Tax-Savvy Ohtani: $700 Million Deal With a Twist

Shohei Ohtani has signed a 10-year contract with the Los Angeles Dodgers, and it looks like he will only get $20 million through 2033

by Sededin Dedovic
Tax-Savvy Ohtani: $700 Million Deal With a Twist
© Tim Nwachukwu / Getty Images

Shohei Ohtani, a two-way sensation, redefined the landscape of sports contracts by signing a 10-year deal with the Los Angeles Dodgers that is anything but ordinary. And while the $700 million figure alone makes it the largest contract in sports history, the details reveal a financial strategy unlike any seen before.

Instead of receiving the full amount over the course of the contract, Ohtani opted to defer a whopping $680 million until his playing days with the Dodgers were over. That means he'll only receive a base salary of $2 million a year until 2033.

This unconventional move serves multiple purposes: Opening up the Dodgers' budget: By putting aside the majority of his salary, Ohtani is essentially creating a financial asset for himself for the Dodgers. This frees up significant resources for the team to build a championship-caliber roster.

That could mean bringing in other big players and creating a dynasty in Los Angeles. There are rumors that this was done in a deal and that the Dodgers intend to build a dream team. Tax Benefits: California's high income tax rate places a significant financial burden on athletes.

By deferring salary, Ohtani avoids paying current tax rates. He may then decide to move to a lower tax state, potentially saving millions of dollars. Maximizing Long-Term Earnings: By deferring his income, Ohtani is essentially investing his money for the future.

The deferred payments will eventually be paid with interest, significantly increasing the total value of his contract. And considering the amount of his monthly salary, those interests will be very high. Financial security: Despite the salary deferral, Ohtani remains financially secure.

His existing endorsement deals in the US and Japan alone bring in $50 million a year. When you look at everything, it can be said that he is currently the richest athlete, perhaps in the world, even though he won't cash out the money from this contract right away.

He prioritized long-term financial stability while ensuring the Dodgers had the resources to compete for championships. One thing is certain, the Dodgers have a passionate idea that they just have to see through to the end.

Shohei Ohtani Los Angeles Dodgers Los Angeles