Will Smith Is the Latest Dodger With a Deferred Deal

Jonathan Hui-USA TODAY Sports

Mookie Betts, Shohei Ohtani, and Yoshinobu Yamamoto walk into the Dodgers clubhouse in 2032, where… they’re greeted by Will Smith. There’s no punchline to this setup because it’s not joke, as the All-Star receiver has joined those other three Dodgers in inking a deal that’s at least a decade long. On Wednesday, the day before his 29th birthday, Smith agreed to a 10-year, $140 million extension.

Smith has already helped the Dodgers win a World Series and established himself as one of the game’s preeminent catchers. He’s second in WAR among catchers since 2019, the year he debuted, with his 15.8 WAR trailing only the 19.8 WAR of J.T. Realmuto, who took nearly 500 more plate appearances over that same stretch. He’s tops among all catchers for the 2021–23 stretch with 12.9 WAR, a span over which he and Realmuto (who had 12.6 WAR) had nearly identical PA totals. Though he still had one more year after this one before becoming eligible for free agency, he and the Dodgers had wanted to hammer out a long-term deal for a while, so much so that according to MLB.com’s Juan Toribo, the two sides had engaged in extension discussions “each of the last few seasons.”

Smith is coming off an admittedly uneven season. Though his 119 wRC+ was the lowest mark of his five-year career, he posted his second-highest WAR (4.4). He hit .261/.359/.438 with 19 homers in 554 plate appearances, but tailed off after a hot start:

Will Smith 2023 Splits
Split PA HR BB SO Barrel% AVG OBP SLG wRC+
1st Half 288 13 44 39 8.0% .279 .396 .494 144
2nd Half 266 6 19 50 5.3% .242 .320 .381 91

Smith made his first All-Star team (!) on the strength of that first half, but even then, all wasn’t quite well. On April 12, he suffered a concussion when a foul ball hit his mask and missed two weeks of action. Three days after returning, on April 30, he was hit by a Jake Woodford sinker. He suffered a broken rib and an oblique strain but played through them, and doing so created some bad habits with regards to his mechanics. From a September 22 piece by Jack Harris in the Los Angeles Times:

Instead of his typically smooth, compact inside-out swing, Smith said his bat path has been too “out to in” lately, leading to more whiffs and mis-hits on pitches he used to crush.

He said his front side is opening up too much, causing him to cut across the ball instead of driving it with his easy pop.

… Added [manager Dave] Roberts: “There was probably a little bit of guarding [the injury] initially after. And then when you’re talking about the rib, the oblique, that sort of dovetails into some changed mechanics.”

Particularly with the Dodgers’ awareness of his slump, the team probably should have dialed Smith’s workload back a bit more than it did; he matched his 2022 total of 106 starts behind the plate but DHed only 14 times, compared to 25 the year before. He had enough success in ironing out his mechanics that he went 5-for-12 with a double and a triple in the Dodgers’ three-and-out Division Series loss to the Diamondbacks, and he’s off to a 6-for-14 start this year, so there’s no reason to think he’s permanently broken.

As for the contract, it’s the longest ever for a catcher, surpassing the eight-year extensions of Joe Mauer, Buster Posey, and Keibert Ruiz, who came up in the Dodgers’ system, generally a level behind Smith, before being traded to the Nationals in the Max Scherzer blockbuster in 2021. Smith’s deal isn’t nearly as lucrative as either the Mauer or Posey ones for $184 million and $167 million — and that’s without adjusting for inflation, as both of those were signed more than a decade ago. In terms of unadjusted average annual value, Smith’s $14 million a year ranks just 12th among catchers historically and fourth currently, according to Cot’s Contracts. On an annual basis, that $14 million average comes to only about 60% of the $23.1 million that Realmuto, the game’s highest-paid catcher, is making.

That AAV requires adjustment, however, because as with the Ohtani and Betts deals — and those of Freddie Freeman and Teoscar Hernández, so long as we’re on the subject of the Dodgers — a significant amount of the money is deferred. In his case, it’s $50 million, with the team paying out $5 million a year from 2034–43. That reduces the AAV of Smith’s deal to $12.24 million for Competitive Balance Tax purposes, about 53% of what Realmuto (who himself deferred half of his $20 million 2021 salary) is making.

