re: 680 million of Ohtani’s 700 mill contract is deferred until it’s over.

Posted by Falco

Member since Dec 2018

1251 posts

Posted on 12/12/23 at 10:08 am to InkStainedWretch

quote:
Ohtani's contract, combined with those of Mookie Betts and Freddie Freeman, raises the Dodgers' total of deferred money owed to the three to $857 million from 2033-44.

quote:
Betts has a $365 million deal covering 2021-32 that includes $115 million in deferred salaries payable from 2033-44 and has the final $5 million of his signing bonus payable from 2033-35.

Freeman has a $162 million, six-year deal for 2022-27 that includes $57 million in deferred money payable from 2028-40.

Los Angeles' high points of the deferred payments are 2038 and '39, when the trio will be owed $83 million, and 2040, when they will be due $84 million

This boggles my mind

Posted by buckeye_vol

Member since Jul 2014

35239 posts

Posted on 12/12/23 at 3:23 pm to WestCoastAg

quote:
Giants fans are taking this well lmao

From his personal income tax perspective (as opposed to the Luxury tax for the Dodgers), since that appears to be what they’re referring to, if he wanted to maximized his wealth, this doesn’t make any sense at all.

Even if he got taxed at 50% for every cent of income that $68 million, but he invested the remaining 50% and let it sit until the 20 years is up, he would have about the following

$1.148 billion at 8% return
$1.333 billion at 9% return
$1.546 billion at 10% return

Now instead if he was able to take the full $68 million per year on the deferred income after 10 years and invest it all until for 10 years (so 20 years total), so a 0% tax rate, he would he would have:

$1.064 billion at 8% return
$1.126 billion at 9% return
$1.192 billion at 10% return

So even being able to invest all $38 million at a 0% tax rates, and he would have significantly less than being able to invest half that each year but with an additional 10 years of compounding interest.

Of course, since that deferred income won’t be tax free, and probably closer to say 40% tax rates, then we’re talking roughly half the amount after 20 years if deferred.

This post was edited on 12/12/23 at 3:51 pm

Posted by kciDAtaE

Member since Apr 2017

15766 posts

Posted on 12/12/23 at 3:29 pm to buckeye_vol

Are we sure the offer would have been the same amount if he didn’t defer? What if the alternative was 1/2 the total contract?

Posted by buckeye_vol

Member since Jul 2014

35239 posts

Posted on 12/12/23 at 4:09 pm to kciDAtaE

quote:
Are we sure the offer would have been the same amount if he didn’t defer? What if the alternative was 1/2 the total contract?

Good points even excluding the impact of the luxury tax, and just using the net present value, the difference over the entirety of the contract is pretty large, and obviously gets larger as the discount rate increases.

NPV with no deferred income by discount rates
$642 million at 2%
$628 million at 2.5%
$615 million at 3%
$603 million at 3.5%
$590 million at 4%
$579 million at 4.5%
$568 million at 5%

NPV with deferred income by discount rates
$529 million at 2%
$494 million at 2.5%
$462 million at 3%
$432 million at 3.5%
$404 million at 4%
$379 million at 4.5%
$355 million at 5%

All it’s quite clear that the deferred income over 20 years is significantly less than full income over 10 years, from 82.6% of the value at a 2% discount rate to to 62.5% at a 5% discount rate. And considering the durations, the longer duration would be more likely to have a higher rate than the lower.

Posted by SeeeeK

some where

Member since Sep 2012

28066 posts

Posted on 12/12/23 at 4:35 pm to Fun Bunch

expect a strike or lock out soon.

Posted by Faulk2Tyler

Louisiana

Member since Aug 2023

260 posts

Posted on 12/13/23 at 7:15 am to CRDNLSCHMCPSN11

quote:
New Balance
Fanatics
Topps
Mitsubishi
Japan Airlines
Seiko
Kose

Those represent just some of Ohtani's sponsors; he had an MLB-record 17 in 2022 and figures to see that number continue to increase.

quote:
Here's the complete list of Shohei Ohtani's endorsements:

Fanatics (struck in an exclusive multiyear memorabilia deal) on July 20, 2021

ASICS, Descente, Japan Airlines, Nishikawa Co., Hugo Boss, New Era, Panini, Fanatics, Oakley, Topps, and Seiko Watch will all be present in 2021.

FTX (joined as a worldwide ambassador) on November 16, 2021

MLB The Show 22, Nintendo Direct (a promotional video game) in February 2022.

April 2022: New and renewed endorsement partnerships with FTX, Kowa, Mitsubishi Bank, Salesforce, ASICS, Descente, Fanatics, Topps, Panini, and Hugo Boss are expected to generate a combined $20 million in revenue.

Porsche Japan (becoming a brand ambassador) August 2022

New Balance (who became an ambassador and will use their equipment on the pitch) 2023

This post was edited on 12/13/23 at 7:19 am

Posted by CRDNLSCHMCPSN11

Member since Dec 2014

17317 posts

Posted on 12/13/23 at 2:23 pm to Faulk2Tyler

I didn't realize he had that many. I would of thought he would of had a lot more TV spots.

Posted by CRDNLSCHMCPSN11

Member since Dec 2014

17317 posts

Posted on 12/13/23 at 8:40 pm to Falco

(no message)

This post was edited on 12/13/23 at 8:41 pm