2023 MLB (non-Tigers) catch all thread

[gehringer_2]

6 hours ago, Edman85 said:

On the contrary, there was some scuttlebutt that the huge luxury tax payments the Mets et. al. paid this year are essentially being used to help teams whose RSN's are falling short on payments.  This can only help keep that fund replenished.

Will the luxury tax on Ohtani end up being more than the entire Orioles or A's payroll, or even both?

Edited December 10, 2023 by gehringer_2

[Cruzer1]

10 hours ago, gehringer_2 said:

Will the luxury tax on Ohtani end up being more than the entire Orioles or A's payroll, or even both?

Most of the 700 million is being deferred, to avoid paying luxury tax.

[gehringer_2]

49 minutes ago, Cruzer1 said:

Most of the 700 million is being deferred, to avoid paying luxury tax.

so the hope is that by the time he hangs up his cleats, inflation will have devalued the payments owed enough to where they won't create significant luxury tax  liability or drag on current payroll - or that the whole CBA will have changed enough to make it all moot. If they still owe him $20M/yr in 25yrs, at 2.5% inflation that only costs them ~$11M in today's dollars. OTOH, if most of the money is 20+yrs out, the contract isn't really worth anywhere near $700M in real terms either. Either way, it's risking a lot on a guess about what the Federal Reserve will do far into the future.

Considering that his arm is going into the shop for the second time and he's not been a particularly high average/low K hitter for his career that you'd expect to have a better chance to still be hitting much past 35 it's a bold move for the Dodgers to say the least.

Edited December 11, 2023 by gehringer_2

[Longgone]

4 hours ago, gehringer_2 said:

so the hope is that by the time he hangs up his cleats, inflation will have devalued the payments owed enough to where they won't create significant luxury tax  liability or drag on current payroll - or that the whole CBA will have changed enough to make it all moot. If they still owe him $20M/yr in 25yrs, at 2.5% inflation that only costs them ~$11M in today's dollars. OTOH, if most of the money is 20+yrs out, the contract isn't really worth anywhere near $700M in real terms either. Either way, it's risking a lot on a guess about what the Federal Reserve will do far into the future.

Considering that his arm is going into the shop for the second time and he's not been a particularly high average/low K hitter for his career that you'd expect to have a better chance to still be hitting much past 35 it's a bold move for the Dodgers to say the least.

I believe any deferred payments are added to the luxury tax calculation for the period of the contract, but adjusted to present value, it is not postponed to the period beyond the contract.

[Cruzer1]

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.

https://blogs.fangraphs.com/the-dodgers-have-signed-shohei-ohtani-what-does-it-all-mean/

[1776]

Deferred salary aside, Ohtani’s per game salary comes out to about $436,000 over the 10 year deal. 
Over $100,000 per at bat. 
 

[oblong]

I saw a report that it was estimated the Angels brought in $20M a year extra by having Ohtani.

The old timers going ape **** over this deal miss the point.  He's not being paid that for what he will do on the field. He's a unique case. The Dodgers will now have millions of eyeballs on their games from Japan. Eyeballs = Dollars.

 

[Tenacious D]

16 minutes ago, 1776 said:

Deferred salary aside, Ohtani’s per game salary comes out to about $436,000 over the 10 year deal. 
Over $100,000 per at bat. 
 

Kind of takes the sting out of striking out.

[gehringer_2]

4 hours ago, Longgone said:

but adjusted to present value,

Interesting - so that also depends on an interest rate assumption. So net present value of the deferrals will be a lot less with interest rate up at 5% than they would have been before the Fed started turning the screws.

Edited December 11, 2023 by gehringer_2

[SoCalTiger]

I was told there would be no math. 

[Tigermojo]

Ohtani getting $2 million per year. $68 million deferred every year! The league is ok with that?

Dodgers indeed. Tax dodgers.

Edited December 11, 2023 by Tigermojo

[oblong]

The league should be fine with it.  I'm a little surprised the MLBPA would be ok but I haven't and can't do the Present vs Future value math right now but I would bet the present value, and the value over the next 10 years compared to the following 10 years means the dollar amount is not insane.  I messed around with it a few days ago and had figures like $37M = $70M in 10 years.

But on the surface getting $20M  for the next 10 years, then $680M in years 11-20..... not outrageous to me.  The question to ask is what is the value in years 1-10 compare to the corresponding years 11-20?  I.E.  Value of a year's in 2028 vs 2038.  In the year 2038 he'll get paid $68M.  We've been saying this since 1975, 'In year X, $YM will seem like peanuts".  

  

 

[KL2]

47 minutes ago, oblong said:

The league should be fine with it.  I'm a little surprised the MLBPA would be ok but I haven't and can't do the Present vs Future value math right now but I would bet the present value, and the value over the next 10 years compared to the following 10 years means the dollar amount is not insane.  I messed around with it a few days ago and had figures like $37M = $70M in 10 years.

