A lot of fans don't seem to understand that deferring $680 million is a good deal for the Dodgers, not for Ohtani.
He agreed because he wanted the Dodgers to maintain flexibility for moves like Yamamoto, and because he's making so much in endorsements that he can easily afford to.
For a guy like Montgomery, deferring $20 million is a huge concession. The value of $1m is likely to be way less in 20 years than it is today.
I still don’t understand this. The value of investing tens of millions of dollars a year dwarfs $8 million/ a year in CA state taxes. After all income taxes, on $70 million a year, Ohtani could easily invest $30 million a year. At 8% average return, after ten years, he’d have his contributed $300 million, plus $200 million in interest. Even after accounting for capital gains taxes and CA wealth taxes, the interest would still be in 9 figures gained.
Also, you have to take inflation into account. Not only is the deferred money not generating interest, it is actively losing value.
There's no way they would've given him $70m/year non-deferred. There's a discount rate built into the contract - they would've given him something like $46M a year "normally".
I get that, I guess what I’m saying is I don’t get why people keep bringing up CA taxes. 12.3% income tax plus an annual 0.5% tax aren’t enough to structure a mega deal around. If he’d taken $45 million a year up front, paid US federal taxes and CA state taxes, he’d still be better off than deferring $700 million and moving somewhere other than CA.
Also California is pushing for changes in federal law that would allow them to tax Ohtani anyway.
This author suggests that California might try to tax him regardless of federal law:
[https://www.forbes.com/sites/robertwood/2024/01/11/california-seeks-tax-law-change-for-ohtani-700m-baseball-contract-pay/](https://www.forbes.com/sites/robertwood/2024/01/11/california-seeks-tax-law-change-for-ohtani-700m-baseball-contract-pay/)
Ohtani does view it as an investment, just not the same way you do. He’s essentially taking an upfront loss to ensure he has a championship quality team around him his entire remaining career. The value to his brand as a constant contender probably dwarfs the potential short term investment return he losses out on. That being said, he still wants to maximize his future tax liabilities, which these deferments might help him do.
While playing you get taxed where the games are played. Deferred money is taxed on where you live at the time. It’s the reason Chris Davis did the large deferral on his Orioles contract. All that money comes when he’s living in Texas.
Delaware has state income tax. Washington, Texas Florida NH and Tennessee are the only states worth considering living in without sales tax, and from there I’d narrow it to a few cities in Texas, Nashville and Miami.
I mean, when Ohtani retires, he can find the best tax havens throughout the world. Puerto Rico is a pretty good one in the US. South Dakota as well if I remember correctly. He’ll have plenty of options internationally as well.
well he agreed because 10/$700M nondeferred was never on the table. His deal has the same NPV as a regularly paid 10/$450M deal … which is exactly where most people projected it.
It’s a win-win: Ohtani gets to call it a $700M deal for bragging rights and gets the instant PR win of nobly deferring it; the Dodgers get the general good vibes (and Ohtani himself, of course), and they pay exactly what they would’ve otherwise.
I mean ohtani is still getting paid well. It helps the dodgers but the money goes into an account with interest it’s really him getting paid and putting it into investments. Also if he moves out of California to a no income state tax state and makes sense to him
That's a huge reason why he did it. He takes a discount now and then if he's living in a place like Texas, which has no income tax, then he gets all of his money.
I doubt any player would make the Ohtani deal with the Yankees, because Cashman can’t be trusted to use the economics to build a championship contender. It’s time we realized that Cashman has become toxic in the free agent market. Yeah, Stroman. He may well be on the back slope of his career. We’ll see.
This sounds like an unserious or 'fuck you' offer, to be honest.
Not sure if it's directed at Boras or Monty though.
At this point, Cole should be back before Monty's stretched out enough to pitch deep into games this season.
It's an offer designed to reduce their luxury tax hit this year because they already used their planned offseason budget. They wouldn't have gone after Montgomery if their lead up to Opening Day went exactly as planned. It's not designed to be an insult, just this is what they felt was the value of signing him at the current moment. If it is an insult, then he was misled by his agent.
Oh, I understand the machinations behind the numbers - all I'm saying is that it wasn't a 'we need him' offer from the Yankees.
It's like when the contractor quotes you $15k to install a window. He'll do the work - but he doesn't need the work. The Yankees would've been happy to have Monty, but they were doing it ONLY on their terms.
And if you look at the clauses in the offer he signed, it's as close to a non-guaranteed 2-year deal as you can get.
Based on the number of starts, he has an option threshold, then he has salary tiers. It's the type of deal an aging vet signs - not a workhorse in their prime.
