Current Contract Structure and Total Value
Shohei Ohtani signed a 10-year, $700 million contract with the Los Angeles Dodgers on December 11, 2023, making it the largest deal in MLB history by total value. The agreement includes $68 million per season in average annual value, with the contract running through the 2034 season. The structure uses significant deferred payments, with $68 million of each annual salary deferred until after the contract expires, a method previously used in high-profile MLB deals. The Dodgers front office structured the deal to manage luxury tax implications while securing Ohtani as both a pitcher and hitter. For full contract details, see the official team announcement via MLB.com.
The contract guarantees $700 million regardless of performance, injury, or team decisions, with no opt-out clauses. Ohtani receives a $10 million signing bonus paid over the first two seasons. The deferred money is paid by a third-party entity, not the Dodgers, reducing the immediate luxury tax hit. The total guaranteed value exceeds the previous record held by Manny Machado and Max Scherzer. This structure allows Ohtani to receive market value while the team maintains roster flexibility under MLB payroll rules.
Salary Breakdown and Deferred Payment Mechanics
Annual Salary and Payment Schedule
Ohtani earns $68 million per year in base salary, paid in full each season through standard MLB payroll channels. The annual average value of $68 million ranks as the highest in MLB history, surpassing previous records held by Bryce Harper and Mookie Betts. The salary counts fully against the Dodgers luxury tax threshold each year during the contract term. The team pays the salary from current revenue and existing revenue-sharing mechanisms. The contract uses a standard 12-month payment cycle aligned with the MLB regular season calendar.
Deferred Payment Structure
The deferred portion of $68 million per year is paid by a third-party fund managed by a financial partner, not the Dodgers organization. This structure removes the deferred amount from the team's luxury tax calculations during the contract window. The payments begin after the contract expires in 2034 and continue for a set number of years. The Dodgers use this method to keep the immediate payroll impact manageable while offering Ohtani a record total value. The third-party deferral mechanism has been reviewed by MLB office for compliance with league rules.
Team Impact and Financial Context
Luxury Tax and Roster Implications
The Dodgers currently operate above the MLB luxury tax threshold, and the Ohtani contract adds significant annual payroll cost. The team uses the deferred structure to reduce the immediate luxury tax hit while maintaining competitive payroll flexibility. The contract does not include a trade kicker or opt-out, locking Ohtani into Los Angeles through 2034. The Dodgers front office has publicly stated the deal aligns with long-term competitive planning. Financial analysts note the structure balances market value with regulatory constraints under current MLB collective bargaining rules.
Comparison to Other MLB Contracts
The $700 million total value surpasses the previous MLB record of $426.5 million held by Bryce Harper. Ohtani's contract is the first in MLB history to combine a $700 million total with a $68 million average annual value. The deal ranks as the largest guaranteed contract in North American professional sports history by total value. The structure differs from earlier mega-deals by using third-party deferred payments for the full salary amount. The contract sets a new benchmark for future negotiations in MLB and other major leagues.