Few can argue with the success of the Los Angeles Dodgers on the field. Since 2012, no MLB team has had as many regular season victories. Their World Series championship in October was the eighth in franchise history and their second in the last five seasons.Behind the scenes, the Dodgers have made a habit of signing players to deferred-money contracts. Shohei Ohtani offers the most famous example.
The two-way star and reigning National League Most Valuable Player signed a 10-year, $700 million deal with Los Angeles in December 2023.More than 97 percent — $680 million — of Ohtani's salary will not be paid out until after the 2033 season, the last of his 10 years in Los Angeles. The upshot to the Dodgers is that, by deferring so much of Ohtani's salary, the present-day value of his deal is reduced to approximately $461 million according to Major League Baseball's calculation. That's the number upon which the Dodgers' competitive balance tax obligation is based.For Ohtani, it ensures he'll be paid annually for the next 20 years, long after his playing days have ended. It also enables his 2034-43 salaries to be taxed on a rate concurrent with whichever state (or country) he calls home after he's played his final game with Los Angeles.California's top earners are taxed at 13.3 percent, according to the Tax Foundation, the highest marginal income tax rate in the U.S.Ohtani is not the only Dodger player who is deferring salary beyond the duration of his contract. Blake Snell, Mookie Betts, Freddie Freeman, Teoscar Hernández, Will Smith, and Tommy Edman give them seven players under contract for this year who can earn more money simply by living out of state once their deferred payouts kick i