Shohei Ohtani’s $700 Million Dodgers Contract Is Unlike Anything in MLB History

On Friday afternoon, USA Today’s Bob Nightengale tweeted a Green Eggs and Ham–sounding rebuttal to reports that Shohei Ohtani was bound for Toronto and set to join the Blue Jays: “Shohei Ohtani is NOT in Toronto. Ohtani is NOT on a flight to Toronto. Ohtani is at home in Southern California.”

Nightengale may not have known how right he was. Ohtani was so at home in Southern California that he decided to stay there—not just for the day, but for the next 10 years. On Saturday, Ohtani concluded his clandestine free agency by breaking the news himself: He’s signing with the Dodgers. As contemporaneous reports revealed, he’s getting a huge haul to do so: $700 million.

Bill James once wrote about Rickey Henderson, “If you could split him in two, you’d have two Hall of Famers.” The line applies even better to Ohtani. Take away the two-way star’s hitting or his pitching, and he’d still be one of baseball’s best players. Until now, though, he hasn’t been baseball’s best-paid player, thanks to the international signing rules that dramatically depressed his earning power when he elected to leave Japan and enter MLB at age 23. In the past several years, Ohtani has reshaped our conception of what’s possible in baseball. He’s rewritten the record book and even the rule book. Now he’s rewriting the checkbook by signing the richest contract ever inked by an athlete, in unadjusted dollars. In Ohtani’s rookie season, he made the league minimum; in his seventh season, he’ll make a new maximum. His deal (which may still be contingent on a sure-to-be-rigorous physical) nearly doubles the $360 million record for a free agent, set by Aaron Judge last December. Split Ohtani’s new salary in two, and you could pay two Hall of Famers.

The dollar figure is much more surprising than the destination (though as we’ll discuss, the dollar figure is somewhat deceptive). After all the speculation, consternation, and rosterbation about his next team, Ohtani chose the likeliest landing spot. He and the Dodgers have had mutual interest in each other since the future superstar was still in high school, and the franchise was long believed to be the favorite in this offseason’s sweepstakes.

As inscrutable as the 29-year-old’s preferences seemed during his hush-hush search for his next team, he had already told us his top priority. “I want to win,” Ohtani said in September 2021, as the Angels dropped out of the playoff picture yet again. “That’s the biggest thing for me.” In exchanging one nominally Los Angeles–based team for another, Ohtani is making the shortest geographical journey possible, but the 30 miles between Angel Stadium and Dodger Stadium make a world of difference in terms of team results. Ohtani never reached the playoffs with the Angels, but his new team hasn’t missed the postseason since 2012—the year before an 18-year-old Ohtani made his NPB debut. Prepare for October Ohtani.

In March 2015, I wrote about how hard it was to envision the Dodgers ever being bad. It’s no easier now. The Dodgers don’t have a competitive window; windows can close. Although the Diamondbacks won the National League pennant last season, they finished 16 games behind the Dodgers in the NL West. The Padres recently traded Juan Soto in an effort to trim payroll, and the mostly mediocre Giants, who were also suitors for Ohtani, came up short again in their latest pursuit of a star. (The Rockies, um, also exist.) Even after all the winning—and all the years without having high draft picks—the Dodgers still possess baseball’s sixth-highest-rated farm system, per FanGraphs. Between that talent and their knack for optimizing players, they’re as well-positioned as any team to keep winning for the duration of this deal. (The Angels’ farm system, drained in vain at the 2023 trade deadline in a last-gasp attempt to win with Ohtani, ranks dead last. Please, somebody, free Mike Trout.)

The Dodgers made sense as Ohtani’s top pick for so many reasons, even beyond their potential to set him up for signature high-leverage moments before the next World Baseball Classic. Ohtani and his longtime interpreter, L.A.–raised Ippei Mizuhara, won’t have to move. Ohtani won’t have to fly any farther than before to return to Japan, and he’ll join an organization with a long lineage of Japanese players, dating back to the trailblazing Hideo Nomo. In L.A., Ohtani can stay the biggest star in the sport while blending into the buzz of a celebrity-rich city. Even on the Dodgers roster, he’ll be one of several prominent names, most likely batting between Mookie Betts and Freddie Freeman in a dominant top of the lineup.

And then there’s the money. The Dodgers have a whole lot of it, and they’re committing a fortune to Ohtani. That said, they won’t be breaking the bank by quite as much as the record-demolishing dollar figure makes it sound. According to ESPN’s Jeff Passan, most of the $700 million in Ohtani’s deal is deferred and will be paid out after Ohtani’s 10-year tenure, Bobby Bonilla–style. Those dollars will depreciate due to inflation, which means the present value of the contract is less than $700 million—likely considerably less, though the precise parameters have yet to be reported. Average annual value is what counts for competitive balance tax purposes, but that AAV takes the time value of money into account. So Ohtani’s soft-cap hit won’t be as big as it would have been if no dollars were deferred and calculating his CBT figure was as simple as dividing 700 by 10.

