Baseball Remains Broken, Again

[DJL44]

2 hours ago, sweetmusicviola16 said:

 I have zero issue with Ohtani getting 700 million. More power to him. My problem however is the Dodgers are paying Ohtani 700 million, but 680 million will be deferred until after the contract is over. They are getting by with a 46 million dollar hit on his salary. They should be taxed 70mil per year not 46. This is gaming the system by a team and MLB needs to fix it or the game will go down the old cr%%per.

Except the net present $ value is the same as if they had paid Ohtani just 46 M now. It's really a 10 year $460M deal. It is structured in a way to benefit Ohtani later by moving some dollars to after his retirement from baseball (when his endorsements will be less lucrative). The Dodgers will have to pay luxury taxes on the present value of the contract. The whole $700M contract value is basically a lie.

[DJL44]

2 hours ago, IndianaTwin said:

Including parking for free at the Mall of America and taking the light rail for $4.50 round trip. 

A good option if you live south of Target Field but I live north and I'm not driving all the way through metro traffic to get to MoA and then all the way back through town when the game's over. Paying $5 extra saves me an hour of driving which is well worth it.

[dxpavelka]

3 hours ago, TNtwins85 said:

Well, this contract just sets the president. You hear Bryce Harper clamoring for more money as well. Who’s to say that next year Juan Soto doesn’t demand a billion dollars deferred for 50 years? Or the next young great player demanding more than that over 100 years that gets passed to his heirs? Without looking into the specifics of the rules and just reading that rule in the Passan tweet it’s hard to know. That rule literally just says that a player can demand anything. For real though. It sounds silly and ridiculous but if that is the only rule which it says their is no limit what’s to say that when it’s time for Walker Jenkins to hit free agency that he doesn’t demand 500 billion over 10 years that’s deferred for 500 years? Obviously there will be another CBA by then but this sets the table and the table is infinite! Randballs Stu… your next article starts here!

just because a player can demand anything doesn't me he will get what he demands

 

[Hawkeye Bean Counter]

11 hours ago, DJL44 said:

Except the net present $ value is the same as if they had paid Ohtani just 46 M now. It's really a 10 year $460M deal. It is structured in a way to benefit Ohtani later by moving some dollars to after his retirement from baseball (when his endorsements will be less lucrative). The Dodgers will have to pay luxury taxes on the present value of the contract. The whole $700M contract value is basically a lie.

This is exactly correct.  Had they announced as a $460 million contract, there would have been no issues, the issues is people think because they announce it as a 700 million contract.  No it is $460 million where instead of paying the player they will put 46 million into an investment vehicle most likely interest bearing accounts that will then be able to pay the $68 million starting in 10 years.   The future payments will be paid for and no issues.  When MLB tv was talking about it earlier today it sounded as if only 2 million was being counted against tax money,  once I looked into it I see no issues with the deal or the structure.   Its just different.  

[tony&rodney]

All in all it works for the Dodgers and Ohtani. The Dodgers get to invest the $68 million per year which should bring them a bundle of money and then use the money earned to pay Ohtani. Ohtani get a big check each year starting ten years from and there may be significant tax advantages for him depending on several circumstances.

Whatever, the Dodgers wanted Ohtani on their team and Ohtani wanted to play for the Dodgers. So everything is fine. Too bad everyone doesn't get to choose where they work.

[Woof Bronzer]

14 hours ago, Vanimal46 said:

The Dodgers should get punished for this and this specific loophole needs to be closed ASAP before things get out of hand in baseball. 

Hard disagree.  The Twins and more teams should be doing innovative deals like this.  Without a cap it's really a mid-market solution more than a large-revenue one.  The Twins could theoretically still get top end FAs at a fraction of the cost - the present day value of the Ohtani deal represents a discount of about 36%.  That would be music to the Pohlads' ears.  

[TNtwins85]

12 hours ago, dxpavelka said:

just because a player can demand anything doesn't me he will get what he demands

 

But it’s a point of negotiation. We just watched it happen. You want to be paid a dollar now. I want to pay you 50 cents. Where do we end up settling? Not to mention there’s someone else negotiating for your services. Or 2-3 other people. Person B offers you 75 cents. I offer 50. Person B really wants your services and offers $1.50. Now you think you’re worth $1.50 since you got an offer for that but I still want your services so I match $1.50. Person B offers $1.75. A simple concept but what do you think Juan Soto is thinking? Especially since he will be younger and he’s a better hitter. We’re talking the best of the best players here. This won’t be common but  it sets a precedent. All I’m saying.

