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***Official - 2024 Major League Baseball Thread - Dodgers Cook With Gas While The Others Eat Cold Cuts*** (1 Viewer)

Evil empire 2.0. This isn’t good for baseball.
Because of revenue sharing, the Dodgers support teams with crappy ownership who won't spend money like the Pirates and Mariners. Dodgers are good for baseball because they want to win, not profit off of doing the bare minimum.
Yeah no……a salary cap and a closing of the deferred salary loophole needs to be instituted.

And all teams mandatory must be at least 80-85% of their cap.

Otherwise this game is going to go up in flames shortly.
 
But they are the only ones that can afford to do it to that level.
Which teams can’t afford it?
Every team can afford it. Not every team can afford to buy out of injuries. Or players having bad years. Or declining years on the back ends of contracts.

THAT’S the issue that large market fans forget about.
Yeah it’s long overdue to institute a true salary cap. There is literally no competitive balance and that makes for a league that won’t survive long term.

Bad bad things are coming when this current CBA expires.

I expect there will be another huge stoppage and we very well may lose an entire season to work the stalemates that are coming.

I love baseball…..it’s my favorite sport by far. But I watch NCAA baseball far more now than professional ball. And they are going to have their own problems now with NIL as well.
 
Yeah it’s long overdue to institute a true salary cap. There is literally no competitive balance and that makes for a league that won’t survive long term.
The NFL has done a great job of this. You don’t see or hear of a team buying their way to championship by just outspending everyone else. But in baseball we’ve seen this play out time and time again.
 
Santander just signed today. There are still lots of really good players available as free agents. There are still a handful of teams that have barely spent anything in free agency this year. Is the lack of a salary cap keeping teams from signing players? Is deferred compensation?

Yes, the dodgers print money, but they’ve invested a ton in their farm system, player development, and scouting (both international and domestic). This organizational depth and competence allows them to make trades for superstars when they are available, to cut bait on players early rather than overpay them (although it’s tough to see some of these guys go at times), and makes them more attractive to free agents.

You’ve got to spend money to make money, and I’d be pissed at owners for not making an effort to win or at least build towards winning. I’ll try to find it, but I saw a chart the other day of teams ranked by salaries as a percent of team revenue and Dodger were in the top five. Lots of teams complaining about the salary imbalance (but still cashing those sweet tax checks) were all at the bottom. Even high revenue teams like the Cubs and Yankees were in the bottom half of salary as a percent of revenue.
 
Evil empire 2.0. This isn’t good for baseball.
Because of revenue sharing, the Dodgers support teams with crappy ownership who won't spend money like the Pirates and Mariners. Dodgers are good for baseball because they want to win, not profit off of doing the bare minimum.
Yeah no……a salary cap and a closing of the deferred salary loophole needs to be instituted.

And all teams mandatory must be at least 80-85% of their cap.

Otherwise this game is going to go up in flames shortly.
Why would the game suddenly go up in flames? There is less salary disparity now than at basically any point in the last 25 years at the top. Was the game going up in flames when Boston and NY outspent everyone by a greater amount than any team does today?
 
But they are the only ones that can afford to do it to that level.
Which teams can’t afford it?
Every team can afford it. Not every team can afford to buy out of injuries. Or players having bad years. Or declining years on the back ends of contracts.

THAT’S the issue that large market fans forget about.
Yeah it’s long overdue to institute a true salary cap. There is literally no competitive balance and that makes for a league that won’t survive long term.

Bad bad things are coming when this current CBA expires.

I expect there will be another huge stoppage and we very well may lose an entire season to work the stalemates that are coming.

I love baseball…..it’s my favorite sport by far. But I watch NCAA baseball far more now than professional ball. And they are going to have their own problems now with NIL as well.
What issues do you think each side will want that are so unresolvable there will be a stoppage?

For example, if the PA wants a floor, the owners will trade it for a cap. It's been offered in each of the last four CBA negotiations and every time the players have been like eh CBT is as much of a cap as we want to give up.

And then they both move on to other stuff.

I'm not sure what pressing issues exist today that one thinks either side is upset enough over for either a strike or a lockout. They're all making tons of money.
 
Must be fun to be a Dodgers fan. I could see them winning 5 World Series between 2024 and 2030.
I’m a huge Dodger fan and I think this is getting out of hand. I mean they are getting everyone they want. Different when rings are expected because you outspend everyone by orders of magnitude. But hey - if you can…
 
Santander just signed today. There are still lots of really good players available as free agents. There are still a handful of teams that have barely spent anything in free agency this year. Is the lack of a salary cap keeping teams from signing players? Is deferred compensation?

