This week, Shohei Ohtani signed a 10-year, $700 million contract with the Los Angeles Dodgers.
Ohtani is a unique entity—perhaps the best two-way player (both pitcher and hitter) since Babe Ruth. He was the first player in history to unanimously be named Most Valuable Player multiple times.
Ohtani’s contract is a quarter of a billion dollars larger than the previous highest salary in Major League Baseball—in fact, it’s the largest contract in the history of sports. Nearly the entire amount—$680 million—will be deferred to the end of the contract, allowing the Dodgers to meet payroll ceilings for the next decade.
While Ohtani is an outstanding talent, one wonders how wise it is to invest such an enormous amount of money in one player for such a long period of time—especially since Ohtani had surgery on his pitching arm in September (for the second time).
Athletes who appear healthy today can easily be derailed by accidents and injuries. Yet, the Dodgers will owe Ohtani nearly 3/4 of a billion dollars, regardless of whether or not he stays healthy and is able to perform.
Ask the NY Mets what happens when a big investment like this goes south. In 2000, they agreed to pay Bobby Bonilla a deferred $1.2 million per year for 25 years, starting in 2011. Bonilla last played in the major leagues in 2001, but he’ll be paid by the Mets until 2035 (when he’ll be 72 years old).
Will the bet on Ohtani pay off? Only time will tell. Will he bring a championship to LA? Or will his new team be on the hook for a payment that’s hit long and deep but doesn’t score?
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