Shohei Ohtani announced his decision on Saturday, joining the Dodgers on what’s reported to be a 700-million-dollar contract. This is hundreds of dollars more than Mike Trout’s previous record-setting contract, a $426.5M deal. The wonderful thing about baseball’s lack of a hard salary cap is that the best players are paid closer to their real market value than they are in any of the NBA, NFL, and NHL. Shohei Ohtani is going to get what he’s worth.
A lot of the money is reportedly deferred, meaning Ohtani will get it after the ten years of his contract are over. Ohtani’s contract with the Dodgers will one day end, and he’ll either retire or sign a new contract, in Los Angeles or elsewhere, and he’ll continue to get money from the Dodgers, Bobby Bonilla-style. He’ll get $700M, but by the time he gets it, it’ll be worth a little bit less, because inflation will happen in some fashion between now and then, whether it’s fast or slow.
Jeff Passan estimates that by Major League Baseball’s method of discounting for the time value of money, Ohtani’s deal is only worth between $400M and $500M by today’s dollars. He will, by MLB luxury tax accounting, be making between $40M and $50M a season. I’m not sure how economically sound MLB’s methodology is. I’d imagine it’s decent, but I really don’t know. Regardless, that’s the hit it’s going to have on the Dodgers’ payroll, for luxury tax purposes, and that makes it close to the best number against which to compare other salaries.
One way to conceptualize the deal is to say that Ohtani signed for approximately $45M per season for ten years, but the Dodgers agreed to pay him an extra $250M over a segment of time after his ten years are up. Coincidentally (I hadn’t checked this before I wrote the previous sentence), a $450M 10-year deal is exactly what FanGraphs’s Crowd Source contract prediction held that Ohtani would sign. So, a way to explain what the Dodgers did is this:
- They paid $450M for the ten years of wins Shohei Ohtani will, in the average scenario, produce.
- They will one day pay an extra $250M for the right to have associated themselves with Shohei Ohtani, who will in a very possible scenario be remembered as one of the greatest baseball players of all time. Barring a trade or some devastating luck, Shohei Ohtani will play more years with the Dodgers than with any other team. The Dodgers will receive marketing benefits galore, but they’ll also get to be the team forever associated with a man who will quite possibly be among the best to ever play the game. For all of this, you could say they paid $250M.
It isn’t this simple. For one thing, I don’t think Ohtani’s getting exactly $450M over these ten years and then $250M over the rest of his life. I just broke it up that way for the ease of my own understanding. More importantly, though, there’s no easy place to draw the line between which money is for the wins and which is for the mystique. Other players—Trout, Aaron Judge—offer marketing benefits themselves, and also offered the possibility of being a Babe Ruth/Willie Mays/Hank Aaron-level all-time great. But the important thing about money is that it only exists when it limits someone’s choices. If the Dodgers could spend $450M on Ohtani or $700M on Ohtani and make the exact same choices with the rest of their money, for eternity, then there is functionally no difference between $450M and $700M for the Los Angeles Dodgers. Again, it isn’t this simple, but given the Dodgers’ gigantic resources and demonstrated willingness to spend from those resources, I’m not sure the Dodgers are any less flexible than they would have been had they spent $250M fewer. Especially now that the money’s deferred in a way that neutralizes the luxury tax impact of the large deal. The luxury tax penalties could theoretically snowball enough over time to have some impact on choices. Take those away, and it’s really only money, a lot of which they’ll expect to recoup in indirect ways (the marketing, the mystique).
The deferrals were reportedly Ohtani’s idea, to create more financial flexibility for the team that signed him, something which should allow him to play with better teammates and win more World Series titles. Whether this is a legacy play or a reaction to the competitive misery of playing for the two–stars–and–little–else Angels, it’s a great move, and it gets us back to the functional difference between $450M and $700M. Will Ohtani be that much happier with $250M extra, having already secured $450M? How much of that $250M would he spend for a title? Or for two? Just as I’m not sure the Dodgers will make any meaningfully different choices because of the $250M they’ll pay Ohtani that won’t count towards the luxury tax, I’m not sure Ohtani will make any meaningfully different choices having signed a deal worth—at its present value, by MLB calculations—only 65% of its stated value. He’s going to have a nice house. He’s going to have other nice things. I have never had hundreds of millions of dollars, but I’d imagine the latter few hundred million don’t change the picture as much as the first few hundred million.
So no, Ohtani’s contract isn’t really worth $700M. He’ll get that much money eventually, but it’s worth less than that by today’s dollars. Depending how accurate MLB’s approach to time value is, it could be worth roughly $450M. Either way, it’s the biggest contract ever signed in an American sports league, and by total dollars it may be the largest athlete contract ever, anywhere in the world (Messi’s deal with Barcelona is listed at $674M on Wikipedia). More importantly for the Dodgers and Ohtani, they each became a lot more likely to win a championship, and they got there by partnering with an entity they like. What is Shohei Ohtani worth? It’s hard to put a dollar on it. But that, in itself, speaks to how much worth there is with this guy. We can put a price on a mid-rotation starter. We can put a price on Aaron Judge. It’s really hard to put a price on someone as valuable as Shohei Ohtani. He’s earned himself the happiness this money will buy. He’s already using it, in a sense, to buy better chances at championships.
Update: It is now being reported, by ESPN and The Athletic among others, that Ohtani is deferring $680M of the $700M until the end of the contract. That doesn’t really change anything we talked about, but it sure helps the Dodgers—and therefore Ohtani.
Why Is Matt Entz Leaving North Dakota State?
