Shohei Ohtani is the face not only of the Los Angeles Dodgers but also of the MLB and, due to his ability on the field, he was awarded a contract of 700 million dollars for 10 seasons. of which you will receive only 20 starting this year and until 2034while the remainder (680 million dollars) would be delivered between 2034 and 2044.
However, the Japanese’s incredible deal with the Los Angeles franchise may not be as juicy as it seems.since you could lose a lot of that money due to the decision (joint with the team itself) to postpone payments in an agreement that would last practically 20 years.
The deferral of his full payment means Ohtani is making an ‘interest-free loan’ to the Dodgers that, according to research from North Carolina State University through the program Poole Thought Leadership, would make him lose between 49 and 91 million dollars only in an initial scenario.
It is true that the value of the Japanese sensation’s contract is 700 million dollarsHowever, paying federal and state taxes could reduce it to about 340 mdd grandchildren, which could become approximately 172 million dollarsaccording to NC State’s calculation in an analysis that considers the time value of money.
If Shohei Ohtani had received the 70 annual ‘melons’ without the agreed delays, His approximate profit would have been around 263 million dollarsthat is to say, 91 million more of what he will theoretically earn for his stay as a Dodger for 20 years, until 2044.
Although if we leave the field of finance for a moment to return to the diamond, Ohtani’s impact has been immediate with a 2024 season in which he became the first player to achieve 50 home runs and 50 stolen bases, in addition to being a key piece in getting the Dodgers back to the World Series.
Why did Ohtani decide to defer his payments considering the losses and risk?
This is the million-dollar (or million-dollar) question surrounding the case of the Japanese baseball player and The answer would be to avoid taxes in the 10 years between 2034 and 2044 when Ohtani ends his contract and would be a free player, at which time he would ‘run’ to change his tax address.
And California has a retention rate of 14.4 percent which applies to the two million he earns annually but Shohei would be seeking to avoid it in the subsequent 10 years, receiving from a state like Nevada, which charges zero taxes despite the monstrous amounts that the player would enter.
However, there could be a setback in this hypothetical attempt by Shohei in which California intervened in those incomes because they were obtained in its territoryHowever, North Carolina State University notes that the laws are unclear about whether the state would have jurisdiction over such payments.
Although the decision of today’s designated hitter for the Los Angeles team would also be aimed at taking care of the finances of the Dodgers, who – although they could afford to pay a contract of this magnitude considering the commercialization of the player himself through image rights and sporting successes They would be in a difficult position to continue paying other high salaries and form a competitive team.