Structure-wise, according to MLB.com’s Mark Feinsand, Smith will receive a $30 million signing bonus — half payable on November 15, the other half on January 15 — and be paid $13.55 million this year (replacing the one-year, $8.55 million contract he signed in January), then $13 million a year for 2025–27, $9.5 million for ’28-32, and $9.95 million for ’33. That’s a cool breeze running through Guggenheim Baseball Management’s bank account; in 2028, Betts will be taking home more than three times as much ($30 million), and Yamamoto nearly that ($26 million). While he doesn’t have explicit no-trade protection, he’ll reach 10-and-5 status in mid-2028, and his contract has one other provision that protects him: If he’s traded, the deferred money becomes payable in season, meaning that the acquiring team will take a larger CBT hit unless the two sides agree to a similar arrangement.

Even given the length of the deal, ZiPS is surprisingly optimistic about Smith. Via Dan Szymborski:

ZiPS Projection – Will Smith
2024 29 .259 .355 .452 471 74 122 21 78 61 94 2 118 5 4.2
2025 30 .252 .349 .436 472 72 119 20 76 61 95 2 112 4 3.8
2026 31 .251 .347 .430 467 70 117 19 72 60 96 2 110 3 3.6
2027 32 .243 .339 .407 457 65 111 17 68 58 95 2 102 2 2.9
2028 33 .240 .337 .401 441 62 106 16 62 55 94 2 100 1 2.6
2029 34 .233 .328 .383 420 56 98 14 57 51 92 1 93 1 1.9
2030 35 .232 .328 .375 392 51 91 12 52 48 87 1 91 0 1.7
2031 36 .231 .327 .372 363 47 84 11 46 44 81 1 90 -1 1.4
2032 37 .227 .321 .360 361 44 82 10 45 42 81 1 85 -2 1.1
2033 38 .224 .317 .349 312 37 70 8 37 36 71 1 82 -3 0.7

That’s 23.9 WAR over the life of the contract, with 17.1 WAR in the first half of the deal, a very strong return. In fact, the ZiPS suggested contract for this projection is $164 million over 10 years, but once the deferred money is accounted for, the Dodgers are paying him the equivalent of about 75% of that in present value. This is a very good deal for them, and if it seems like Smith is getting the short end here, it’s just that the two sides have figured out a mutually advantageous way of structuring the payments. To these eyes, the way it makes the most sense is to think of that signing bonus and the higher salaries of the first four years as one deal that without deferrals averages out to $20.6 million a year over the next four years (which would be the second-highest AAV for a catcher, surpassing Salvador Perez’s $20.5 million), and then about $9.6 million per year for the last six, a little less than the $10.15 million James McCann is making as a well-compensated backup.

Particularly in the wake of the Ohtani contract, I’ve seen complaints that the Dodgers’ penchant for using deferred money is somehow a subversion of the Competitive Balance Tax system — as if that were sacrosanct — and therefore bad for baseball. I don’t find this notion particularly convincing. The league and the owners knew exactly what they were doing when they designed this system; as former MLBPA executive subcommittee member Collin McHugh told The Athletic recently, “They’re better at finding loopholes in the system because that is their job, to maximize profit” for the 30 owners. Does anyone out there actually think that even the most miserly of the multimillionaires and billionaires who own teams got filthy rich without understanding the time value of money and the advantages, tax-related and otherwise, of spreading out large payments? The concept permeates our society; not all of us are fortunate enough to have socked away money for retirement, but at some point, most of us have been encouraged to participate in a pension plan, 401k, or IRA that provides tax advantages and spreads out our income to compensate for lesser earnings down the road.

As for the players and owners, in December the Wall Street Journal’s Linsdey Adler and Richard Rubin reported that the owners have proposed limits on the amount of salary that can be deferred, with one 2021 proposal including a full ban, but the MLB Players Association rejected the idea. Understandably, they have no incentive to give up that right without receiving major concessions in return. Maybe they’d agree to forgo deferrals if the owners were to allow players to reach eligibility for arbitration and/or free agency more quickly, but we all know that’s not happening anytime soon.

Anyway, it’s not like the Dodgers, who now have $915.5 million worth of deferrals on their books for the salaries of Betts, Freeman, Hernández, Ohtani, and Smith, are doing this while avoiding paying the CBT. They’re well past the fourth-tier threshold of $297 million, and figure to be paying taxes annually for the foreseeable future, with increasingly steeper penalties and the risk of an inflexible roster; it’s hardly inconceivable that some of these contracts could go south and cause the Dodgers headaches down the road. As for Smith, he’s now got a handsome deal that rewards him for his place as part of the team’s foundation, with protection from the cumulative impact of so many innings behind the plate. Good for him, and good for the Dodgers.

