Shohei Ohtani Is Not Playing For Your Favorite Team And That's Okay

Kenta Harada. Getty Images.

I originally meant to break the Shohei signing it but my parent's wifi was down due to a neighborhood Comcast outage during a family reunion this weekend. Long story but I figured next best thing is helping the handful of fanbases that really wanted him. It's not everyone - unfortunately - because a lot of owners are cheap and even more organizations fundamentally can't support his stardom. But there's enough clubs who genuinely could have and would have 

Even as a Cubs fan, I'm writing this blog on behalf of that bigger group. 

First though, I think it's best we start with a collective understanding of the finances around his deal. At least to the best we can. The big terms are simple to remember. $700M over 10 years. But the mechanics are a little more nuanced that actually should make you question your own club's financial acumen.

Specifically, we know "the majority of Ohtani's salary is deferred" which could mean anywhere from $351M to $600M, Probably somewhere in between is my guess, but we don't know exactly how much right now. The consequences of this are substantial. 

High Level: we all agree that $1 today is worth less than $1 a year from now. And just spitballing without my calculator, you'd need about $0.94 to make $1 over a year. I don't have the discount rates at hand and I'm not looking up the most recent CPI, but I'm comfortable with the concepts we're building here. Inflation, interest rates, investing. Net present value. You guys are smart enough to know that money grows over time. 

So let's be real conservative and say Ohtani is deferring $400M of the $700M meaning he's getting paid $300M over the 10-years of the contract. The $400M deferral gets paid out over some terms not yet disclosed. So let's be conservative again and say $400M over 25 years. We're throwing shit at the wall now but it's the general concept that helps. Under this hypothetical, the Dodgers would pay Shohei $30M from 2024-2034, and then $16M every year until 2059 when I'm long dead. 

If we work the value of $1 into the equation now, you can easily understand that the $16M the Dodgers would pay in 2040 (for example) is not actually $16M today. It's probably closer to $10M. And if you package all that up into one valuation for the contract, you'd be discounting that $400M deferral to something close to $250M, maybe a lot more but probably not a lot less. And that doesn't account for the Dodgers' financial prowess. Maybe the best run business in baseball, which means I think they'll afford most of Shohei via investment income on a deal probably valued closer to $500M than $700M. 

I could be wrong, but it's not insane to think that the Dodgers will have enough revenue and the timeframe to invest it properly to substantially drive down the true cost of this deal. That's my read as a licensed Certified Public Accountant with all the bells and whistles the designation allows. Cool for me. More cool that we're just spitballing numbers to grasp a broader talking point about Shohei Ohtani. 

The Dodgers aren't committing $700M over the next 7-years. They packaged it up under a long-term vision and that's what really grinds my gears with the rest of baseball's offers. This has significant benefits to the luxury tax calculations and cash-on-hand for future deals. It's such a slam dunk smart way to do business. I just don't understand why it seems he Dodgers are consistently able to pull off the biggest deals and the largest payrolls while having the best farm system and MLB player development system and all this bullshit. How do the Dodgers do it? Why are they so much better? 

I'll get specific for each club and what they can do to move on from the Dodgers landing another superstar. I just want to emphasize that I only heard the Dodgers talk this creatively about their pitch. If things go well, Shohei becomes a money-making icon long after he's retired and based on that alone, I'd expect to see more of these monster deferrals pop up. But alas, I don't and maybe my salt is born from the hard realization that the Cubs need luck to win 84 games right now. Long offseason sure, but even longer path to competing against the Dodgers, Braves and Phillies much less the other NL clubs trending up. 

Speaking of which, here's a good path forward for the teams that wanted Shohei. Exactly 700 words into the blog. 

Mets: he didn't want to be there anyways. That's what I'd be telling myself, especially considering Steve Cohen could sell a painting to cover the $700M paycheck tomorrow. There's nothing about the front office resources or commitment that should weigh you down. He didn't play in New York because he doesn't want to be in New York. That's not an indictment on your ball club as much as it is his low-key demeanor paired with the international stardom and natural interest in a high-quality outdoor life. Does California offer that? Yes. Yes it does. Everyone fought that battle from Day 1 and you guys had the highest barrier to entry. Move on with the checkbook and be thankful the Braves didn't orchestrate history's biggest heist. 

