The Dodgers Have Signed Shohei Ohtani. What Does It All Mean?

Shohei Ohtani is not on a plane to Toronto. He’s not hiding in your linen closet or lurking off the coast of Jamaica in a submarine. After years of intrigue, weeks of speculation, and days of looking for signs in flight plans and sushi restaurants, it’s over. After a free agent courtship to fit the player — in other words, unique — Ohtani will be a Los Angeles Dodger.

This is hardly the most interesting outcome. There will be no reset to the competitive order, no validation of an underdog’s creative sales pitch or intriguing roster construction. The Dodgers were already one of the best and most heavily scrutinized teams in baseball, and if Ohtani doesn’t mind a bit of a commute, he won’t even have to move. But if the destination is a bit of an anticlimax, the contract is dramatic enough to pick up the slack.

Ten years, $700 million. Seven. Hundred. Million. Dollars.

Obviously, it’s the biggest contract in the history of sports. It’s within a Bryan Reynolds of being as big as the second- and third-richest contracts in baseball put together. It’s enough to make a person want to stop using hyperbole, because when Mike Trout’s $426.5 million deal is an “incomprehensible” amount of money, what does the mind do when confronted with an additional $273.5 million, over a shorter term?

So yeah, Ohtani doesn’t have to move, because on that salary he could commute to Dodger Stadium by rocket ship if he wanted to.

Apart from the dollar figure — and if your ears are still ringing from “$700 million,” by all means, take a moment to collect yourself before you read on — there are two interesting components to this contract.

The first is the fact that it has no options or opt-outs. Over the past five years, Bryce Harper has perfected the art of spinning a no-opt-out contract into a sign of commitment to and faith in the organization; no doubt Ohtani will learn from his example. More than that, it means we won’t have to do this whole rigmarole again in four or five years.

The second is that more than half of the deal is in deferred salary, apparently at Ohtani’s insistence, in order to mitigate the massive financial impact of the deal on the Dodgers and help the team spend to remain competitive. The Dodgers are no stranger to contracts with big sticker values and lots of deferred money. Mookie Betts deferred $115 million of the $365 million contract he signed in 2020, to be paid in installments, without interest, over the 12 years after the contract ends.

Having to wait to get paid reduces the practical value of the contract; this is why you should take the lump sum and not the annuity if you win the lottery. As a result, on contracts with deferred money the MLBPA calculates the amount by which deferrals lessen the contract’s value — in Betts’ case, by about $5 million a year. That number is used to determine the contract’s value for competitive balance tax purposes.

Until the details of Ohtani’s contract are made public, our Jon Becker estimated what deferring most of Ohtani’s contract might look like financially. This estimate assumes $40 million in deferred salary per year, to be paid out in four-year increments after the contract ends.

The interest rate was applied extremely incorrectly, and upon fixing the formula, I got a staggeringly different number. Upon recalculating, the $400M in deferrals goes down to *$129M in present value* based on my hypothetical schedule, bringing the total down AAV down to $42.9M. pic.twitter.com/fKUdDDTLEg

— Jon Becker (@jonbecker_) December 10, 2023

The Dodgers could be deferring more salary, or paying it out over fewer years, but this estimate brings the AAV of the deal down to a hair under $43 million a year. If the real deferral ends up being anything like this number it’s a huge bargain. Aaron Judge, who was a year older at the time he signed and also, you know, doesn’t pitch, got $40 million a year from the Yankees last year. Even if the MLBPA number lands closer to $50 million, this contract is a hometown discount. Particularly because Ohtani can create value for his employer the way no other player can.

Ohtani has always jealously guarded the details of his private life and is the most meticulously noncontroversial player in the game. He makes Trout look like Dennis Rodman. Either in spite of or because of his approach to fame, Ohtani is the most marketable baseball player of the 21st century. The Dodgers are going to make a huge chunk of this contract back just in promotions and merchandising, maybe as much as half of Othani’s salary. They’re going to sell more no. 17 jerseys than Fanatics is able to print. (Savvy consumers will note that this was also true when Miguel Vargas and Joe Kelly wore no. 17. But you get the point.)

Then there’s the on-field impact. The Dodgers are one of the blessed few teams that understands how to make money by putting out a winning product, rather than just slashing expenses. Ohtani’s on-field contributions help the Dodgers sell tickets and advance in the playoffs, which should also fatten up their coffers.

What are those contributions? It’s a bit perverse that the most important part of the Ohtani signing is the least interesting, but if you’re reading or even aware of FanGraphs, you probably already know what Ohtani is about.

