Coming off of their World Series victory, the Los Angeles Dodgers have certainly not sat on their laurels. Of all teams this off-season, with maybe the exception of one contract signed in Queens, the Dodgers have been the most aggressive in signing big name players to big money deals.
The Dodgers added several big pieces to their roster, including cornerstones to their rotation. Blake Snell was signed away from the rival Giants on a five-year deal worth $182 Million. High profile prized Japanese import Roki Sasaki chose to join fellow countrymen Shohei Ohtani and Yoshinobu Yamamoto. They brought back outfielder Teoscar Hernandez on a three-year deal worth $66 million. For good measure, they also added reliver Tanner Scott for four years and $72 Million.
It’s not so much the Dodgers’ aggressive check writing that is making headlines. After all, this is Major League Baseball. Big market teams have not been shy to spend when they see fit. However, the wrinkle that’s drawing the ire of baseball fans is how much money is being
deferred in these contracts.
Deferred money contracts are not that new to baseball, and the Dodgers are hardly the only team utilizing the ability to pay players many years after they’ve hung up their cleats. The Mets signed what is likely the most noteworthy and famous deferred money deal with Bobby Bonilla, who has been receiving $1.2 Million every July 1st since 2011, and will until 2035.
The difference now is just how many players are receiving deferred money, and how much. The Dodgers have financial deferrals on Shohei Ohtani, Mookie Betts, Blake Snell, Freddie Freeman, Will Smith, Tommy Edman, Teoscar Hernandez, and Tanner Scott. If you add up all the deferred money on the Dodgers’ books to these eight players, it totals close to $1.4 billion dollars. That’s not a typo.
The NBA, NFL, and NHL all have salary caps, with each having its own rules regarding flexibility and accounting. Baseball has a luxury tax, which means that as high spending teams spend total payroll above certain levels, for a number of consecutive seasons, the teams must pay additional dollars into a pool which shares revenue to smaller market teams.
There are four teams which are projected to pay luxury tax in 2025, and you can probably guess who they are relatively easily: the Dodgers, Phillies, Yankees, and Mets.
It’s not as if a deferred contract is a “get-out-of-jail-free” card when it comes to the tax, but it is a financial instrument which provides additional flexibility. Ohtani’s deal was the highest profile deferred contract, with $680 Million of the total $700 Million value deferred into the future, allowing the Dodgers to only pay their star $2 Million each season he’s actually playing. That flexibility allows them to be in the market for the Blake Snell’s and Tanner Scott’s of the world, without having to pony up the total outlay in cash every season.
It’s a sizable advantage for teams like the Dodgers. Other teams simply can’t commit to such long-term expenditures during years the players aren’t even playing.
There are currently 62 contracts in baseball that are $100 Million or more. The Dodgers lead the major leagues with seven. In comparison, the Phillies have six, the Yankees have five, and the Mets have four.
Pardon the pun, but consider this. If leagues are going to have restrictions like salary caps and luxury taxes in order to level the playing field between big and small markets, and give even simply the illusion of competitive balance, shouldn’t the rules actually work towards that end?
Brian Attard is a lifelong resident of Hammonton, avid sports fan and host on The Sports Box Network (@SportsBoxSports on all social media platforms).