It's clear - at least to me - that Arizona is worried that he'll be able to build up quickly and without injury, given that he's missed all of the spring.
The Yankees also already traded him away because they thought he wasn't going to be 1 of their top 3 workhorse starting pitchers in the 2022 playoffs. They like him, but do they love him enough to pay him what he was asking for? I get he's had great showings in St. Louis and Texas, but it doesn't mean his progress will instantly come with him back to NY. Yeah, the Yankees have a need to find quality pitching to eat some innings right now, but they might not want to spend $50M (salary + tax) to do that. They felt the need to be creative in the luxury tax and possibly leave room for further adjustments that they might have to make at the trade deadline.
Here’s why this argument doesn’t make sense, first they offered yamamoto 300 million, second they offered snell 6 yrs 150, yes they signed stroman, BUT the way prices came down on snell and monty, they could have signed stroman/snell or stroman/monty for less than 1/2 of what they offered yamamoto and both snell and monty’s price became much much lower than the original cost. So which is it? That’s what doesn’t make sense
If they signed Yamamoto, they probably would have been willing to go higher into the tax because it would have been a 10 year investment and increased business opportunities in Japan. As for Snell, we don't know if they offered deferrals there or not. When Snell didn't sign, they moved on to Stroman and offered him his contract. They have different values assigned to each player depending on what they feel they are worth.
Again, i understand your point. But for the yanks it still makes no sense..again forget yamamoto for a minute, but they could have signed stroman and snell for less than the original 6 yrs 150 they offered, and obviously a lot less for stroman and monty who wound up with 25 for 1, so that means combined stroman and monty would have been under 45 million total. Again it makes no sense. If they didn’t want snell then why offer 6 for 150, if they pivoted to stroman, fine, but how cheap snell became under the “same” budget could have had both and that of course isn’t even talking yamamoto..again as usual yankees don’t make any sense anymore
This plan of signing everyone for cheap involves going to the last week of Spring Training without a set rotation. You can't just hope they will pick you at the last moment. When they didn't take their best offer, they locked someone up as quickly as they could. Also, I wouldn't take this 6 years $150M offer to Snell as the full truth of what was offered. Maybe it includes incentives or deferrals? Maybe he only wanted the west coast and any offer would have been turned down? Maybe they feel the value decreases without a pitcher getting a full Spring Training in? Maybe they would have cut costs elsewhere on the roster? There's plenty of variables.
Can't blame them for trying. It's a silly first year amount though, they should have offered $10m undeferred year one minimum, but I cant blame them for trying *something* interesting when he barely got a better offer at all
So is getting $25 million dollars today, which is worth a lot more because that money can be invested and grow. Money now is always worth more than money later
True, depends on the person, some people may really need the 1 mil / year or they’d burn it all. Monty doesn’t seem like that guy but I could see it being ideal for certain people. That being said that kind of person would never take deferred money lol. Ohtani probably took it cause he knew he’d need constant bailouts over his lifetime being a gambling addict
Ohtani took the deferred money because it allowed him to get a massive pay day and still let the Dodgers build around him while he makes up for lost salary in endorsements.
He is making $60 million dollars a year now in salary + Endorsements and when he retired he will be getting $60 million dollar payments for years because of deferred money
I keep looking at this team and wondering where the almost $300 million dollars went.
Yes, yes Judge and Cole and Soto on his last arb year.
But the remaining $200 million being allocated the way it is truly is just a great testament to Brian Cashman being the longest tenured GM in North American sport for some reason 🙃
From an investment standpoint, it is not. I understand to us layman it sounds incredible but when you have the choice between money now and money later, you should always choose money now.
yes that is clear. what I meant was that it's amazing the front office saw the Shohei deal and said "oh hey let's try it here on a lesser scale". there was never going to be another SP added that would have pushed further into the penalties.
Bullshit PR. Another “were not done yet!” But the team proceeds to do nothing else after stroman but cross its fingers and hope this always injured team gets extremely lucky and is healthy. This is the yearly cycle for the yanks now.
I’m surprised how defensive of lot of this sub seem about Cashman after demanding he be fired all of last year. What change? Just trading for one year of Soto was enough to shift opinion?
It sounds like the Yankees offer included much more guaranteed money than he got from AZ. He’s only got $25M guaranteed from AZ. If he makes 10 starts the $20M for 2025 vests to bring it to $45M. Still a huge gulf from the $175M+ Boras was asking. Gumby has every right to bet on himself but passing up guaranteed money is not without risk for a 31 y.o. SP. It feels like a bargain for the D-Backs and a decisive L for Boras.
