Quote from fenn68 on December 12, 2023, 1:56 am

Looking differently at the Ohtani deal … the headline $700MM might be the problem issue here. Would argue Ohtani would not get $700MM contract but for the deferral.

Dodgers will only be paying the $460MM over the course of the deal … the earnings from the bonds (whatever) they buy will pay the remaining $240MM. Essentially the same (in theory) as the LAD paying Ohtani the $46MM per year and Ohtani invests it for 10 years  and ends up with $70MM .. $2MM current and $68MM in 10 years..

Bottom line is the LAD signed him for $460MM out of their pocket (that is why the lower AAV), As I suggested in a previous post … Ohtani may really benefit from the deferral from a tax perspective if he moves out of CA after 10 years or the vehicle they use for the deferral money somehow produces tax advantaged money.

So if the headlines initially came out (as they should have) that Ohtani signs for $460MM that included significant deferred money … I guess we would be asking why Ohtani took a discount to play in LA since most where estimating a deal in the mid-$500MM range.

Again, looks as though both sides benefit. Now why this is less likely with other players is a combination of not having Ohtani’s earning power outside the contract during the contract years (therefore want the money now) and doubt most will factor in moving at the end of the deal to a better tax state when the collect the payout.

However, a number of previous contracts have had deferred money … so suspect this has been going on before just not with the reporting that the high profile Ohtani / LAD bring.

What we will never know is what the LAD would have really paid without the deferred money involved … clearly NOT $700MM but likely more than the $460MM they will pay.

Again brilliant on both sides … hard to replicate with most players who want their money now and with that their financial advisor believing that they can do better investing than what the earnings on a deferral would provide.

However you are right if Machado, Bogaert, Tatis, and the other on long team big money deals recognize the payroll issue (and luxury tax issue) and want to win during their contracts they should restructure their deals to include deferred money and lower the current cash outlay for the Padres. Guess it would not be as dramatic as Ohtani since these player do want money now but may shave off a few million annually off each deal. None are going to defer 97% of the annual as did Ohtani.

Quote from Randy Manese on December 12, 2023, 6:55 am

Fenn, this is a really good explanation and helped me understand the whole Ohtani contract a lot better.  Thank you!

Quote from MrPadre19 on December 12, 2023, 7:17 am

The issue I have is this is clearly an attempt to circumvent the CBT and MLB has made it clear this is not allowed.

If you can not give a 31 year old a 15 year contract to spread out the AAV then certainly this should not be allowed either.

My guess is this will now get changed but of course.....the Ohtani deal will stand.

 

Did I read right that in 11 years when LA is paying the $68 mil per year it won't affect their CBT amount at all?

Talk about Big Market BS!

 

Quote from MrPadre19 on December 12, 2023, 7:19 am

Oh how I hate the dodgers....let me count the ways!

1.

2.

3.

 

50.

 

1,000.

 

Quote from fenn68 on December 12, 2023, 8:47 am

Quote from MrPadre19 on December 12, 2023, 7:17 am

The issue I have is this is clearly an attempt to circumvent the CBT and MLB has made it clear this is not allowed.

If you can not give a 31 year old a 15 year contract to spread out the AAV then certainly this should not be allowed either.

My guess is this will now get changed but of course.....the Ohtani deal will stand.

 

Did I read right that in 11 years when LA is paying the $68 mil per year it won't affect their CBT amount at all?

Talk about Big Market BS!

 

No, LAD are paying $46MM per year (that is in the AAV) … $2MM to Ohtani and $44MM to buy a bond or to an insurance company for an annuity … LAD is not paying $68MM to anyone.

In the elongated contacts (eg. 7 years when is should be 5 to lower AAV) the team still pays all the money.

Think like the AAV hit reflects the CASH the team will pay over the life of the contact.

Quote from Randy Manese on December 12, 2023, 11:01 am

Just had a thought that maybe Snell would take deferrals like Ohtani to come back to San Diego.  He loved it here and pleaded not to be traded at the trade deadline.  Further, he was very close to Seidler and may still have some emotional connection to the team.  Probably won't happen, but it seems anything is possible now in free agency.  Say he takes 8-10M per year for the next 5-7 years and defers the rest until after he retires.  I know Snell is oftentimes a frustrating pitcher to have on the mound, but he can be very very good and he was for a long time down the stretch in 2023.

Quote from Randy Manese on December 12, 2023, 12:01 pm

Sports Info Solutions (SIS) just put out some good scouting reports on Yamamoto, Imanaga and Jung Hoo Lee as well as how the Padres defense helped Snell be as successful as he was given his high walk rate.  It seems these are very unbiased and accurate reports and I agree with the end of article current comparison of Lee to the Mets Jeff McNeil, although I see Lee as having a higher on base percentage rate.  If signed by the Padres, I can see him hitting in the #2 hole behind Kim and ahead of Tatis, Machado, Bogaerts, Cronenworth and Campusano; DH and other OF are yet to be determined although we may be stuck with Carpenter at DH and might see some kind of rotation in LF with Profar (to be a FA  re-sign),  another platoon type FA or one of Marsee/Merrill.  These latter two young guys are both low strike out/high contact guys with Merrill having a power edge over Marsee; Merrill should not have a problem adapting to LF.

Quote from fenn68 on December 12, 2023, 12:08 pm

Wonder if there is any thought of Cronenworth in LF if they see better FA options at their price who are 1B/DH types.

Usually in this era, 1B/DH are more available at lower price points that similar offensive LF.

Quote from fenn68 on December 12, 2023, 12:13 pm

Report is that Lugo is signing a 3 year / $45MM guaranteed contract.

Again, a FA signing a bigger deal than most projected. He should be sending a thank you note to the Padres for taking the risk in 2023 of converting him to a SP.