Just days after Shohei Ohtani’s $700 million deal with the Dodgers was met with jaws on the floor around the sports world, the details of that deal proved perhaps more staggering.
Ohtani will make just $2 million in each of the next 10 seasons, with $68 million of his annual salary deferred to the ensuing 10 years, once his contract is up with the Dodgers.
It’s a familiar trick MLB teams play to free up present-day money to use elsewhere on their roster. The Orioles of a previous vintage were practitioners in an effort to keep the mid-2010s competitive window open.
Ohtani’s near-term concession presents a tremendous opportunity for the Dodgers, with the long-term costs clearly not important to an ownership group that’s wealthy enough to assume that significant a salary commitment.
The Orioles were never on the hook for $68 million a year in deferrals, but for a while early on in their rebuild, the total payouts to players no longer on the roster surpassed the highest salary for an actual player — which says plenty about both the amount deferred and the Orioles’ spending since then.
Chris Davis’ contract is, obviously, the most extreme example. His original contract had $42 million of the original $161 million deferred, with annual payments of $3.5 million per year beginning this season and extending through 2032, then $1.4 million being paid annually the next five after that. He also deferred the $17 million he was owed in the final year of the contract, 2022, over three years when he retired, meaning the Orioles paid him $9.16 million this year and will again for the next two.
He’s not the only one. Mark Trumbo left the organization in 2019, at the end of the three-year, $37.5 million deal signed ahead of the 2017 season, then was paid $1.5 million in deferred money from 2020-2022. Andrew Cashner’s $3 million signing bonus was split into two deferred payments owed in 2020 and 2021 when he signed a free agent deal ahead of the 2018 season. Alex Cobb had deferrals in his four-year, $57 million deal signed that spring as well, and spent three of those seasons on the Orioles, though it’s unclear whether any of the deferrals he was owed ($2 million in 2022 and $1.8 million from 2023 to 2032) went to the Angels along with Cobb in the February 2021 trade that got him off the Orioles’ books.
Other Orioles contracts with deferred money went to Chris Tillman, Darren O’Day, Ubaldo Jimenez, J.J. Hardy and Yovani Gallardo. In 2024, Davis and possibly Cobb will get checks from the Orioles on July 1, when the deferred money is paid. As will Bobby Bonilla, who still gets $500,000 from Baltimore, less than half what he gets from the New York Mets as part of a more infamous arrangement.
I’ve periodically asked how the deferred money was accounted for — whether it came out of the present-day baseball operations budget the same way that year’s payroll did, or was from a different budget line independent of that, given executive vice president and general manager Mike Elias’ budget shouldn’t have been affected by contracts given out years before he arrived. No clear answer ever came back, though those payments — and more aptly the free agent spending that led to them — clearly loomed large in the organization, and likely still does.
It was believed at the highest levels of the organization that the payrolls of the mid-2010s were beyond the club’s means, though the pursuit to win a championship for aging owner Peter Angelos was certainly a worthy one. After all, flags are flown for World Series champions, not clubs that moderate spending and run a profit for their owners.
The resulting change in the organization, with a focus on player development and building a sustainable contender, has led the Orioles to where they are now. As things stand, they’ll be paying Davis more than anyone on their roster in 2024 other than closer Craig Kimbrel and, potentially, Anthony Santander. Blessedly, they could have more than 10 players making more than Ohtani’s $2 million in 2024, something past versions of the club couldn’t say.
But the Dodgers, of course, aren’t finished yet. They spent two years creating payroll space for Ohtani and now, presumably, get to use it on other star-level talent in addition to having Ohtani in the heart of their lineup.
In a way, the episode represents one of the main competitive challenges the Orioles face these days. The deferral method was one they used to help get more talented back when they tried to maximize every dollar available for the major league roster. It helped fit Cobb onto the payroll in 2018. Now it’s being taken to an unthinkable extreme by one of the mega-wealthy clubs they’re chasing.
Same goes for pretty much everything they’re doing. The Orioles have player development and data advantages over many clubs, but some of the wealthiest teams they’re chasing — the Dodgers and the Yankees, among others — are also well-resourced and incredibly effective in those departments as well.
There are plenty of reasons why it’s fair, even if it doesn’t feel like it. It’s all within the rules of the game, and all the teams that believe they’re in media markets too small to do the same are happy to take revenue sharing and national television money those big clubs generate for them, so they shouldn’t take issue with anything else those clubs do with their money.
It’s incumbent on those smaller clubs to find different ways to maximize their budgets and find efficiencies or other ways to compete with these teams, because Ohtani’s deferrals and whatever else it allows the Dodgers to do this winter show the spending gap isn’t shrinking any time soon.
This story has been updated to correct how much Alex Cobb is owed in deferred payments from 2023 to 2032.