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12-09-2023, 06:44 PM   #886
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QuoteOriginally posted by luftfluss Quote
It certainly worked out well with the Raptors - Kawhi has missed so many games since leaving!
Possibly, although they might have been able to run it back one more time. However, with covid forcing Toronto to play the abbreviated season in Florida, who knows if it would have worked in the end. The shorter season certainly worked to the advantage of the aging Lakers and would have benefited Leonard too, especially as the Raptors were willing to load manage and had enough on the bench to have him miss a lot of regular season games.

There's still the bigger issue of whehter big name MLB or NBA players are willing to come here in free agency. In that respect, signing Ohtani would have made a huge statement, but not at any price.

12-10-2023, 04:00 AM   #887
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QuoteOriginally posted by luftfluss Quote
According to Ken Rosenthal, Ohtani's contract contains "unprecedented" deferrals in order to keep LA's payroll flexible enough to sign other players and not forfeit draft picks - which would happen if the payroll is over a certain number for consecutive years.
That just sounds like Bobby Bonilla's contract where he will continue to get 1.2 million on July 1st every year until 2035 (the Mets haven't gotten much production out of him lately).

The issue now is that the luxury tax bills for future teams could be astronomical. I was just looking at teams that have paid the luxury tax and their success rate. The Yankees paid the luxury tax every year from 2003 to 2020 except for 2018 (total of 348 million paid) and the Dodgers are second at 151 million (all paid in the last 10 years). The next team is the Red Sox at just over 50 million paid out. Then it drops down to 15 million or below.

So, the Dodgers in that time have won one World Series (2020) although they have won a lot of games as well and won the NL Pennant in 2017 and 2018 as well. The Yankees won the World Series in 2009. They won the East nine times since 2003 and have several wild card births as well.

I guess I'm saying that my analysis says that spending huge amounts of money -- enough to get you into the luxury tax -- will likely assure you of winning quite a few regular season games, but doesn't assure you of playoff success.

I suppose the good thing for small market teams is it doesn't even assure regular season success. The Mets last year had a payroll of 340 million with another 40 million dollars tacked on for good measure from previous deals that didn't work out bringing their total for luxury tax purposes to 380 million. Their success wasn't exactly resounding...
12-10-2023, 08:54 AM   #888
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QuoteOriginally posted by Rondec Quote
I guess I'm saying that my analysis says that spending huge amounts of money -- enough to get you into the luxury tax -- will likely assure you of winning quite a few regular season games, but doesn't assure you of playoff success.

I suppose the good thing for small market teams is it doesn't even assure regular season success.
Take a look at how well the Orioles against teams with much higher payrollls, very interesting.
12-10-2023, 09:47 AM   #889
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Here's a post on Twitter from Jeff Passan, explaining Ohtani's contract:

I’m going to explain why Shohei Ohtani’s $700 million contract with the Los Angeles Dodgers will not equal $700 million in terms of MLB accounting or the present-day value of the deal.

When money in a contract is deferred, the competitive-balance tax number — the luxury tax — is discounted. With a source saying a “majority” of Ohtani’s contract is deferred, the discount could be significant. Typically, a CBT number is the average annual value of a deal — in this case $70 million. But depending on the size and length of the deferrals, Ohtani’s CBT number is likelier to wind up in the $40-50 million-a-year range, an enormous benefit for the Dodgers.

The deferrals also affect the net present value of the deal. There’s a rule of thumb across all walks of life: Money today is more valuable than money tomorrow, inflation being what it is. When you defer money, you’re taking less. The Dodgers are operating in an environment in which the prime rate is 8.5%. And with money today being so pricey, it lowers the present-day value of the deal by a significant margin.

Regardless, in the end, Shohei Ohtani will be paid 700 million US dollars by the Dodgers. It’s an obscene amount of money. It’s just going to be seen as less by the league’s accounting — and will allow the Dodgers to add even more around Ohtani as they try to win a championship.

12-10-2023, 09:51 AM - 2 Likes   #890
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Some wag expressed his hope that the tax revenue from Ohtani's contract would be put towards repairing California's roads.
12-10-2023, 01:52 PM - 1 Like   #891
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Next up pitcher Yoshinobu Yamamoto.

Several clubs are very interested, including the NY Mets.

Chris
12-10-2023, 02:07 PM   #892
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QuoteOriginally posted by robgski Quote
Some wag expressed his hope that the tax revenue from Ohtani's contract would be put towards repairing California's roads.
Probably why he wanted to avoid Canadian taxes!

12-10-2023, 02:28 PM   #893
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QuoteOriginally posted by luftfluss Quote
Here's a post on Twitter from Jeff Passan, explaining Ohtani's contract:

I’m going to explain why Shohei Ohtani’s $700 million contract with the Los Angeles Dodgers will not equal $700 million in terms of MLB accounting or the present-day value of the deal.

When money in a contract is deferred, the competitive-balance tax number — the luxury tax — is discounted. With a source saying a “majority” of Ohtani’s contract is deferred, the discount could be significant. Typically, a CBT number is the average annual value of a deal — in this case $70 million. But depending on the size and length of the deferrals, Ohtani’s CBT number is likelier to wind up in the $40-50 million-a-year range, an enormous benefit for the Dodgers.

The deferrals also affect the net present value of the deal. There’s a rule of thumb across all walks of life: Money today is more valuable than money tomorrow, inflation being what it is. When you defer money, you’re taking less. The Dodgers are operating in an environment in which the prime rate is 8.5%. And with money today being so pricey, it lowers the present-day value of the deal by a significant margin.