[SteveLV]

Players and Agents are not stupid.  Deferred money has less value. They are not going to take net less money to "help out" a mid--market team.

The reason THIS deal works is that Ohtani makes more than $50M from endorsements, so the present $2M is just window dressing.  He gets $68M per year after he retires when, presumably, his endorsement revenue will decline.

My question is who guarantees those future monies?  Do the Dodgers have to buy an Annuity to guarantee those payments? Does the LA Dodger Baseball Club guarantee, regardless of potential future ownership change?  Does the owner personally guarantee?  Does MLB guarantee?  Interesting situation.

[TNtwins85]

2 hours ago, Woof Bronzer said:

Hard disagree.  The Twins and more teams should be doing innovative deals like this.  Without a cap it's really a mid-market solution more than a large-revenue one.  The Twins could theoretically still get top end FAs at a fraction of the cost - the present day value of the Ohtani deal represents a discount of about 36%.  That would be music to the Pohlads' ears.  

100%!!! Funny the boy genius’ Falvine haven’t done this yet! All it takes is one. The question is when does it become the norm? Maybe it doesn’t. We’ll just have to wait and see.

[TNtwins85]

2 minutes ago, SteveLV said:

Players and Agents are not stupid.  Deferred money has less value. They are not going to take net less money to "help out" a mid--market team.

The reason THIS deal works is that Ohtani makes more than $50M from endorsements, so the present $2M is just window dressing.  He gets $68M per year after he retires when, presumably, his endorsement revenue will decline.

My question is who guarantees those future monies?  Do the Dodgers have to buy an Annuity to guarantee those payments? Does the LA Dodger Baseball Club guarantee, regardless of potential future ownership change?  Does the owner personally guarantee?  Does MLB guarantee?  Interesting situation.

The only way of knowing is to actually read the contract. Maybe the dodgers aren’t even liable. Who knows without reading the language of the contract. Very interesting indeed

[Cris E]

My suspicion is that large market teams are gambling on a change to the luxury tax rules.

Consider the Dodgers' payroll this year and ten years from now.  They are well over the tax threshold already even paying Ohtani only $2m, and the rules say that the higher you are above the line the higher the percentage your penalty will be. So assuming that they continue to be near the top of the league in payroll, in ten years they'll be paying perhaps twice the $68m that they're deferring today. (For example today the amounts over $275m get taxed at 90%+, which will hurt.) 

You can try to handwave this away with some present value mumbo jumbo, but the fact is the inflated future value is what's getting taxed so you have two problems: socking away enough cash now to write Ohtani his $68m check in ten years and then socking away enough more to write another $60m check to the league, and this to pay for a guy pushing 40 who may or may not be on your roster.  Oh, and then plan on doing that EVERY YEAR FOR TEN YEARS.  $120m every year for a decade for a guy that isn't playing makes the Pujols deal look like a treat. Bobby Bonilla couldn't cover the postage on this deal. The mind reels.

Again, I suspect the team is anticipating a change to this tax model.

[nicksaviking]

On 12/9/2023 at 9:31 PM, DJL44 said:

I can find parking near Target Field for $10, not sure why you're paying $100. I also have no problem finding tickets for less than $100. If you really want to go on the cheap you're also allowed to bring your own food into Target Field.

Going to a major league game isn't cheap but it doesn't have to be $500 for 3 people.

I also eat and drink at the three dozen or so restaurants and breweries near the stadium before and/or after. Way better food and drinks at those places anyway. Pretty sure I haven't bought more than a hot dog at Target Field in the last four years.

[Dave Borton]

8 hours ago, lake_guy said:

...  I don't fall on the side of owners either but the inequity of revenues and spending is continuing to degrade the sport.  This feels like the big market teams are just kind of playing along with the rest of the league to not make it so one sided.

