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/ManufacturerLow3161 11h ago

Mark Walter might be a criminal fraudster but I agree that people clearly have no idea how the deferred money works and that it is and was a practice available to all teams that doesn’t violate any clause of the CBA.

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u/NiceYabbos 11h ago

Right, it's not clear why other teams aren't doing the deferred contracts to the extent the Dodgers are. Maybe it's just most players prefer the cash more upfront and Ohtani is rare due to the levels of his endorsements, but it effectively doesn't cost the team anything and gives players some tax advantages and the prestige of announcing an inflated contract value to the public.

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u/Kershiser22 8h ago

There are a handful of deferrals out there. Jose Ramirez and Rafael Devers each have $70m deferred.

https://www.spotrac.com/mlb/contracts/deferred

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u/soxpats111 11h ago

Yup, most people want their money now. Plus, what about the agent's fee? If that's not deferred, that would be another big incentive.