Regardless, in the end, Shohei Ohtani will be paid 700 million US dollars by the Dodgers. It’s an obscene amount of money. It’s just going to be seen as less by the league’s accounting — and will allow the Dodgers to add even more around Ohtani as they try to win a championship.
I am not sure that I buy this line of thinking. It is like saying that you are saving money because you bought something on 12 months same as cash.

The issue to me isn't the owner's money -- I could care less what they spend on the players and I don't particularly like the Dodgers. I just see deferred payments as being considered for the purpose of the luxury tax in future years. So if Ohtani receives 500 million over the next ten years and then gets paid another 10 million a year for the next 20 years to make up the remaining 200 million, that is 10 million each year towards your luxury tax line that doesn't get you anybody in uniform.

The Mets have salaries of 274 million, but their luxury tax bill is based on 299 million -- I guess due to deals that are still being charged to the Mets, like Verlander's.
12-12-2023, 05:51 PM   #894
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QuoteOriginally posted by Rondec Quote
I am not sure that I buy this line of thinking. It is like saying that you are saving money because you bought something on 12 months same as cash.

The issue to me isn't the owner's money -- I could care less what they spend on the players and I don't particularly like the Dodgers. I just see deferred payments as being considered for the purpose of the luxury tax in future years. So if Ohtani receives 500 million over the next ten years and then gets paid another 10 million a year for the next 20 years to make up the remaining 200 million, that is 10 million each year towards your luxury tax line that doesn't get you anybody in uniform.

The Mets have salaries of 274 million, but their luxury tax bill is based on 299 million -- I guess due to deals that are still being charged to the Mets, like Verlander's.
This is how it works (ESPN):

Shohei Ohtani's historic contract with the Los Angeles Dodgers will see him defer $68 million of his annual $70 million salary, sources familiar with the deal said Monday, significantly lowering his new team's payroll and potential tax burden.

The Dodgers announced Monday they had signed the two-time MVP, after Ohtani had agreed Saturday to a 10-year, $700 million contract, by far the richest in the history of North American professional sports. A source said then that the majority of the contract would come in deferred money; under this structure, however, Ohtani is deferring more than 97% of his earnings. The deferred money -- totaling $680 million -- will be paid to Ohtani between 2034 and 2043, a source said.


Shohei Ohtani to defer $680M in Dodgers contract, sources say - ESPN
12-12-2023, 05:54 PM   #895
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SF Giants sign Korean star OF Jung Hoo Lee for 6/$113M
12-12-2023, 05:56 PM   #896
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QuoteOriginally posted by luftfluss Quote
The deferred money -- totaling $680 million -- will be paid to Ohtani between 2034 and 2043, a source said.
Baseball finance, very interesting.
12-12-2023, 06:11 PM   #897
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QuoteOriginally posted by luftfluss Quote
This is how it works (ESPN):

Shohei Ohtani's historic contract with the Los Angeles Dodgers will see him defer $68 million of his annual $70 million salary, sources familiar with the deal said Monday, significantly lowering his new team's payroll and potential tax burden.

The Dodgers announced Monday they had signed the two-time MVP, after Ohtani had agreed Saturday to a 10-year, $700 million contract, by far the richest in the history of North American professional sports. A source said then that the majority of the contract would come in deferred money; under this structure, however, Ohtani is deferring more than 97% of his earnings. The deferred money -- totaling $680 million -- will be paid to Ohtani between 2034 and 2043, a source said.


Shohei Ohtani to defer $680M in Dodgers contract, sources say - ESPN
I assume they will have 68 million dollars a year on their cap then between 2034 and 2043? Either they have a contract that is 20 years and 35 million a year or 2 million a year for the first ten years and 68 million a year for the second ten years.

It may help the team while Ohtani is on it, but it could be problematic in the 2030s.
12-12-2023, 07:51 PM   #898
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QuoteOriginally posted by robgski Quote
Baseball finance, very interesting.
The Ohtani deal is certainly unprecedented. He makes so much in endorsements that deferring $680M apparently has no impact on his lifestyle.
12-12-2023, 08:11 PM   #899
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QuoteOriginally posted by Rondec Quote
I assume they will have 68 million dollars a year on their cap then between 2034 and 2043? Either they have a contract that is 20 years and 35 million a year or 2 million a year for the first ten years and 68 million a year for the second ten years.

It may help the team while Ohtani is on it, but it could be problematic in the 2030s.
Think of it this way: by the mid-2030's MLB's luxury tax threshold will likely be greater than than the current $233M. So while that $68M will still be highly impactful, it will be more manageable in ten years.

Also important, if a team exceeds the luxury tax by too much, they will be penalized in the draft. The Mets did, and during the draft lottery last week, the Mets had their slot - #9 - dropped by 10 slots to #19 as a penalty.
12-12-2023, 09:56 PM - 2 Likes   #900
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It isn't 68 million for those years as there's a 10% devaluation per/year (or thereabouts, I'd have to look up the article). While the Dodgers will pay out 680 million over the lifetime of the contract, it will only hit their books as something like 460 million overall. Baseball finance at its best. Since he's making more than 30 million a year in endorsements at the moment, it is also in his interests tax wise, not to collect most of his salaray in the short term. This is even more so being in California with a state tax in the 13-14% range that is going up next year. If he collects his deferred salary while living in a state with a lower state tax, he'll save more that way too.
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