinger, whose price they will also drive up.  In the meantime, still think Lee will get a lot of love in San Diego and may take a lower salary but maybe for a shorter period of time to sign with us.  I believe that initially he wants to be where he will be most comfortable in his adaptation to the major leagues and that has to be San Diego with good friend Kim (unless, of course, Preller trades Kim!).

Agree the Padres have an advantage with Lee in a close set of offers … but SF can go crazy and make the money offer a big difference … too big to ignore.

Worse if Bellinger signs big with TOR or the CUBS who both were in on Ohtani … SF would be once again hung out to dry but with money to spend and maybe a growing need to appease their fans. I wonder if after failing to land big names over the past few years … and an aging team … whether FA with a choice may lean towards signing with teams with a better future (money being close) or will SF have to really mess up the market by way over paying just to get any kind of talent?

Quote from fenn68 on December 10, 2023, 12:15 pm

MLBTR had a piece with some AAV information that I did not know … re Ohtani and his deferral.

Reported MLB has a discounting procedure to adjust the AAV (lower) in these long deferral contracts. Depending on the final contract structure the LAD AAV could be only in the $45MM range.

I guess that follows my other comments on LAD buying annuities at a lower cash outlay to deal with the deferred monies and link the purpose of the AAV as a control to deal with cash manipulation / and cash outlay over time. Basically AAV goes to reflect LAD cash outlay, I guess spread over those 10 years.

Quote from WindsorUK on December 10, 2023, 12:15 pm

I think Preller needs to move REALLY fast on Lee. The longer this plays out, the more expensive it gets and the least likely he ends up in SoCal.

Quote from Randy Manese on December 10, 2023, 12:32 pm

Think Giants are looking for more established playerswho can rack up some HRs and be more of an impact player - like Bellinger, JD Martinez or Teoscar Hernandez.  They especially would like to land the two ex-Dodgers, so Lee might be a little further down their wish list given the adjustment period some KBO players are known to have when moving to the big leagues.  Another great time for speculation and, for some reason, the Giants seem to me to be big players in the free agent market verbally but when it comes down to actually following through, their offers typically lag behind.

Quote from MrPadre19 on December 10, 2023, 2:45 pm

I wonder if Otani signing with the dodgers helps them get Yamamoto. Maybe the reason he took the deferred payments to lower their payroll was to afford Yamamoto also.

If Ohtani comes back healthy from surgery a rotation of Ohtani/Yamamoto/Buehler/May would be pretty good I would think.