Yes, the dodgers print money, but they’ve invested a ton in their farm system, player development, and scouting (both international and domestic). This organizational depth and competence allows them to make trades for superstars when they are available, to cut bait on players early rather than overpay them (although it’s tough to see some of these guys go at times), and makes them more attractive to free agents.

You’ve got to spend money to make money, and I’d be pissed at owners for not making an effort to win or at least build towards winning. I’ll try to find it, but I saw a chart the other day of teams ranked by salaries as a percent of team revenue and Dodger were in the top five. Lots of teams complaining about the salary imbalance (but still cashing those sweet tax checks) were all at the bottom. Even high revenue teams like the Cubs and Yankees were in the bottom half of salary as a percent of revenue.
Now we know what handle Scott Boras posts at over here...

I do believe that there is some fiscal responsibility being made by the clubs. The free agents out there right now all have plenty of question marks. Pitchers with iffy shoulders. Rotund corner infielders. Players that are demanding multi-year contracts running into their mid-late 30's. Clubs have seen the damage that these type contracts can do. Look at the Angels. My Red Sox have handed out plenty of craptastic contracts since their last World Series and that has gotten them nowhere fast. I think this is just natural push back by the owners against the players and their blood sucking agents (no offense @yoboras).

And as ~fish mentioned earlier, any club can do deferred salaries. just do a google search and you'll find plenty of terrible players getting paid for the next 5-20 years. Hell, even hockey teams are doing this now. I can't recall who it was, but someone recently signed a 3 year extension and deferred a **** ton of it because he is playing in a high tax state (probably california) and said he was aiming to retire in Florida or Texas where he'll pay no state income tax on it. That's like a 5-10% raise for doing nothing.

I'm certainly no Dodgers apologist, but if they are willing to sign all of these players, well that's the free market. And they are paying massive luxury taxes on it. There probably needs to be a firmer cap and perhaps a higher bottom - I think the NHL salary cap works out well as does the NFL, but of course all of these clubs do things to circumvent the caps in one way or another. I honestly have no issues with the Phillies, Yankees, Dodgers, Mets et al paying out the nose for these free agents, I have more of an issue with these cheap *** teams like the Pirates that destroy their fan base.
 
In the last 11 years, MLB has had 9 different champions, including Kansas City and Washington. Nobody's won more than two. All 30 teams have made the playoffs at least once, and half of them have been to at least one World Series, including Cleveland, Tampa Bay and Arizona. The team with the longest postseason drought plays in LA and likes to throw huge contracts at stars, so it's not like that guarantees success.

The regular season isn't a fair fight, but the playoffs are a crapshoot and 40% of the league gets in, including at least one team from each Central Division. It's possible to be competitive just with team control and arbitration players, and no matter how much the Dodgers spend, they'll never have better than about a 1-in-3 shot to win it all.
 
Also the most watched sports league in the world has a 4-time defending champion owned by guys from Abu Dhabi who make the Dodgers brass look miserly. So maybe competitive balance isn't that important anyway.
 
Santander seems like a bit of an overpay by the Blue Jays. He's become a reliable power source but doesn't much of anything else. That said, it fills a hole, the AAV isn't terrible and GM Ross Atkins is in job saving mode.

Toronto's biggest priority is extending Vlad Guerrero. If bringing in Santander somehow assist in that, it's money well spent.
 
The Dodgers have more than $1 BILLION dollars in deferred salaries.

In the old days when franchises were largely family owned, that amount of future liabilities would be unfathomable. The value of their asset would be greatly diminished by carrying that much debt. Now teams are owned by private equity and run by financiers. What could possibly go wrong?

I don't like the deferred contracts because I'm a California taxpayer but it's been done for decades. It helps the team's balance sheet, gives the player certainty of income from the end of their career to their pension date and agents like it because it makes the number looks bigger.
 
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There were 9 teams that paid luxury tax last year. 6 made the playoffs. Those teams also tended to have the most attendance and revenue, which teams that underspent and fielded bad teams profited from. Teams that want to win aren't the problem. Teams like the Mariners, A's and Pirates are.

By the way, aren't the Phillies considered a large market team? What have they done in free agency? Is there something stopping them?
 
There were 9 teams that paid luxury tax last year. 6 made the playoffs. Those teams also tended to have the most attendance and revenue, which teams that underspent and fielded bad teams profited from. Teams that want to win aren't the problem. Teams like the Mariners, A's and Pirates are.

