A Bad Precedent Is Being Set?
Twins Video
Those of us who are baby boomers vividly remember Popeye’s friend and lover of hamburgers, J. Wellington Wimpy, commonly referred to as Wimpy saying “I’ll gladly pay you Tuesday for a hamburger today”. It has been reported that Wimpy would never come around on Tuesdays.
The LA Dodgers, in this offseason, have started negotiating with available free agents by offering larger contracts with a decent amount of the money deferred. By deferred we mean that when a player's career is over, large payments will become due.
For Shohei Ohtani it makes perfect sense. The money he is currently making in doing promotional work, endorsements and commercials is substantial. Forbes has estimated that he made about $40 million in 2024. It’s easy to see how he would allow the Dodgers to defer about $680 of his $700 million contract to 2034 through 2044.
While it looks like his 10 year $700 million contract would require the Dodgers to make a $70 million dollar payment in 2025, they will, in fact pay him about $2 million.
This allows the Dodgers to spend that $68 million on other players and still experience the same cash flow. This off-season in addition to Ohtani they signed Blake Snell (5 yrs./$182 million), Teoscar Hernandez (3 yrs./$66 million), Blake Treinan (2 yrs./$22 million), Michael Conforto (1 yr./$17 million), Hyeseong Kim (3 yrs./12.5 million), Tanner Scott (4 yrs./$72 million) and extended Tommy Edman (4 yrs./$64.5 million). In total that comes out to 32 years of contract for $1.136 billion, an average of $35.5 million a year for these 8 players. But instead of paying $284 million for these players in 2025, they will “only” have to pay out $216 million because of Ohtani’s deferral. It’s possible that number could be lowered further if there are other players with deferrals in their contracts.
From a player’s perspective, it makes complete sense for tax purposes to spread their payments over additional years. However, $68 million today will have far greater value than $68 million in 2044.
However, in spite of all this information, my concern is the Wimpy impact. What will the Dodgers be like in 2034? Will the $68 million they are paying Ohtani (and maybe others), have an impact on the team’s ability to compete against teams in the 2034 season without continuing with deferrals?
Unless Major League Baseball requires teams to place the deferred money in escrow or in an annuity, there should be concern about the financial stability of teams who defer such large sums of money.
Many of us knew about the Bobby Bonilla's contract with the Mets and its deferrals, but how many other deferrals are already in progress?
To remind those of the Bonilla deferral, here is the background. In 2000 the Mets agreed to buy out the remainder of his $5.9 million contract. At that time the Mets were investing with Bernie Medoff with the promise of a double-digit return (how’d that work out?). So instead of making a one-time payment in 2000 they negotiated a payment schedule of nearly $1.2 million a year for 25 years starting in 2011 with a negotiated 8% interest rate. Bonilla will be paid $1.2 million until 2035 when he is 72 years old.
For those without a calculator handy, Bonilla will receive a total of approximately $30 million for that $5.9 million deferral.
There are other deferrals known but they are nowhere near the size and magnitude of the Ohtani deal. We know that Bret Saberhagen receives $250,000 a year from the Mets from 2004 to 2029 (this was the inspiration for the Bonilla deal!). Max Scherzer will receive $105 million from the Nationals that will be paid out through 2028. Manny Ramirez is collecting $26.2 million from the Red Sox through 2026. Ken Griffey is receiving $3.59 million from the Reds every year through 2024 as the deferral from his 9 year $116 million deal signed in 2000. And Todd Helton received $1.3 million annually from the Rockies through 2023 as the result of a $13 million deferral when he signed a two-year extension in 2010. – Thank you to ESPN Stats & Information’s Ryan Milowicki for the information.
What do you think? Is this a compensation method that you are comfortable with for MLB? Would you be okay with the Twins using this payment option to sign current players?


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