It’s fair to be concerned that a torn UCL will keep Ohtani off the mound for all of 2024, but even if Ohtani vowed never to throw a baseball again, he would’ve been the highest-paid free agent of this class. This past season, Ohtani hit .304/.412/.654 with 44 home runs and 20 stolen bases. His wRC+ of 180 was the highest in baseball by 10 points and the highest of any qualified hitter in this class by 46 points. On Friday, I wrote about the enormous collection of runs Juan Soto might score hitting in front Aaron Judge. Betts could score even more hitting in front of Ohtani and Freddie Freeman.

Even as a DH who only played 135 games, Ohtani was fifth in position player WAR in 2023. And that’s ignoring the contributions he can make as a pitcher once his elbow recovers.

It remains to be seen how much Ohtani will be able to pitch in the long term. He’s qualified for the ERA title once in his career, and has made more than 10 starts just three times. The 2024 season will be Ohtani’s seventh in the majors, and of those, he will have pitched basically three full seasons. But when he’s on the mound, Ohtani can be dominant. The one season he qualified for the ERA title, he struck out 219 batters in 166 innings and posted a 2.33 ERA. His pitching alone was worth 5.6 WAR.

Ironically, the Dodgers probably need Ohtani more as a pitcher than a hitter right now. After Ryan Pepiot, things get a little dark, and when listing off their starters, you get to “after Ryan Pepiot” about two rotation slots sooner than would be ideal.

But the nice thing about a 10-year contract is it gives Ohtani plenty of time to heal. And when he does, well, he’s the answer to a question that’s troubled humanity for decades: What would it be like if Spencer Strider were growing out of Corey Seager’s torso like Kuato from Total Recall? It turns out such a player is worth $70 million a year, minus some deferred money.

If you want further evidence of how special Ohtani is, and why he’s worth this much money, consider the conditions under which his free agency played out. Ohtani made it known up front that he did not want to be courted via the public rumor mill, and his suitors obliged by refusing to discuss him even on background.

Ironically, the resulting information vacuum generated league-wide hysteria all on its own. On Monday, Blue Jays GM Ross Atkins skipped the first day of Winter Meetings, reportedly to meet with Ohtani at the team’s spring training facility in Florida; when asked about his whereabouts on Zoom, Atkins obfuscated, as if he was on the run from Interpol.

When Dodgers manager Dave Roberts told reporters that his team had met with Ohtani, speculation swirled that even acknowledging the meeting constituted an unforgivable breach of the omerta, and that Ohtani might choose to sign elsewhere as a result. Farcical elements of the story continued into Friday, when a private jet purportedly carrying Ohtani to Toronto for a physical turned out to contain only the guy from Shark Tank (no, not Mark Cuban, the other one) and his family.

With Ohtani still at large, the teams that were still in on him did not want to commit big money elsewhere. And with a few exceptions (Aaron Nola and Sonny Gray, who signed with teams that were never serious candidates for Ohtani), the other potential top free agents decided to wait the market out until the Ohtani runners-up were flush and desperate. The result was two and a half extremely slow days in Nashville, until the Juan Soto trade chatter heated up, and some mild blowback as a premier offseason news opportunity turned into a non-event. (I had the two best helpings of grits I’ve had in my life on Monday and Tuesday, so everything turned out fine.)

Ohtani’s nonexistent relationship with the media has the potential to cause some problems downstream, but that’s an issue for another time. He’s entitled to conduct his free agency however he pleases; while it was inconvenient that the rest of the league was waiting around to see what he would do, that’s not really his problem. Besides, it’s not every offseason that one player can hold the entire market hostage like this, and we got plenty of wild stories out of it anyway.

Or let’s put it this way: Any list of the most special players in the league, the ones who are most difficult to replicate or replace, would have Ohtani at the top. But Soto would be close behind, maybe no. 2. Soto got traded this week, to the New York Yankees, in a deal that signals the potential dismantlement of a major contender and nationwide hipster favorite team. And it held the top spot in the news cycle for maybe 36 hours.

Ohtani is such a titanic figure that he can knock Juan Soto and the Yankees off the front page by not getting on an airplane and not attending Yusei Kikuchi’s fancy dinner party in Toronto. When Ohtani went off the radar, the entire sport stopped in place. That’s just another thing only Ohtani can do. He’s unique, and he’s getting paid like it.

Editor’s Note: An earlier version of this piece contained an incorrect estimate of the AAV of Ohtani’s deal once deferrals were accounted for; an updated estimate is now included. FanGraphs regrets the error.