Brooklyn-based Jay Jaffe is a senior writer for FanGraphs, the author of The Cooperstown Casebook (Thomas Dunne Books, 2017) and the creator of the JAWS (Jaffe WAR Score) metric for Hall of Fame analysis. He founded the Futility Infielder website (2001), was a columnist for Baseball Prospectus (2005-2012) and a contributing writer for Sports Illustrated (2012-2018). He has been a recurring guest on MLB Network and a member of the BBWAA since 2011, and a Hall of Fame voter since 2021. Follow him on Twitter @jay_jaffe... and BlueSky @jayjaffe.bsky.social.

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Travis Lmember
23 days ago

I’m curious how others see the deferred money working out for LAD, ignoring the salary cap issue. Most of the time, these deferred money deals feel like a team spending beyond their means. For the Dodgers, however, I think the strategy is to become bigger than the Yankees by growing the fan base, especially in Japan.

Their tv deal doesn’t expire until 2039, but I bet they are printing money for broadcast rights overseas.

Last edited 23 days ago by Travis L
23 days ago
Reply to  Travis L

There’s 3 things in play here:

1: The Dodgers are owned by a consortium that originates in an investment group. Deferred money has to be escrowed 2 years after the season when it is earned, but it can be escrowed in non-cash assets; eg, the Dodgers can use interest-bearing investment vehicles to secure it, and reap any interest above the interest rate of the deferral (which, at least in Ohtani’s case, is all of it!)

2: It shows you how much extra cashflow these big organizations have when you let them fund things outside of their normal baseball expenditures and incomes. Teams are normally quite limited in how much debt they can take on (with MLB usually only granting exceptions to the debt requirements for actual team purchases), because this maximizes franchise values (by not letting them be encumbered by debt). This vehicle allows the teams to incur debts that aren’t counted against that limitation and fund them in ways that don’t require direct cash flow (as above in 1).

3: I think this expects that the overall inflation of salaries in MLB and in the dollar generally will not be as low as it has been in most of our lifetimes (where it has been historically low). These dollars are deferred so far into the future (paid out in the 10 years AFTER a 10 year contract) that the Dodgers have a reasonable expectation of viewing a lot of them (like Smith’s 5m per year in years 11-20) as a negligible expense at that point. It will no longer count against the tax (because it counts now).

Yes, the Dodgers have deferred around 90m per year of payments for most of the 2030s. But they can fund that with interest-bearing investments until the payments start, and it may be the equivalent of only 40-60m in todays money by that point. That’s not going to encumber them in a really significant way (though it may affect their spending generally). The key personnel clause in Ohtani’s contract suggests that the current Dodger ownership group has no intention of selling during this window, since the departure of Mark Walter allows Ohtani to opt out.

Old Washington Senators Fanmember
23 days ago
Reply to  Travis L

What’s funny is the double standard – whilst the Dodgers are praised for deferring cash, when the Nationals did it or tried to do it, they were criticized.

What it shows is how the Big Boys – Dodgers, Yankees, etc. – have a huge advantage financially. Thankfully this hasn’t manifested itself on the field to the extent it’s like European soccer clubs.

23 days ago

I mean … I saw a joke on the socials today about how Bobby Bonilla is also being paid by the Orioles, seemingly in perpetuity.

23 days ago

The environment is different now.
The Nats were deferring money in an age of near zero interest, that is not what the Dodgers are dealing with.
The time value of money is very different now and if predictions of high interests lasting another decade the calculus changes significantly.

23 days ago
Reply to  fjtorres

Whether and how much interest is on the deferrals is a negotiated item. Most deferred money does NOT have 0% interest like Ohtani agreed to.

22 days ago
Reply to  mikejunt

Not today. But five, six years ago?
Interest on big loans was nil.
In Japan it was negative.
Which is the point: there wasn’t much to negotiate.
Are you familiar with the collapse of the Silicon Valley bank a year ago? They went under becuause they put mostbof their cash into long term low interest securities they coudn’t cash out without big penalties and which were no longer worth their face value so when they could be cashed out would be worth less than invested. When people tried to get their money from the bank, the bank couldn’t get enough cash and imploded.

As the article mentioned, Ohtani get all the interrest his defered money earns in interest so if inflation by then drops below the interest on his secuties, he makes more than the nominal but if it gows even higher, he gets less value.

And there’s no telling how that will go in ten years.
(Ten years ago, a dollar was worth 31% more than today. So taking 2014 dollars and spending them in tangibles–gold, diamonds, food!–would be worth more today than most long term securities from 2014.)
So today front loading benefits the player more than interest bearing deferrals which are a crap shoot. At least they can manage the money day to day to protect its value.

As I said, different times.