Also signing this weekend with a big Southern California brand was Matt Entz, head football coach at North Dakota State. The brand in question? Southern California. Entz will be USC’s new linebackers coach.
I don’t know if Entz is going to be getting all that big a pay raise for this promotion, especially when you factor in the cost-of-living difference between Fargo and Los Angeles. Entz was making roughly $400,000 a year as NDSU’s head coach, and while the linebacker title at USC is being accompanied by “assistant head coach for defense,” USC already grabbed D’Anton Lynn to be its defensive coordinator. Lynn is reportedly set to make two million dollars per year. Unless I really misunderstand something, Entz is not going to be making two million dollars per year. Did Entz leave for the pay raise? Maybe. But Chris Klieman grabbed more than a $2M salary when he left Fargo, and he got to continue being a head coach.
Where we’re headed with this is that for as successful as Entz has been since taking the reins at North Dakota State, with two national titles (at least—NDSU still has about a 1-in-4 chance at another one this year) and a 60–10 career record heading into this weekend, the man has not been Chris Klieman, and considering NDSU was still in Division II when Craig Bohl took over, I’m not sure Entz has been Bohl, either. Bohl went 104–32 (.765 win percentage) and won three FCS national titles out of a theoretically possible six. Klieman went 69–6 (.920 win percentage) and won four FCS national titles out of a possible five. Entz is 60–10 so far (.857 win percentage) and has won 2.25 titles out of a possible five. Those are good numbers, but they’re worse than Klieman’s, and they don’t represent the historic improvement Bohl’s signify.
It’s hard to separate NDSU’s success from the quality of its competition. South Dakota State is better now than they’ve ever been, a team our model would have favored over fringe top-25 FBS teams right now. It’s also hard to account for the Covid season, when NDSU played without Trey Lance and went only 7–3. But last year, NDSU was clearly not the best FCS team, and this year, NDSU was clearly not the best FCS team for most of the season (they still might not be). Even if you wipe 2020 away, Entz has turned in NDSU’s first consecutive 3-loss campaigns since Bohl was still building what would become this dynasty. If NDSU loses, to Montana or to South Dakota State, Entz will have lost more games in two years than Klieman did in five. The context matters, but at a high level, the results are not the same.
Dynasties are fragile things. It’s difficult to build what Bohl built, and it’s difficult to maintain what Klieman maintained. But Entz wasn’t really maintaining the dynasty he inherited. Which makes me wonder whether this move is for the best for North Dakota State, and also for Entz himself. I wonder if Entz is jumping at the moment his value is the highest it will be. Given another year, maybe he could have shown himself to be on par with Klieman and landed a Power Four head coaching role. Given another year, maybe NDSU would have continued to struggle, relative to what they so recently were.
Entz has a deserved reputation as a stellar linebackers coach and defensive mind. As a head coach, he has a lot left to prove over the rest of these FCS playoffs.
Could Joe Flacco Make the Hall of Fame?
We’re headed for an argument next year over whether Eli Manning is a Hall of Fame quarterback. It’s bubbled up from time to time over the last decade, but the debate will become one of consequence next year, with the younger Manning eligible for Hall of Fame induction in 2025.
At the crux of the expected Eli Manning debate will be the following question: Should a quarterback make the Hall of Fame if he won two Super Bowls? So far, only one eligible man has won two of them and not been inducted: Jim Plunkett, who threw more interceptions in his NFL career than he threw touchdowns (but did win Rookie of the Year, Super Bowl MVP, and—of course—the two Super Bowls).
In a very related story, the Browns are probably going to make the playoffs. ESPN’s FPI, our preferred predictor around here, has the possibility 80% likely. As a playoff team, the Browns could therefore theoretically make the Super Bowl. Should they make the Super Bowl, the Browns could theoretically win the Super Bowl. It is very unlikely that the Browns win more than one or two playoff games, but they did just beat one of the best teams in the AFC, and they’ve beaten the Ravens once this year, and Joe Flacco’s play yesterday was comparable to the best play the Browns have received from the quarterback position all fall. They’re banged up, and they’re starting a 38-year-old Joe Flacco, but the Browns could theoretically win the Super Bowl.
If they do…
Does the Joe Flacco Hall of Fame debate begin?
He’s thrown a lot more touchdowns than interceptions.
The Bulls’ Long December
The Chicago Bulls have won four straight games since losing Zach LaVine to injury, something probably coincidental but also…the team, as it was constructed around LaVine, stunk. The streak started with that crazy win over the Bucks where the Bulls blew a fourth-quarter lead only to see Alex Caruso force overtime with a three at the buzzer.
Tonight, the Bulls play the Bucks again. Then, they play the Nuggets. Then, they play the Heat. Then, they play the Heat a second time. Then, they’ve got the Sixers. After that, it’s the Lakers. Over their next six games, the Bulls are playing six teams with realistic title aspirations. It was fun while it lasted, guys.
On a more serious Bulls note, there are two pieces of Caruso news: First, he’s questionable tonight with a sprained ankle. Second, there was a run of stories today about how the Bulls don’t want to trade the guy. That second part seems foolish to me and potentially larcenous, given Caruso’s chance of winning a title if traded to the right team (what title-contending team would not want Alex Caruso right now). The first part is comparably scary. Because if Caruso isn’t out there against the Bucks, it’s hard to see the Bulls building a fourth-quarter lead at all, let alone being saved when they blow it. Then, they’ve got the Nuggets and Heat tomorrow and Thursday, and it stays bad after that.
The winning streak was fun.