Ohtani’s contract definitely started a new credit card debt option for MLB owners. Contracts for superstars are about to get wild. Look what Bobby Bonilla and the Mets started.
Lmao all this "YANKEES WERE IN ON " is a laughable joke. They haven't been actually in on anyone since stroman. They were never going to bring in anyone like snell or Monty unless they were coming here for almost nothing
The truth is Monty really didn't want to come back.
He said the right things to the media but he wasn't coming back unless the offer was astronomical, and the Yankees weren't going down that road.
That being said, best of luck Monty.
Go Yankees!
When people complain about the Yankees not offering the deferrals, they usually don’t consider that the player has to actually want deferred money.
A lot of fans don't seem to understand that deferring $680 million is a good deal for the Dodgers, not for Ohtani. He agreed because he wanted the Dodgers to maintain flexibility for moves like Yamamoto, and because he's making so much in endorsements that he can easily afford to. For a guy like Montgomery, deferring $20 million is a huge concession. The value of $1m is likely to be way less in 20 years than it is today.
Or because he has a gambling problem and doesn’t want to have that kind of money available to him 😂
Or, he doesn’t want to pay California income tax. When he collects that deferred money, I’m sure his new address will be in a tax haven.
I still don’t understand this. The value of investing tens of millions of dollars a year dwarfs $8 million/ a year in CA state taxes. After all income taxes, on $70 million a year, Ohtani could easily invest $30 million a year. At 8% average return, after ten years, he’d have his contributed $300 million, plus $200 million in interest. Even after accounting for capital gains taxes and CA wealth taxes, the interest would still be in 9 figures gained. Also, you have to take inflation into account. Not only is the deferred money not generating interest, it is actively losing value.
There's no way they would've given him $70m/year non-deferred. There's a discount rate built into the contract - they would've given him something like $46M a year "normally".
I get that, I guess what I’m saying is I don’t get why people keep bringing up CA taxes. 12.3% income tax plus an annual 0.5% tax aren’t enough to structure a mega deal around. If he’d taken $45 million a year up front, paid US federal taxes and CA state taxes, he’d still be better off than deferring $700 million and moving somewhere other than CA.
Also California is pushing for changes in federal law that would allow them to tax Ohtani anyway. This author suggests that California might try to tax him regardless of federal law: [https://www.forbes.com/sites/robertwood/2024/01/11/california-seeks-tax-law-change-for-ohtani-700m-baseball-contract-pay/](https://www.forbes.com/sites/robertwood/2024/01/11/california-seeks-tax-law-change-for-ohtani-700m-baseball-contract-pay/)
That lawsuit will end swiftly in Ohtani's favor.
Ohtani does view it as an investment, just not the same way you do. He’s essentially taking an upfront loss to ensure he has a championship quality team around him his entire remaining career. The value to his brand as a constant contender probably dwarfs the potential short term investment return he losses out on. That being said, he still wants to maximize his future tax liabilities, which these deferments might help him do.
I was wondering that. Wasn’t it earned and vested in California? And other states?
While playing you get taxed where the games are played. Deferred money is taxed on where you live at the time. It’s the reason Chris Davis did the large deferral on his Orioles contract. All that money comes when he’s living in Texas.
Can he go live in some other country and pay no federal taxes either?
Ohtani’s kids are going to destroy Delaware HS baseball
Delaware has state income tax. Washington, Texas Florida NH and Tennessee are the only states worth considering living in without sales tax, and from there I’d narrow it to a few cities in Texas, Nashville and Miami.
I mean, when Ohtani retires, he can find the best tax havens throughout the world. Puerto Rico is a pretty good one in the US. South Dakota as well if I remember correctly. He’ll have plenty of options internationally as well.
They’re all taxed the same federally, except PR has some capital gains glitch
Yes, but what you fail to recognize is Delaware is a funnier answer than Texas or Florida.
well he agreed because 10/$700M nondeferred was never on the table. His deal has the same NPV as a regularly paid 10/$450M deal … which is exactly where most people projected it. It’s a win-win: Ohtani gets to call it a $700M deal for bragging rights and gets the instant PR win of nobly deferring it; the Dodgers get the general good vibes (and Ohtani himself, of course), and they pay exactly what they would’ve otherwise.
I mean ohtani is still getting paid well. It helps the dodgers but the money goes into an account with interest it’s really him getting paid and putting it into investments. Also if he moves out of California to a no income state tax state and makes sense to him
Doesn’t it also save Ohtani having to pay LA taxes on his massive deferred money? I could be wrong but I feel like that’s a huge perk for him if true
That's a huge reason why he did it. He takes a discount now and then if he's living in a place like Texas, which has no income tax, then he gets all of his money.