By the way, aren't the Phillies considered a large market team? What have they done in free agency? Is there something stopping them?
I think what the Dodgers are doing is not in the long-term interest of the league but you won't get any argument from me that what the Mariners, A's, and Pirates are much worse.
 
By the way, aren't the Phillies considered a large market team? What have they done in free agency? Is there something stopping them?
They currently have the highest 2025 payroll of any MLB team per Spotrac. They have over $200M tied up in 8 players.

The budget probably doesn’t have room for another superstar, but they did sign Jordan Romano and Max Kepler and traded for Jesus Luzardo.
 
There were 9 teams that paid luxury tax last year. 6 made the playoffs. Those teams also tended to have the most attendance and revenue, which teams that underspent and fielded bad teams profited from. Teams that want to win aren't the problem. Teams like the Mariners, A's and Pirates are.

By the way, aren't the Phillies considered a large market team? What have they done in free agency? Is there something stopping them?
I think what the Dodgers are doing is not in the long-term interest of the league but you won't get any argument from me that what the Mariners, A's, and Pirates are much worse.
Agreed. Both things can be true.
 
There were 9 teams that paid luxury tax last year. 6 made the playoffs. Those teams also tended to have the most attendance and revenue, which teams that underspent and fielded bad teams profited from. Teams that want to win aren't the problem. Teams like the Mariners, A's and Pirates are.
All true, but the fact is, baseball (fka America's pasttime) is nowhere near as popular as it could be. Why not copy the NFL's labor structure, level the playing field (forcing the skinflints to reach a floor) and increase popularity (and likely, revenue)?

It's probably not going to happen, but if I were commissioner ...
 
There were 9 teams that paid luxury tax last year. 6 made the playoffs. Those teams also tended to have the most attendance and revenue, which teams that underspent and fielded bad teams profited from. Teams that want to win aren't the problem. Teams like the Mariners, A's and Pirates are.

By the way, aren't the Phillies considered a large market team? What have they done in free agency? Is there something stopping them?
I think what the Dodgers are doing is not in the long-term interest of the league but you won't get any argument from me that what the Mariners, A's, and Pirates are much worse.
Agreed . Baseball needs a mandate in a few things. A true salary cap which will drastically help competitive balance. And teams must be at least 80-85% of their total cap space to ensure teams are spending money to attempt to field competitive teams top to bottom.

Deferred comp loop hole also needs to be shut down. It’s a joke.

Close the loopholes, mandate a cap and teams to spend 80% minimum of the total cap on player salaries.

You will see a pendulum swing of where each spring will have hope for a lot more fans of smaller market teams and teams with cheapskate ownership.

The game is flailing badly in popularity. This is an unsustainable business model in todays world and where the culture of sports entertainment has evolved to.

Oh and move the Marlins the heck outta here…..biggest scam I have ever seen. It’s amazing they won two World Series. 1997 was bought and 2003 was developed.

But ever since 2007 this franchise has been an absolute disgrace.
 
All true, but the fact is, baseball (fka America's pasttime) is nowhere near as popular as it could be. Why not copy the NFL's labor structure, level the playing field (forcing the skinflints to reach a floor) and increase popularity (and likely, revenue)?

It's probably not going to happen, but if I were commissioner ...

The NFL financial model relies on an even split of television revenues which the baseball owners will never agree to and non-guaranteed contracts which is a non-starter with the players.

I don't think the popularity of the NFL has much to do with how the stakeholders divide the loot.
 
There were 9 teams that paid luxury tax last year. 6 made the playoffs. Those teams also tended to have the most attendance and revenue, which teams that underspent and fielded bad teams profited from. Teams that want to win aren't the problem. Teams like the Mariners, A's and Pirates are.
All true, but the fact is, baseball (fka America's pasttime) is nowhere near as popular as it could be. Why not copy the NFL's labor structure, level the playing field (forcing the skinflints to reach a floor) and increase popularity (and likely, revenue)?

It's probably not going to happen, but if I were commissioner ...
The major networks want ratings, so they're fine if the marquee teams are stacked with stars. The Padres paid Soto, Machado, Tatis, Cronenberg, Darvish and Kim a ton of dough to get to the NLCS a couple times, and were building a great team until their ownership imploded, but they certainly weren't losing money. They were a fun team to watch and teams like that help maintain popularity.

