Ohtani’s contract

This signing will ensure there will be more Dodger haters than Yankee haters

We can't hate the Dodgers until 2034, when the big bucks start rolling in. Bobby Bonilla should get a cut.

He'll own 40% of the Dodgers in year 15, when they can't pay him .

By the time the 11th year kicks in the Dodgers will have made more than 700M off Ohtani in merchandising and broadcast rights into Japan.

It was Ohtani's idea.

@BaseballBUDDY posted:

He'll own 40% of the Dodgers in year 15, when they can't pay him .

By the 11th year and the bill comes due in ten year increments chances are the Dodgers will have made 1.4B in increased revenue from merchandising and streaming into Japan. In 2034 68M in 2024 dollars is a lot less in 2034 dollars.

Question,

How Ohtani cope with the new status and potential income. Will he have 5 lockers in the Locker room like Bonds? How will the teammates react? Uncle Sam benefits . What would Tommy Lasorda do in this situation?
Bob

@Consultant posted:

Question,

How Ohtani cope with the new status and potential income. Will he have 5 lockers in the Locker room like Bonds? How will the teammates react? Uncle Sam benefits . What would Tommy Lasorda do in this situation?
Bob

Lasorda would jump into Ohtani’s arms when the Dodgers win the World Series. Ohtani won’t be special in the Dodger locker room. Maybe he would be put on Millionaire’s Row with Betts and Freeman.

Not to be overlooked is the tax situation.  I've read that if he doesn't live in CA when the deferred money is paid then he won't owe CA taxes on it (13.5%).

@K9 posted:

Not to be overlooked is the tax situation.  I've read that if he doesn't live in CA when the deferred money is paid then he won't owe CA taxes on it (13.5%).

If he returns to Japan the federal tax will be 45%. The local tax will be about 10%.

K9;

California will tax on the games played in the State. Who plays the Lloyds of London insurance?

Bob

@2022NYC posted:

This signing will ensure there will be more Dodger haters than Yankee haters

Not possible @2022NYC.   The evil empire will always be the evil empire. ;-)

Yes, $700M is a very large number for a very talented athlete.  I've read a few articles on the topic as I'm sure most of you have.  I admit I was scratching my head at first.  My thoughts:

1) The first thing that comes mind is why defer $680M until 2034?  It appears Mr Ohtani is all about winning.  Essentially, he is giving the Dodgers some huge financial wiggle room to bring in more talent to play with him.  Smart man.  We've seen this work out well in other sports, and apparently he's all over it.

2) Is he really worth that money?  Seriously, he can't pitch until he has a second Tommy John surgery which is going to sideline him for a while at some point.  Let's face it that 2nd TJ is a roll of the dice.  That's a lot of risk and there are no opt out clauses on either side according to the articles I've read.  He's going to be bleeding Dodger blue for a long time.  There has to be significant business reasons beyond what the general public knows on why the Dodgers and others were willing to pay $700M for one dude. 

3) I wish him well.  He appears to be a very humble guy, and he's comfortable in the LA area.  Good for him.  I wonder what effect this is going to have with MLB contracts in general.  There is only one Ohtani, but is this going to raise the salary levels/terms/years as a whole?  We'll see.  You can bet Scott Boras is licking his chops to find out with his clients.

JMO.

@Consultant posted:

K9;

California will tax on the games played in the State. Who plays the Lloyds of London insurance?

Bob

97% of the pay will come after he’s done playing in California. But, if he moves back to Japan he won’t be gaining anything. Look for Ohtani to purchase a home on a golf course in Florida and a second home in Japan.

Remember The Dodgers = Guggenheim Partners.  I believe they have 290 *billion* under management. This is nothing for them. They're not paying interest on the contract. They can essentially invest this in USTs and still make money...

I think if a team defers money they need to show after year 2 they have the money separate from other money, but just after the second year. So Guggenheim can move money  (600mm+) around after the second year and show this then do what they want with it. Not many teams can do that.

@RJM posted:

By the 11th year and the bill comes due in ten year increments chances are the Dodgers will have made 1.4B in increased revenue from merchandising and streaming into Japan. In 2034 68M in 2024 dollars is a lot less in 2034 dollars.

The dodgers seem to be very optimistic that they can come out well from the whole transition from cable TV to streaming thing.

Cable TV stations already start to die and of course that gap has to be filled by online streaming.

I'm not quite sure how well this will go. Online streaming is much more individualized than cable TV, young streaming users want very tailored packages and not pay for anything they are not interested in.

That means getting cross-subsidiation will be much harder than with cable TV where you had many buyers buying it without ever watching much baseball. Obviously in streaming there are also combination packages but there are also a lot of non combination packages available.

I guess the dodgers are banking on big market teams surviving that transition better than smaller market teams.

The Dodgers are counting on capturing the entire Japanese market.

@nycdad posted:

Remember The Dodgers = Guggenheim Partners.  I believe they have 290 *billion* under management. This is nothing for them. They're not paying interest on the contract. They can essentially invest this in USTs and still make money...

I think if a team defers money they need to show after year 2 they have the money separate from other money, but just after the second year. So Guggenheim can move money  (600mm+) around after the second year and show this then do what they want with it. Not many teams can do that.

No.

To pass IRS scrutiny this has to be an arms length transaction. So there’s no comingling of funds and the Dodgers and Guggenheim Partners remain separate legal entities.

Guggenheim Baseball, primary owner of the Dodgers, is simply purchasing an insurance policy from Guggenheim Partners that guarantees future payments to Ohtani. GP collects the premium and invests it, but since the investment is paired with an insurance contract it grows tax free. The structure is a simple way for GB to avoid paying taxes on interest accrued by the monies set aside to guarantee Ohtani’s deferred compensation. The risk is in future assumptions about interest rates.

Several other teams could do this if they wanted - the Blue Jays are owned by a public company that could set up an insurance arm, the Mets have all of Point72’s $31Billion hedge fund assets at their disposal, and the Giants are controlled by the owners of the $1.5Trillion AUM Franklin Templeton Investments.

Speed and RJM;

When Ohtani played HS Baseball in the famous Koshien Osaka Tournament, 20 million watched on TV and 43,000 attended each game.

Each year our American team played the Tournament "All Stars". Yes, the Japanese TV contract with the Dodgers is a Major factor in the signing.

Bob