Because the Dodgers won’t have as significant a CBT penalty as they would with a non-deferred deal, and because they won’t have to immediately pay Ohtani $70 million, they can still spend on other players, which is why Ohtani supposedly suggested this salary structure. Ohtani can brag about making more than Messi—or he could, if he were the type to brag—but his presence won’t preclude the Dodgers from having the means to upgrade the rest of the roster.

As it is, the Dodgers project to have MLB’s fourth-highest payroll in 2024, behind the Yankees, Mets, and Phillies. That figure will probably grow before Opening Day. The Dodgers didn’t spend much by their recent standards last offseason, and they won 100 games anyway. But a year after letting more talent leave than any other team, they’re back to being additive.

Because Ohtani will be limited to a DH role next season—he’s recovering from elbow surgery that will keep him off the mound until 2025—the Dodgers need dependable pitching. Walker Buehler will return to the rotation with a brand-new UCL, but behind him is the same unseasoned, injury-reduced group that manager Dave Roberts ran out during October’s NLDS, in which L.A. was swept by the Diamondbacks. (Minus free agent Clayton Kershaw, who had shoulder surgery last month.) That could soon change. The Dodgers have already been linked to trade candidates Tyler Glasnow, Corbin Burnes, and Dylan Cease. They’ve also been mentioned as a potential destination for another Japanese megastar, Yoshinobu Yamamoto, the best (and priciest) free agent left now that Ohtani is off the board. The 25-year-old ace of the Orix Buffaloes was posted in late November, and he has to sign with an MLB team by January 4.

Even with the deferrals, Ohtani surpassed expectations for how much he might make. When ESPN surveyed 26 team executives in May, only two predicted that Ohtani would command as much as $600 million, and no one went higher than $605 million. Although Ohtani went on to win a second unanimous AL MVP award, his injury put a damper on most sources’ salary expectations. So much for that. Maybe Ohtani’s flirtation with Toronto made the Dodgers desperate, or maybe he was always destined to make this much. One way or another, we can add this to the list of times that Ohtani proved pessimists wrong.

Would he have made even more with an operational right elbow? Maybe, but the standard dollars-per-WAR math that makes this signing seem like an overpay doesn’t map well onto Ohtani. As Friday’s flight-tracking saga demonstrated, he’s as singular an off-field figure as he is an on-field star—a global brand and a mainstream, crossover sensation of the kind baseball doesn’t make anymore. (Ohtani is selective as a spokesman, yet his earnings from endorsements dwarf any other player’s.) Some estimates say the Dodgers could recoup most costs of his contract in Ohtani-driven promotion, marketing, and advertising alone.

Of course, some of Ohtani’s capacity to sell tickets, drive ratings, and seal sponsorships is contingent on his remaining a two-way star. WAR-wise, Ohtani could probably be about as valuable in a corner outfield spot as he’s been as a pitcher/DH, but he wouldn’t be as big a draw. The Dodgers’ willingness to take this plunge suggests that they think he can continue to pitch at a high level, and Ohtani’s willingness to sign up for so long (without any opt-outs) implies that L.A. may have made him some assurances about permitting him to keep pitching as long as he can. It may seem implausible that Ohtani could be better than he has been, but there are some ways he could improve on the margins, and if any team can help him perfect his plate discipline and pitch selection, it’s the Dodgers. It definitely wasn’t the Angels, though Ohtani’s first MLB team does deserve credit for letting him strut his stuff despite the doubters and the dings.

With the Angels, Ohtani wasn’t much of a threat to opposing fans, who could enjoy his excellence without being bitter that he’d beaten their teams; despite his best efforts, the Angels usually lost. (RIP, Tungsten Arm O’Doyle.) Maybe he won’t be as widely beloved now that he’s richer than Robert Herjavec and taking his talents to a deep-pocketed, perennial contender. But for Ohtani to burnish his legend, he had to lose his halo. Joining the Dodgers will all but ensure he’ll check off the one accomplishment he couldn’t achieve on his own—qualifying for the postseason—while allowing MLB to maximize the PR potential of a once-in-a-century star. It should also give L.A. many more cracks at winning a title with more than a few fans in the stands. If that means spending $700 million or—almost as scary—making Max Muncy play third base, so be it.

Ohtani was already a peerless player. Now he has a contract and team to match.