Depending on which source you look at, the Mariners, for example, were somewhere between 13-15 in baseball in revenue. They're making a ton of money because they don't spend. They just have an ownership group that is satisfied to be mediocre (they literally said that .500 was an acceptable goal). When you have ownership groups that get rewarded for putting bad products on the field and screwing the fans (like John Fisher), you lose popularity. You can't hang that on the Dodgers, Mets and Yankees.

Salary cap may help, but alone it isn't the answer. You want to participate in revenue sharing? You need to spend a minimum of X dollars on player salaries and player development.
 
There were 9 teams that paid luxury tax last year. 6 made the playoffs. Those teams also tended to have the most attendance and revenue, which teams that underspent and fielded bad teams profited from. Teams that want to win aren't the problem. Teams like the Mariners, A's and Pirates are.

By the way, aren't the Phillies considered a large market team? What have they done in free agency? Is there something stopping them?
I think what the Dodgers are doing is not in the long-term interest of the league but you won't get any argument from me that what the Mariners, A's, and Pirates are much worse.
Agreed . Baseball needs a mandate in a few things. A true salary cap which will drastically help competitive balance. And teams must be at least 80-85% of their total cap space to ensure teams are spending money to attempt to field competitive teams top to bottom.

Deferred comp loop hole also needs to be shut down. It’s a joke.

Close the loopholes, mandate a cap and teams to spend 80% minimum of the total cap on player salaries.

You will see a pendulum swing of where each spring will have hope for a lot more fans of smaller market teams and teams with cheapskate ownership.

The game is flailing badly in popularity. This is an unsustainable business model in todays world and where the culture of sports entertainment has evolved to.

Oh and move the Marlins the heck outta here…..biggest scam I have ever seen. It’s amazing they won two World Series. 1997 was bought and 2003 was developed.

But ever since 2007 this franchise has been an absolute disgrace.
Loophole:

What is the loophole? The money still counts equally against the payroll in the year it is earned, regardless of when paid. The team that is deferring it must show 4 times a year that the entire salary amount earned has been placed in escrow, so they have to have the money.

Literally the only change is when the player gets the check. And the team gets to earn interest on it until it is paid.

What is the loophole? Because if there is one, I'm sure all the teams would want to fix it.



Flailing popularity:

Attendance and viewership were both up last year. What model is unsustainable in what culture?


Marlins:

Yeah agree. Their ownership...blech.
 
until baseball has a salary cap the last small market team standing is my champ i dont really care and dont watch it when its the top four or five payroll big market teams left in the playoffs and its why basetball has become a third child to football and basketball take that to the bank bromigos
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
You don't think deal was structured to avoid luxury tax?
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
You don't think deal was structured to avoid luxury tax?
No? I think if he signed for money today, given it was last year, and how contracts tend to work, he probably would have signed for around $50M/year (Soto signed for $51m this offseason right?), maybe a little less in year one and more in year 10? Which as I understand it, is approximately what ends up hitting the CBT payroll figure anyway, isn't it?
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
You don't think deal was structured to avoid luxury tax?
No? I think if he signed for money today, given it was last year, and how contracts tend to work, he probably would have signed for around $50M/year (Soto signed for $51m this offseason right?), maybe a little less in year one and more in year 10? Which as I understand it, is approximately what ends up hitting the CBT payroll figure anyway, isn't it?
Ohtani is better than Soto. He would have had multiple offers for more than $46 million a year in current salary if that’s what he wanted to do. I don’t find it plausible that he ran all these numbers through a spreadsheet to maximize his NPV versus the more straightforward explanation that he was trying to allow the Dodgers to put together a more dominant team in the short run.
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
You don't think deal was structured to avoid luxury tax?
No? I think if he signed for money today, given it was last year, and how contracts tend to work, he probably would have signed for around $50M/year (Soto signed for $51m this offseason right?), maybe a little less in year one and more in year 10? Which as I understand it, is approximately what ends up hitting the CBT payroll figure anyway, isn't it?
Ohtani is better than Soto. He would have had multiple offers for more than $46 million a year in current salary if that’s what he wanted to do. I don’t find it plausible that he ran all these numbers through a spreadsheet to maximize his NPV versus the more straightforward explanation that he was trying to allow the Dodgers to put together a more dominant team in the short run.
I don't think he did. But I think Agents probably did. it doesn't have to be one or the other.
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
You don't think deal was structured to avoid luxury tax?
No? I think if he signed for money today, given it was last year, and how contracts tend to work, he probably would have signed for around $50M/year (Soto signed for $51m this offseason right?), maybe a little less in year one and more in year 10? Which as I understand it, is approximately what ends up hitting the CBT payroll figure anyway, isn't it?
Ohtani is better than Soto. He would have had multiple offers for more than $46 million a year in current salary if that’s what he wanted to do. I don’t find it plausible that he ran all these numbers through a spreadsheet to maximize his NPV versus the more straightforward explanation that he was trying to allow the Dodgers to put together a more dominant team in the short run.
I don't think he did. But I think Agents probably did. it doesn't have to be one or the other.
if you are now acknowledging he might have structured the deal even in part to help the Dodgers luxury tax bill then I think we are in violent agreement, or at least partially so.
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
You don't think deal was structured to avoid luxury tax?
No? I think if he signed for money today, given it was last year, and how contracts tend to work, he probably would have signed for around $50M/year (Soto signed for $51m this offseason right?), maybe a little less in year one and more in year 10? Which as I understand it, is approximately what ends up hitting the CBT payroll figure anyway, isn't it?
Ohtani is better than Soto. He would have had multiple offers for more than $46 million a year in current salary if that’s what he wanted to do. I don’t find it plausible that he ran all these numbers through a spreadsheet to maximize his NPV versus the more straightforward explanation that he was trying to allow the Dodgers to put together a more dominant team in the short run.
I don't think he did. But I think Agents probably did. it doesn't have to be one or the other.
if you are now acknowledging he might have structured the deal even in part to help the Dodgers luxury tax bill then I think we are in violent agreement, or at least partially so.