Tampa, 27th smallest market size
Milwaukee, 26th
Orioles, 24th 
Twins, 18th 
Snakes, 17th...
Houston, 15th
Jays, 13th
Braves, 11th
Rangers, 8th
Dodgers, 7th
Phillies, 3rd

Seems like small and medium sized clubs did alright for themselves this year. I believe that might be the point Seth referred to above.

I 

[SteveLV]

Sure, the small and mid-market teams have a shot--just not an EQUAL shot at being competitive.

Good sports leagues (like the NFL) give the fans in every city the hope and expectation that their home team has a fair shot at winning every year.

Baseball is destroying that expectation of fairness and equality.

I would like to hear the reasons why anyone on this Board would not want to waive a magic wand and create a player compensation system parallel to the NFL where there are hard floors and hard caps, strictly enforced, to create that level playing field.

It will probably never happen, but doesn't everyone here at least want that????

[tony&rodney]

Money helps but it does not come close to being equal and can never surpass the power of the unknown. The Yankees and the Dodgers have  been powerful organizations for a long time. In the same market, neither the Mets nor the Angels have managed to capture similar success. The development of baseball players bears zero resemblance to the developmental paths of sports such as football and basketball. Those highly drafted athletes slot immediately into starting and starring roles for their respective teams. Baseball has Aaron Sabato, Mark Prior, and everything in between. Baseball players have a difficult road to playing time at the highest levels with an unpredictable end point, where injuries or even social problems can end careers quickly.

MLB has weak leadership that has failed to access the media and attendance potential of the sport at a similar level to basketball and football. Those who decry the competition should examine the results of the last 40 years in comparison to the preceding 40 years in baseball. 

There are conversations and negotiations on various details that may enhance the sport for all teams and the players, but the game is not suffering at the moment.

The Shohei Ohtani signing has incited a raft of comments that push notions of imbalance and unfairness. The reality is that Ohtani was focused on playing for the Dodgers and the financials were irrelevant. We can be certain that multiple teams were willing to extend more lucrative contracts to Shohei. Baseball players should be able to work wherever they desire if they are able to manage the details. I would think that everyone should understand the allure of choosing your living and employment situation. 

[SteveLV]

T&R, are you content with the current system, then?  I think you are in a vast minority, but so be it.

I have repeatedly stated that:  A) Ohtani is a wonderful player; B) Happy he gets whatever he can get; C) Hold no grudge vs. the Dodgers for doing what they do.

My beef is that MLB leadership, both owner and players/agents, have skewed the game towards massive compensation for the elite, relatively modest compensation (relative to revenues) for the average MLBer, and downright criminal compensation for younger, emerging players and those toiling in the minors.  Furthermore, the growing perception by fans is that the deck is getting more and more stacked in favor of the large market teams.

[Mike Sixel]

1 hour ago, SteveLV said:

T&R, are you content with the current system, then?  I think you are in a vast minority, but so be it.

I have repeatedly stated that:  A) Ohtani is a wonderful player; B) Happy he gets whatever he can get; C) Hold no grudge vs. the Dodgers for doing what they do.

My beef is that MLB leadership, both owner and players/agents, have skewed the game towards massive compensation for the elite, relatively modest compensation (relative to revenues) for the average MLBer, and downright criminal compensation for younger, emerging players and those toiling in the minors.  Furthermore, the growing perception by fans is that the deck is getting more and more stacked in favor of the large market teams.

I mean, that's every sport, other than the criminal low pay. Look at QBs vs LBers ...

I agree there is a real perception issue. No idea how to fix that 

Ohtani was always going to a big market. The fact it is now more expensive, potentially, for big markets, isn't really an issue for any other teams. Unless we think this raises the floor for good players' pay.

[SteveLV]

QB is the most difficult position--and most valuable position---in all of pro sports.  It is hardly surprising good ones would be highly compensated. Not a good analogy, IMO.

There is NOT a perception in the NFL that teams in NY or LA have a competitive advantage over teams in KC or Pittsburgh. And the entire economic framework is set up to maintain that parity and perception of fairness.

MLB cannot "fix" that perception because it is an accurate assessment of the inequalities prevalent in the current MLB system. The perception is accurate.  The way to fix it is to dramatically overhaul the system.  If the owners can put together a proposal that puts equal or even slightly more money in the players' pockets, I bet a deal could get hammered out.  

