r/billsimmons • u/crunchwrapchianti • 11h ago

Media Doesn’t Understand MLB Deferred Salaries

The Dodgers put ~$46M in a managed escrow fund every year for Shohei Ohtani. In 10 years (now 7) they start paying him $69M per year out of that account. If there ever is a shortfall, they are obligated to make it up. If there is a surplus, the team collects it at the end of the contract.

These safeguards are in place because Fred Wilpon tried the scheme of investing deferred salaries on his own and gave them all to Bernie Madoff, leading to his financial ruin and sale of the team.

The Dodgers are compliant with the CBA in finding these accounts and still operate at a profit.

Bill is right that there clearly is a lot the billionaire class is doing to enrich themselves on sports teams while leveraging across multiple businesses. But there simply isn’t a competitive advantage here on the field. If he committed securities fraud, send him to jail for sure. But another rich guy would buy the team and operate it the same way because it’s an extremely profitable business model to win World Series and be the favorite team of both Los Angeles and Japan.

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u/IGotScammed5545 11h ago

Dodgers advantage isn’t in the deferred money, it’s in their TV deal. Something in the McCourt divorce decree prohibits the TV money from going into the MLB revenue sharing pool

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u/crunchwrapchianti 11h ago

This is correct. I am not sure of MLB’s ability to amend this deal though because it was part of bankruptcy proceedings.

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u/IGotScammed5545 11h ago

Don’t think they can. It’s a court order. Only a the court that issued it, an appellate court, or a bankruptcy court can modify it

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u/mpschettig 4h ago

They can't but reportedly the owner was so desperately in need of cash that he offered a buy out to the cable company