Braves: I've learned to tolerate the chip Braves fans hang on their shoulder. I know some of them wanted Shohei and it's actually crazy they have the long-term flexibility to even be in the discussion. But realistically you can't tell me this would happen with a straight face. That's Manchester City levels of corrupt roster building. I'd need the NBA to step in and veto the deal based on competitive balance. No way it was realistic from the get go, and honestly the Braves don't need any more help in the lineup. They need healthy pitching and upon inspection, Shohei isn't that guy right now. You'd be better off spending the $700M on the next 10 impact players under 22. God knows you got them. 

Cubs: Kinda sucks/really sucks when you need dominant starting pitching and power left-handed hitting in the long run. Kinda sucks when you have an app that Japan would devour for $240/year starting tomorrow. Sucks when you have his countryman in right field and all the positive goodwill Major League Baseball has to offer from a magical stadium to an unparalleled loving fan relationship to becoming the city's most significant athlete since Derrick Rose turned Chicago inside out. The chance to be on Mt. Rushmore with MJ and the guy who saved a world class city from a decade of sports irrelevance. That's what sucks most about it and I suppose it's even worse that I thought the Cubs could do it. So path forward involves the hardest step, which is getting over the pain. I have a lot of it in my heart right now and the path forward starts with cleansing it. After that, Jed needs to get 450 good plate appearances at 3rd base, a left handed hitting 4th outfielder, a 1st baseman that slugs over .500 and two starting pitchers that could compete in a playoff series. Tall fuckin task considering Shohei checks so many boxes. But we need to get over him. Remember? That's step one. After that we need to be extremely creative over a 2-3 year window. Don't sign guys past the Hoerner/Happ extensions unless their last name is Yamomoto. 

Blue Jays: You guys got stiffed but please please please be smart enough to recognize you haven't paid Bo Bichette or Vlad Junior. Letting either go would be so stupid no matter how displeased you are with their lack of October success. I don't want to hear that when you're talking about to legitimate hall of famers in the middle of your lineup from our own minor league system. Be sensible and extend those guys first before you start handing out ownership in the company to Shohei Ohtani. That would move the lineup forward on paper, but consequently trash your existing superstar players that have watched Jose Berrios, George Springer, Kevin Gausman (v good) and Chris Bassitt (pretty good) get paid a butt load of money. If Shohei ended up in Toronto, I think the only sensible move thereafter would be extensions to both Bo and Vlad, or a game changing trade of either. There'd be no middle ground as I would expect both players to feel the same way. So maybe in some fucked up sense you guys dodged a bullet. And then maybe Manoah is back to his old self and one day we're all laughing about how lucky the Blue Jays are for not giving their entire budget to a DH with a shoddy elbow.  

Angels: Fuck off.

Mariners: Be honest. You only thought this was possible because or Ichiro. If you want to be honest like that then I'm willing to move on with you like an adult. Some tea leaves that there'd be money. Some rumors that it was part of the future. But realistically your owners would never commit to that contract. Your front office would never make such a substantial bet. It's completely uncharacteristic but for the Ichiro conntection. Which brings me back to my original point: stop it. The biggest contract in the history of sports will not be decided by childhood fandom. 

Giants: I actually though you guys had a chance here because it's a rare club that can compete with the Dodgers on the experience of preparing/helping/supporting the MLB roster. These guys are the cream of the crop in player experience and I put that very high on Shohei's list. He wants to compete at the highest level and he wants to be the absolute best his talent allows. The Giants jump off the page with that stuff and it just felt like that gave them a huge boost. Also, nice change of scenery from LA if that was his cup of tea, and we obviously know they have the money to make it happen. So now that they don't, they're competing directly against him in a division that will likely see the Padres emerge as a perennial 95 win club. That doesn't sit well with the Giants, which means I'd bank on them filling holes with significant contracts now and in the immediate future. They're too rich, successful, and well organized to settle for 4th place while the Diamondbacks trend up and Padres roll out a preposterous farm system. The path forward here means overpaying for good pitching and leading subsequent offseason's with authority. The A's leaving may not bump the economic impact right now, but they won't be far away from absorbing the next generation which means a bigger brand and more money to spend. They have the longest path forward within their own division but probably the best resources to fix in the long run. 

Also, maybe bring Buster Posey back. That guy was awesome. Maybe even a hall of famer? 

I say yes but I don't think 1st ballot. Really hard case to argue. Maybe some other time. 

For now I hope you guys are feeling better about the Shohei news. Bright side is no more Angels. Even with the Dodgers and Braves light years ahead of everyone else, we can all agree it's best for baseball that he will never play for the Angels again. 

That's a great thing.