Ohtani Contract & Why Baseball is Terrible (1 Viewer)

[Leeroy Jenkins]

Ohtani deserves every dollar that he can make, and being arguably both the best hitter and best pitcher in baseball merits a record breaking contract. But how is it fair to have 97% of that contract deferred, and then it does not count against the luxury tax threshold? The limited parameters in place to attempt to bring a sliver of competitive balance in MLB mean nothing apparently. How are teams like Pittsburgh and other supposed to compete -- why should they even try?

 

[Spartans Rule]

But how is it fair to have 97% of that contract deferred, and then it does not count against the luxury tax threshold?

Most of it still does. I think the luxury tax number was like $46 million.

How are teams like Pittsburgh and other supposed to compete -- why should they even try?

Because baseball is naturally a sport of parity. Historically great teams win like 2/3 of their games, and the playoffs are decided by best-of-5 and best-of-7.

This year a team that was tied for the 6th-best record in MLB beat a team that was tied for the 12th-best record in the World Series. Pittsburgh may never be the best team, but they should certainly try to be in the top 12 and then get hot at the right time.

 

[Leeroy Jenkins]

But how is it fair to have 97% of that contract deferred, and then it does not count against the luxury tax threshold?

Most of it still does. I think the luxury tax number was like $46 million.

How are teams like Pittsburgh and other supposed to compete -- why should they even try?

Because baseball is naturally a sport of parity. Historically great teams win like 2/3 of their games, and the playoffs are decided by best-of-5 and best-of-7.

This year a team that was tied for the 6th-best record in MLB beat a team that was tied for the 12th-best record in the World Series. Pittsburgh may never be the best team, but they should certainly try to be in the top 12 and then get hot at the right time.

I think they have to escrow $44MM per year as an NPV of the deferred money, but I don't know that it all counts towards the tax, and it still is significantly less.

 

[PIK95]

Until they fix the awful playoffs format with all those teams in, it doesn't even matter imo.

 

[Anarchy99]

Can someone explain the tax threshold implications of contracts that are deferred and traded. For example, Chris Sale is due $27.5 million this year. Boston agreed to pay $17 million of it to move him to Atlanta. Sale has $10 million of it deferred until 2039, and reports have come out that the Braves only have to pay him $500,000 this year. (That may still end up being an overpay if Sale pulls up lame before the season starts). How is the contract / tax bill accounted for in this case for the Sox and Braves? Will Atlanta end up having to account for that $10 million 15 years from now?

 

[Eephus]

Can someone explain the tax threshold implications of contracts that are deferred and traded. For example, Chris Sale is due $27.5 million this year. Boston agreed to pay $17 million of it to move him to Atlanta. Sale has $10 million of it deferred until 2039, and reports have come out that the Braves only have to pay him $500,000 this year. (That may still end up being an overpay if Sale pulls up lame before the season starts). How is the contract / tax bill accounted for in this case for the Sox and Braves? Will Atlanta end up having to account for that $10 million 15 years from now?

As I understand it, Sale's full salary number counts against Atlanta's CBT calculation. Boston transferred $17M to help defray his 2024 salary while the Braves are responsible for the deferred money.

It's kind of academic now because Atlanta has given Sale and extension which supersedes his current deal. Sale gets more guaranteed money over the new contract term while the Braves get some luxury tax relief. The deferred money went away with the renegotiated contract.

 

[Anarchy99]

Can someone explain the tax threshold implications of contracts that are deferred and traded. For example, Chris Sale is due $27.5 million this year. Boston agreed to pay $17 million of it to move him to Atlanta. Sale has $10 million of it deferred until 2039, and reports have come out that the Braves only have to pay him $500,000 this year. (That may still end up being an overpay if Sale pulls up lame before the season starts). How is the contract / tax bill accounted for in this case for the Sox and Braves? Will Atlanta end up having to account for that $10 million 15 years from now?

As I understand it, Sale's full salary number counts against Atlanta's CBT calculation. Boston transferred $17M to help defray his 2024 salary while the Braves are responsible for the deferred money.

It's kind of academic now because Atlanta has given Sale and extension which supersedes his current deal. Sale gets more guaranteed money over the new contract term while the Braves get some luxury tax relief. The deferred money went away with the renegotiated contract.

Thanks. With Boston paying $17 million of his salary and ATL now off the hook for the deferred $10 million, the Braves really are only giving Sale an additional $11 million over two years. With Boston, he wasn't anywhere near the pitcher he used to be and wasn't able to stay healthy. If my math is right, including the $17 million they have to pay for this season, BOS will have paid Sale $91.9 million from his 2020 extension and still owe $40 million in deferred payments = $131.9 million. He pitched a total of 151 innings on that contract for Boston . . . meaning they paid out roughly $875,000 per inning for his services. Good work if you can get it.

 

[Eephus]

Thanks. With Boston paying $17 million of his salary and ATL now off the hook for the deferred $10 million, the Braves really are only giving Sale an additional $11 million over two years. With Boston, he wasn't anywhere near the pitcher he used to be and wasn't able to stay healthy. If my math is right, including the $17 million they have to pay for this season, BOS will have paid Sale $91.9 million from his 2020 extension and still owe $40 million in deferred payments = $131.9 million. He pitched a total of 151 innings on that contract for Boston . . . meaning they paid out roughly $875,000 per inning for his services. Good work if you can get it.

On the other hand, Sale was on the mound for the final out of the 2018 World Series and flags fly forever.

 

[Anarchy99]

Thanks. With Boston paying $17 million of his salary and ATL now off the hook for the deferred $10 million, the Braves really are only giving Sale an additional $11 million over two years. With Boston, he wasn't anywhere near the pitcher he used to be and wasn't able to stay healthy. If my math is right, including the $17 million they have to pay for this season, BOS will have paid Sale $91.9 million from his 2020 extension and still owe $40 million in deferred payments = $131.9 million. He pitched a total of 151 innings on that contract for Boston . . . meaning they paid out roughly $875,000 per inning for his services. Good work if you can get it.

On the other hand, Sale was on the mound for the final out of the 2018 World Series and flags fly forever.

That's true, and Bosox fans will be grateful for the title. But the Sox extended him early when they didn't need to, and he already wasn't the healthiest of pitchers. Not sure that they needed to / should have given a 30-year-old pitcher a 5/$145 million contract, who wasn't even able to pitch at the time his extension kicked in. I doubt he suddenly gets healthier at 35, but at least the Braves aren't paying him a ton to find out.

 

[Eephus]

At least Sale had a good track record of health and consistency when the Sox extended him.

The Dodgers who are generally regarded as one of the smarter front offices in baseball (albeit one with deep pockets) have given Tyler Glasnow a deal similar to Sale's Boston contract even though Glasnow's injury history is more similar to post-2018 Sale than pre-2018. Glasnow is even the same age as Sale when he signed his extension.

Big contracts for pitchers are inherently risky but the scarcity of good starters keeps the market prices high.