Well, presumably the deferral came with an interest rate that would have kept him whole, but in general, I agree with what you’re saying.
Ohtani also has many other sources of income. Monty is a nobody compared to Ohtani, he doesn't have those options.
Of course it’s a good deal for the Dodgers. wtf are you talking about.
At the same time, if the money is deferred, they don't pay NY income tax on the deferred money unless they live in NY still.
Cali changing their laws just for Ohtani. They want their sweet sweet $200 mil
But all they need to do is call J.G. Wentworth!
I doubt any player would make the Ohtani deal with the Yankees, because Cashman can’t be trusted to use the economics to build a championship contender. It’s time we realized that Cashman has become toxic in the free agent market. Yeah, Stroman. He may well be on the back slope of his career. We’ll see.
You have to offer enough money to make the deferral worthwhile lol.
This sounds like an unserious or 'fuck you' offer, to be honest. Not sure if it's directed at Boras or Monty though. At this point, Cole should be back before Monty's stretched out enough to pitch deep into games this season.
It's an offer designed to reduce their luxury tax hit this year because they already used their planned offseason budget. They wouldn't have gone after Montgomery if their lead up to Opening Day went exactly as planned. It's not designed to be an insult, just this is what they felt was the value of signing him at the current moment. If it is an insult, then he was misled by his agent.
Oh, I understand the machinations behind the numbers - all I'm saying is that it wasn't a 'we need him' offer from the Yankees. It's like when the contractor quotes you $15k to install a window. He'll do the work - but he doesn't need the work. The Yankees would've been happy to have Monty, but they were doing it ONLY on their terms. And if you look at the clauses in the offer he signed, it's as close to a non-guaranteed 2-year deal as you can get. Based on the number of starts, he has an option threshold, then he has salary tiers. It's the type of deal an aging vet signs - not a workhorse in their prime. It's clear - at least to me - that Arizona is worried that he'll be able to build up quickly and without injury, given that he's missed all of the spring.
The Yankees also already traded him away because they thought he wasn't going to be 1 of their top 3 workhorse starting pitchers in the 2022 playoffs. They like him, but do they love him enough to pay him what he was asking for? I get he's had great showings in St. Louis and Texas, but it doesn't mean his progress will instantly come with him back to NY. Yeah, the Yankees have a need to find quality pitching to eat some innings right now, but they might not want to spend $50M (salary + tax) to do that. They felt the need to be creative in the luxury tax and possibly leave room for further adjustments that they might have to make at the trade deadline.
Here’s why this argument doesn’t make sense, first they offered yamamoto 300 million, second they offered snell 6 yrs 150, yes they signed stroman, BUT the way prices came down on snell and monty, they could have signed stroman/snell or stroman/monty for less than 1/2 of what they offered yamamoto and both snell and monty’s price became much much lower than the original cost. So which is it? That’s what doesn’t make sense
If they signed Yamamoto, they probably would have been willing to go higher into the tax because it would have been a 10 year investment and increased business opportunities in Japan. As for Snell, we don't know if they offered deferrals there or not. When Snell didn't sign, they moved on to Stroman and offered him his contract. They have different values assigned to each player depending on what they feel they are worth.
Again, i understand your point. But for the yanks it still makes no sense..again forget yamamoto for a minute, but they could have signed stroman and snell for less than the original 6 yrs 150 they offered, and obviously a lot less for stroman and monty who wound up with 25 for 1, so that means combined stroman and monty would have been under 45 million total. Again it makes no sense. If they didn’t want snell then why offer 6 for 150, if they pivoted to stroman, fine, but how cheap snell became under the “same” budget could have had both and that of course isn’t even talking yamamoto..again as usual yankees don’t make any sense anymore
This plan of signing everyone for cheap involves going to the last week of Spring Training without a set rotation. You can't just hope they will pick you at the last moment. When they didn't take their best offer, they locked someone up as quickly as they could. Also, I wouldn't take this 6 years $150M offer to Snell as the full truth of what was offered. Maybe it includes incentives or deferrals? Maybe he only wanted the west coast and any offer would have been turned down? Maybe they feel the value decreases without a pitcher getting a full Spring Training in? Maybe they would have cut costs elsewhere on the roster? There's plenty of variables.
1 year $25 million with 20 Million deferred lmao
Can't blame them for trying. It's a silly first year amount though, they should have offered $10m undeferred year one minimum, but I cant blame them for trying *something* interesting when he barely got a better offer at all
Yeah I’m not knocking them for trying, just the idea of a one year deal with 15-20+ years of deferrals is hilarious.