Fat chance, but it could be done.

[arby58]

On 12/9/2023 at 10:16 PM, Parfigliano said:

Isnt $70 mil/yr what BALT and TB payroll was last year?  I know that you cant just buy a WS ring (hi NYM) but at some point MLB has to address the crazy competitive imbalance under the current financial system.

There is revenue sharing  in baseball. 48 percent of team revenue is pooled and split evenly among teams. There is also a competitive balance tax, and if teams go over the threshold (which is $237 million in 2024) there is a tax of between 20-50 percent of the overage. Note also that deferred compensation still counts in that calculation. 

[srlarson]

ok..not really $70 mil per year......present value...I think the Dodgers are putting away like $46 million per year, + the $2mil per season....so really like $48 million per season.....a small step over the current high salaries of $43+million..........

[Whitey333]

Good for Ohatani, not so good for baseball as a whole.  The cost for the rest of the players just went up as well.  We are already seeing the effects of that.  This also shows the Twins are unwilling to pay market value for pitching.  We lose Gray, Maeda, and Pagan because Twins didn't want to pay the going rate.  Now even the Royals are signing free agent pitching.  The price of all future contracts with players will be going up.  No not to 700 million dollar levels but it drives the bidding up for the next level free agents.  TheTwins had pitching but they decided to not pay the going rate.  They had a good thing going but through it away.  It's there decision.  They have to live with it.  Same thing as the ticket buyer.  They can tell the team they disagree with their payroll reduction philosophy by staying away.  And yes it is way too expensive to take a family or your grandkids to a Twins game.

[LonelyseatinMOA]

I understand calls for a cap but why punish players for a problem the owners created? 

[Parfigliano]

2 hours ago, LonelyseatinMOA said:

I understand calls for a cap but why punish players for a problem the owners created? 

Owners created.

[Old fox]

Sorry folks because the Dodgers maybe didn’t over Mr. Ohtini, because they got 2 dam good ball players in 

[SteveLV]

Exhibit 2:  Yamamato contract, $325M, not even including the posting fees.

MLB, fix yourself or you are going to lose fans in the small market areas.  Maybe you don't care.

[Mike Sixel]

1 hour ago, SteveLV said:

Exhibit 2:  Yamamato contract, $325M, not even including the posting fees.

MLB, fix yourself or you are going to lose fans in the small market areas.  Maybe you don't care.

Strong disagree. Baseball was never more popular than when the Yankees did this. It's good for baseball to have a big market team casual fans hate irrationally. At least the dodgers are spending money, unlike like seven teams that aren't trying and are just pocketing millions. 

[Parfigliano]

1 hour ago, Mike Sixel said:

Strong disagree. Baseball was never more popular than when the Yankees did this. It's good for baseball to have a big market team casual fans hate irrationally. At least the dodgers are spending money, unlike like seven teams that aren't trying and are just pocketing millions. 

Last year my Mets spent money.  Poorly.

[USAFChief]

On 12/22/2023 at 9:11 AM, Mike Sixel said:

Strong disagree. Baseball was never more popular than when the Yankees did this. It's good for baseball to have a big market team casual fans hate irrationally. At least the dodgers are spending money, unlike like seven teams that aren't trying and are just pocketing millions. 

Yeah, MLB is flourishing and the NFL can't get anyone to watch.

 

[Nine of twelve]

I know I've said this before but it applies. An MLB team is not a business unto itself. MLB as a whole is the business. And owners should know that it's the highest priority to maintain fan interest, both in the game as a whole and in individual teams. And IYAM having a system that allows a very few teams to have an advantage that other teams can never attain is not good for the business of baseball. I wish I knew what the solution is, but somehow something needs to change. Right now, if the World Series ever pits the Yankees and the Dodgers I will ignore it.

[DJL44]

6 minutes ago, Nine of twelve said:

Right now, if the World Series ever pits the Yankees and the Dodgers I will ignore it.

You might, but that would pretty much guarantee the most people are watching. Lose a handful of fans in small markets but gain ten times as many in NY and LA.

If you want to fix baseball you have to change the incentives. Teams should make the most profit when the stadium is full.