If I recall correctly, Ohtani himself acknowledged that his contract was structured in part to aid in the Dodgers' pursuit of Yamamoto.
 
The loophole if there is one is that only the discounted net present value is counted for luxury tax purposes
Why is that a loophole? Isn't that the way you should do it?
10 years, $700 million should count $70 million for luxury tax purposes.
But if he was getting paid that amount today, he probably signs for like...$60M? $65M? There's a time value to the money. We'd rather just ignore that?

I'm open to it, but logically I have a hard time with it. Maybe that's just finance brain.
It's obviously fine in terms of compliance with existing rules and as an actuarial matter. The best player in baseball signing an arguably below market deal that was transparently structured to allow the Dodgers to avoid luxury taxes (and thus avoid the actual cost of what acquiring a superstar should be from a competitive balance standpoint) and to allow Ohtani to avoid actual taxes doesn't sit well with a lot of people.
I get the player avoiding California's taxes part could annoy people, but then again I just moved to Texas to get away from the ultra high income tax I was paying.

I don't follow the avoidance of luxury taxes or the competitive balance piece. The $70M/discount rate hits their CBT payroll. That's what he would get paid if the money wasn't deferred. And he gets paid all the money, and they have to show they have all the money to pay him. So what "actual cost" is being avoided? He's literally making more per year than anyone in the history of the league ever has...by like 40% (i think? Is Soto's $51M per year next highest?). Even if you discount it to only what it would have been were deferred contracts not allowed, it would be like...$62M per year?

This is why the backlash feels like (note, feels that way to me, broadly, on the internet - not here specifically) uninformed sensationalism. Just trying to get clicks or be upset about something. Nobody can point to the "actual cost" you mention and what it should be or would otherwise be. And nobody can point to how they're avoiding luxury taxes (because they aren't?)
You don't think deal was structured to avoid luxury tax?
No? I think if he signed for money today, given it was last year, and how contracts tend to work, he probably would have signed for around $50M/year (Soto signed for $51m this offseason right?), maybe a little less in year one and more in year 10? Which as I understand it, is approximately what ends up hitting the CBT payroll figure anyway, isn't it?
Ohtani is better than Soto. He would have had multiple offers for more than $46 million a year in current salary if that’s what he wanted to do. I don’t find it plausible that he ran all these numbers through a spreadsheet to maximize his NPV versus the more straightforward explanation that he was trying to allow the Dodgers to put together a more dominant team in the short run.
I don't think he did. But I think Agents probably did. it doesn't have to be one or the other.
if you are now acknowledging he might have structured the deal even in part to help the Dodgers luxury tax bill then I think we are in violent agreement, or at least partially so.
I guess. I just don't see that as a loophole in any way, which was the original post right?

Where we disagree is that being a bad thing. i thought we lauded athletes who took less than they could otherwise get in order to compete? This guy took a deal worth $46M a year to do so instead of more. Thats an awesome example to set that winning matters isnt it?
 

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