His Unprecedented Contract Has Unprecedented Structure

The big sports news over the weekend came from the world of baseball, where Shohei Ohtani announced he'd signed a record-shattering $700 million contract over 10 years to play for the Los Angeles Dodgers. Now that more details of the deal are surfacing, the Wall Street Journal calls attention to an odd detail: Ohtani—who's both a star pitcher and a star hitter—will make less than some rookies next season, despite the gargantuan contract. The reason is the unusual way the contract is structured, which was reportedly Ohtani's idea. Coverage:

• Deferral: Ohtani will make "only" $2 million per year for the 10 years of the contract, meaning he'll collect just $20 million of that $700 million over that span, reports the AP. The rest will be deferred until afterward—he'll collect $68 million per year from 2034 to 2043. Ohtani, a native of Japan, is currently 29 years old.

• Benefits: The structure means the Dodgers can better afford to sign other players in the immediate future, notes the Athletic. Ohtani, for his part, will be taxed on the smaller annual amount in California, and by the time he's making the larger sum, he might well be living back in Japan or somewhere else with lower or nonexistent taxes. His $68 million annual salary will be worth less in a decade, but that tax benefit could negate that.
• Benefits, II: The stories also dig into what's known as baseball's competitive balance tax, aka the luxury tax. The upshot is that because of the deferrals, the Dodgers will take a much smaller hit on this yearly—roughly $46 million (his salary, plus the present-day value of the deal) instead of $70 million.
• Not a pauper: Ohtani may be making the smaller salary of $2 million for a while, but he rakes in about $50 million per year in endorsements, notes the Athletic.

(More Shohei Ohtani stories.)