But on the surface getting $20M  for the next 10 years, then $680M in years 11-20..... not outrageous to me.  The question to ask is what is the value in years 1-10 compare to the corresponding years 11-20?  I.E.  Value of a year's in 2028 vs 2038.  In the year 2038 he'll get paid $68M.  We've been saying this since 1975, 'In year X, $YM will seem like peanuts".  

  

 

Im not so sure the league will be fine with it. It's a massive exploitation of the system to avoid the luxury tax. Now, the tax is pretty much worthless. 

(not to mention the deal is gonna piss off the feds too)

Edited December 11, 2023 by KL2

[SoCalTiger]

It's allowed per the rules which will probably be changed the next time around. 

[Tiger337]

3 minutes ago, KL2 said:

Im not so sure the league will be fine with it. It's a massive exploitation of the system to avoid the luxury tax. Now, the tax is pretty much worthless. 

That was my impression too.  

[oblong]

3 minutes ago, KL2 said:

Im not so sure the league will be fine with it. It's a massive exploitation of the system to avoid the luxury tax. Now, the tax is pretty much worthless. 

It’s no different than not paying taxes today on your investments you will get in 20 years isn’t it?  Why should they be taxed on money not being paid?   Massive is a subjective term. 

[KL2]

10 minutes ago, oblong said:

It’s no different than not paying taxes today on your investments you will get in 20 years isn’t it?  Why should they be taxed on money not being paid?   Massive is a subjective term. 

no. 

By stretching it out, it lowers the hit in today's luxury cap. So instead of paying on $70million the Dodgers are now paying on $48million. That means less in luxury tax penalties to other owners and the fear is now big market teams will do this and just overpay and defer to take players from small markets where they can't do the same. The luxury tax was supposed to keep the Dodgers and Yankees of the world from signing everyone without requiring a massive luxury tax pay. 

And by deferring the money he'd pay taxes on it wherever he lives. So if he doesn't live in California in 2034 or even the US it would be less money in real-life taxes. 

Edited December 12, 2023 by KL2

[1776]

1 hour ago, Tigermojo said:

Ohtani getting $2 million per year. $68 million deferred every year! The league is ok with that?

Dodgers indeed. Tax dodgers.

This should set the Dodgers up nicely to grab Yamamoto. I have to wonder if Ohtani’s plan didn’t have Yamamoto in mind to begin with when constructing the contract. I don’t think you’d get players in many other countries/cultures, if any, to agree to this type deal. Two million a year? Huge egos can’t survive on a paltry two million a year. 
 

[KL2]

1 minute ago, 1776 said:

This should set the Dodgers up nicely to grab Yamamoto. I have to wonder if Ohtani’s plan didn’t have Yamamoto in mind to begin with when constructing the contract. I don’t think you’d get players in many other countries/cultures, if any, to agree to this type deal. Two million a year? Huge egos can’t survive on a paltry two million a year. 
 

He makes 50 million from other ventures

[1776]

43 minutes ago, KL2 said:

Im not so sure the league will be fine with it. It's a massive exploitation of the system to avoid the luxury tax. Now, the tax is pretty much worthless. 

(not to mention the deal is gonna piss off the feds too)

Piss on the Feds but I agree with your above point 100%. It defeats the purpose of the luxury tax entirely. 

[oblong]

Wrong. 
 Why would they be expected to pay on $70M when that’s not the actual value? The “luxury tax” was supposed to do what the text of the rules allows the clubs to do. Ohtani wasn’t going to end up in Pittsburgh or Colorado or Baltimore. The luxury tax or CBT is not a salary cap.  It’s  within the rules and didn’t severely alter the pay landscape.  

[oblong]

The purpose isn’t what you think it is. 

[1776]

1 minute ago, KL2 said:

He makes 50 million from other ventures

He’ll make more than that now. He’d probably be a better agent than a lot of them out there now. It’s hard not to like the guy. Being a Dodger will give me reason to try though.

[gehringer_2]

45 minutes ago, KL2 said:

no. 

By stretching it out, it lowers the hit in today's luxury cap. So instead of paying on $70million the Dodgers are now paying on $48million. That means less in luxury tax penalties to other owners and the fear is now big market teams will do this and just overpay and defer to take players from small markets where they can't do the same. The luxury tax was supposed to keep the Dodgers and Yankees of the world from signing everyone without requiring a massive luxury tax pay. 

And by deferring the money he'd pay taxes on it wherever he lives. So if he doesn't live in California in 2034 or even the US it would be less money in real-life taxes. 

The deferred payment is worth less, so they should pay the tax on the 'true' amount - nothing wrong with that. The only joke is on the public, which thinks Ohtani is getting $700M when it may be something more like $450M in constant dollars. And that is actually the biggest question in this - who got to decide what the discount rate applied to the deferred payments is? That number has a very large impact on what the tax charge will be.

Edited December 12, 2023 by gehringer_2

[CMRivdogs]

Just remember the Mets are paying Bobby Bonilla $1.19 million a year since 2010 and will continue until 2035. It's part of the $5.9 mil he was owed when he was released in 1999.