Shohei is Underpaid at 700 Million- Here’s Why

Shohei Ohtani tipping his cap at his 2023 press conference when he signed his 700 million dollar contract with the Los Angeles Dodgers. (Athlete: Shohei Ohtani Source: reason.com Date: December 15th, 2023, Photographer: Hiroyuki Yabushita)

Contextualizing the Cash: Background on Sports’ Biggest Deals

On December 11, 2023, Shohei Ohtani signed a 10-year, $700 million contract with the Los Angeles Dodgers. The contract was the largest deal in sports history, surpassing Lionel Messi’s 4-year, $674 million contract with Barcelona FC in 2017.

Intriguingly, Ohtani elected to defer $680 million of his contract to after he retires. This would devalue his contract due to inflation, potentially making his earnings worth less.

Accordingly, the ringer found that the net present value (NPV) of Shohei’s contract was $460 million due to the deferrals. Moreover, if Shohei stays in California, he would lose a further $90 million due to the state’s high tax rates.

Overall, Shohei will earn $2 million annually during his 10-year contract, which is dwarfed by his endorsement earnings and other revenue streams. Therefore, with Juan Soto’s new record-breaking 15-year contract worth $765 million with no deferrals, Shohei Ohtani was underpaid even at $700 million.

Juan Soto smiling at his press conference after signing a 765 million dollar contract with the New York Mets. (Athlete: Juan Soto Source: sportsbusinessjournal.com Date: January 22nd, 2025)

Shohei’s Journey: Escaping the Shadow of Unfair Contracts

Before Ohtani arrived at the MLB, he started his professional career at age 19 in Japan playing for the Hokkaido Nippon-Ham Fighters from 2013 to 2017. In 2014, he was the first person to have double-digit wins and home runs in one season.

In 2016, he played a pivotal role as he led the Fighters to a Japan Series championship, Japan’s World Series equivalent. After the 2017, the Fighters posted Ohtani, allowing him to join MLB teams.

After a storied career in Japan, Ohtani would sign with the Angels in December 2017 for three years on a league minimum along with a $2.3 million signing bonus. This meant Ohtani was paid around $545,000 annually for the 2018, 2019, and 2020 season.

Afterward, until 2023, Ohtani kept signing low-value deals to avoid arbitration, a common practice among players and teams due to the long length of conventional arbitration hearings. These deals included a two-year $8.5 million for 2021 and 2022, and $30 million for 2023.

Ohtani had to sign these arbitration deals because an MLB player usually cannot enter free agency until they serve six years of service time, which Ohtani accomplished after 2023 since his first season was in 2018.

It is laughable at how much the Angels underpaid Ohtani because in 2021 and 2022, he finished as the unanimous AL MVP and runner up respectively despite earning only $8.5 million.

If Ohtani had been paid market value for those historic seasons, he would have made around $140 million. Surprisingly, this only covers his on-field performance because Ohtani’s economic impact off the field, which includes ticket sales, sponsorships, merchandise, and other revenue streams totals over $515 million.

Overall, just for the 2021 and 2022 season, Ohtani provided the Angels with over $655 million in value as a baseball player and global icon despite being paid 1.2% of his value.

Ultimately, Ohtani generated the Angels billions of dollars during his time on the team, yet he was paid only $42 million in total. Accordingly, Ohtani signed a record-breaking deal worth $700 million in the 2023 offseason with the Los Angeles Dodgers, but he is still getting underpaid.

Ohtani getting ready to swing in a Dodgers jersey. (Athlete: Shohei Ohtani Source: foxsports.com Date: December 11th, 2023 Photographer: FOX Sports)

Priceless Talent: Why Ohtani’s Record Contract Falls Short

In late 2023, Ohtani had to undergo Tommy John surgery after tearing his UCL, causing him to not pitch for the whole 2024 season. With the 2025 season around the corner, it seems that Ohtani will return to the mound, but the Dodgers and manager Dave Roberts will be cautious.

However, his 2024 season was monumental, winning his first World Series title with the Dodgers and earning the franchise around $770 million off the field along with his $61 million market value for that season, totaling $831 million. Therefore, just in his first season, Ohtani has made the Dodgers more money than his whole contract.

Since he could not pitch, Ohtani turned in arguably the best hitter in baseball, winning NL MVP for his efforts. Nevertheless, he was severely underpaid since he deferred most of his contract, causing his annual earnings to be $2 million for the rest of his 10-year contract.

Thus, Ohtani is being paid even less than when he was on the Angels since he provides more economic value for less pay. In addition to all of these benefits, Ohtani has finally brought what the Dodgers lacked: hope.

Since many considered the Dodgers’ 2020 World Series title lacks legitimacy since it was a shortened season and there were no fans, their most recent championship solidifies their position as a MLB powerhouse and dynasty.

Ohtani has also rejuvenated Dodgers ticket sales and local tourism due to his Japanese supporters and appeal to the second-biggest market, Japan, for baseball worldwide. He ranked number one in 2024 for jersey sales and has ascended to be the face of MLB.

Ultimately, Ohtani’s massive contract value has already been recouped by his first year on the Dodgers, making his future seasons just a bonus for the organization. Ohtani’s selfless decision to defer his contract has allowed the Dodgers to build a superteam that will contend for the World Series until he retires.

In the end, Ohtani chose to win over making money, but that does not take away from the fact that Ohtani is severely underpaid and no other teams than the Dodgers took advantage, and now they bear the fruit of their once-thought-to-be risky decision.

Ohtani taking his helmet off during a game. (Athlete: Shohei Ohtani Source: theguardian.com Date: October 4th, 2024 Photographer: Chung Sung-Jun/Getty Images

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Thank You for Reading!

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