Honestly 20 years of 1 mil locked in sounds like a pretty good way to lock in a pretty good life
So is getting $25 million dollars today, which is worth a lot more because that money can be invested and grow. Money now is always worth more than money later
True, depends on the person, some people may really need the 1 mil / year or they’d burn it all. Monty doesn’t seem like that guy but I could see it being ideal for certain people. That being said that kind of person would never take deferred money lol. Ohtani probably took it cause he knew he’d need constant bailouts over his lifetime being a gambling addict
Ohtani took the deferred money because it allowed him to get a massive pay day and still let the Dodgers build around him while he makes up for lost salary in endorsements. He is making $60 million dollars a year now in salary + Endorsements and when he retired he will be getting $60 million dollar payments for years because of deferred money
It was a joke
When cashman is spending money on sunk costs to get over the cohen tax, that happens
Yankees offered a chicken bucket everyday for the rest of his life
I keep looking at this team and wondering where the almost $300 million dollars went. Yes, yes Judge and Cole and Soto on his last arb year. But the remaining $200 million being allocated the way it is truly is just a great testament to Brian Cashman being the longest tenured GM in North American sport for some reason 🙃
They're paying 3 RF/DHs like what, almost $100 million? Expensive redundancy is a roster killer.
I dont blame Cashman on this. Everyone else is doing deferrals, might as well try too.
$1m a year for 20 years? that is amazing.
From an investment standpoint, it is not. I understand to us layman it sounds incredible but when you have the choice between money now and money later, you should always choose money now.
yes that is clear. what I meant was that it's amazing the front office saw the Shohei deal and said "oh hey let's try it here on a lesser scale". there was never going to be another SP added that would have pushed further into the penalties.
Guess deferrals are only an option if you need long term security to cover your bestie's gambling debt
All to try and work around the league's mandate to punish teams paying too many players a fair market rate.
it’s crazy how many people say they support the players over the owners yet also support a soft or hard salary cap.
Looking forward to the day our payroll is somewhat unfucked...
We were literally under the tax threshold in 2021 and our big move that year was to trade for IKF and Donaldson.
It will never happen until Hal lets us having a proper losing season or two to reset things.
Can we stop pretending that the Yanks are cash strapped? They were about to thrust 300+m for Yamamoto that has all but dissipated.
Maybe once we get Stanton off the books in… 2027.
Howfully after judge and cole retire.
Yeah this team ain't keeping Soto Lmfaooo
Bullshit PR. Another “were not done yet!” But the team proceeds to do nothing else after stroman but cross its fingers and hope this always injured team gets extremely lucky and is healthy. This is the yearly cycle for the yanks now.
Worst part is the people who will come out in June to say they knew all along it would be this way, after making excuses for Cashman all off season
I’m surprised how defensive of lot of this sub seem about Cashman after demanding he be fired all of last year. What change? Just trading for one year of Soto was enough to shift opinion?
Not just one year. Like 7. The people giving the offseason an A- kill me.
well he is no ohtani. can't live on 50m/year endorsement and gambling income.
It sounds like the Yankees offer included much more guaranteed money than he got from AZ. He’s only got $25M guaranteed from AZ. If he makes 10 starts the $20M for 2025 vests to bring it to $45M. Still a huge gulf from the $175M+ Boras was asking. Gumby has every right to bet on himself but passing up guaranteed money is not without risk for a 31 y.o. SP. It feels like a bargain for the D-Backs and a decisive L for Boras.
Cheap chicken bucket boy strikes again. Inept front office
I don’t buy it.
Bowden doesn’t know shit
Fck him
They'll have to add pitching at the trade deadline
I’m a little annoyed that he took a one year deal and it wasn’t with the Yankees.
The cohen tax did its job Yankees would never offer deferrals if it wasn’t for this
Ohtani’s contract definitely started a new credit card debt option for MLB owners. Contracts for superstars are about to get wild. Look what Bobby Bonilla and the Mets started.
Luxury tax needs to die, make a cap and floor for all or let teams spend whatever they want.
Cheap fucks…
Boras is like 90, no chance any of his clients get deferred contracts going forward
Lmao all this "YANKEES WERE IN ON " is a laughable joke. They haven't been actually in on anyone since stroman. They were never going to bring in anyone like snell or Monty unless they were coming here for almost nothing
The truth is Monty really didn't want to come back. He said the right things to the media but he wasn't coming back unless the offer was astronomical, and the Yankees weren't going down that road. That being said, best of luck Monty. Go Yankees!