Mathematically, the Ohtani contract is for 10 years, each year paying $2MM immediately and $68MM 10-years later. MLB has decided that $68MM deferred 10-years is equivalent to $44MM paid when earned without deferrals. To the player, deferral is undoubtedly is more effective from a tax standpoint than paying taxes in California (not sure of tax treatment) Perhaps he is taxed those years in (say) Panama. The deferral effectively discounts at circa 5%. To the Dodgers, they likely can invest in their business at an effective rate of much more than that, so is a very big win.
In that case, what I’m asking is why is Vlad’s $38M for the same years 2034-39 not considered at a reduced value since it’s the same 6 year stretch as Ohtani’s deferred.
It’s AAV that is used…you could pay Vlad $25x7 followed by $45x6 plus then $50 (all$ MM) … or visa versa…and it would be the same as (roughly) $35.7MM for each of 14 years. MLB needs an Actuary to do reasonable interest adjusted AAVs. I’ll apply, and take a salary of only 10% of Vlad’s…or even an autographed City Connect jersey
And Frank Mahovlich
Mathematically, the Ohtani contract is for 10 years, each year paying $2MM immediately and $68MM 10-years later. MLB has decided that $68MM deferred 10-years is equivalent to $44MM paid when earned without deferrals. To the player, deferral is undoubtedly is more effective from a tax standpoint than paying taxes in California (not sure of tax treatment) Perhaps he is taxed those years in (say) Panama. The deferral effectively discounts at circa 5%. To the Dodgers, they likely can invest in their business at an effective rate of much more than that, so is a very big win.
In that case, what I’m asking is why is Vlad’s $38M for the same years 2034-39 not considered at a reduced value since it’s the same 6 year stretch as Ohtani’s deferred.
It’s AAV that is used…you could pay Vlad $25x7 followed by $45x6 plus then $50 (all$ MM) … or visa versa…and it would be the same as (roughly) $35.7MM for each of 14 years. MLB needs an Actuary to do reasonable interest adjusted AAVs. I’ll apply, and take a salary of only 10% of Vlad’s…or even an autographed City Connect jersey
Great news, but can't help thinking that Shapiro made this deal through gritted teeth.
Also can't help thinking that the fans might turn a bit on Vladdy if he and the team don't perform well - the natives are still restless.
27 is a nice Toronto number - was also Darryl Sittlers.