I don’t know if it’s funny or sad, but, with a $700 million contract, Shohei Ohtani is a steal.
With his earnings, he could become majority owner of nine major baseball teams and 22 in the NHL. But it’s a godsend.
Last season, 11 major league baseball teams didn’t even give as much money to their 26 regular players as the Dodgers are going to give just Ohtani this year. But it’s a godsend.
In Canadian money, the Japanese phenomenon will earn $261,000 per day, or $10,800 per hour or even $3 per second. Even when he’s not playing. Even when he goes to sleep. Even when flossing. Even when he tries a spaghetti sauce recipe. But it’s a godsend.
It is the largest contract in the history of sports in North America. But it’s a godsend.
For what? Because if we look at Ohtani’s contribution in a very factual way, at $70 million per year, he is underpaid.
He should have received approximately $76 million.
His value
We must consider his value both as a pitcher and as a hitter.
As a pitcher, Gerrit Cole earns $36 million per year for three years. Ohtani strikes out more often than he does. Hitters also have a better batting average against Cole than Ohtani. But Cole throws more often and has more catches. It should also be considered that the first of ten years it will not launch. It is therefore necessary to deduct one year of salary as a pitcher over the ten years of the contract. We must also consider that Justin Verlander and Max Scherzer earned $43 million for one year last year, at ages 41 and 39. It’s crazy, but it could benefit Ohtani who will be 39 years old at the end of his contract. Considering that Ohtani is more and more dominant every year on the mound and that he risks being the best pitcher in the world starting in 2025, he could ask for $40 million per year. This is without forgetting that, in five years, with the increase in salaries, he will certainly not be the highest paid pitcher with $40 million. So 9 years at $40 million = $360 million.
Regarding his value as a hitter, it’s not simple. But 44 home runs in 135 games in 2023 comes at a high price. Ohtani is already among the best hitters in the world and he will remain so for a long time. The problem is that he will mainly be a designated hitter. Aaron Judge makes $40M, but he’s a solid outfielder. Mike Trout wins 36, but he can do it all on the field. Corey Seager hits 35, but he plays shortstop, a key position. But considering he already hits more than Judge, I believe Ohtani could demand $40 million per year. Over 10 years, that’s $400 million.
In total, Ohtani is worth $760 million over 10 years. Obviously, he risks not being worth $76 million at 37, 38 and 39 years old. But he risks being worth more at 32, 33 and 34 years old.
And to convince the Dodgers to offer him such an amount, the team can reassure itself by telling itself that Ohtani can bring in an additional $20 million per year thanks to sponsorships, merchandise sales and ticketing revenue, said the researcher. Vince Gennaro, author of the book: The Economics of Winning in Baseballat Bloomberg.
Spend to earn
The Dodgers are worth US$4.5 billion. Only the Yankees are worth more. The Californian team has revenues of around $14 million per year, according to Forbes, which is not high despite their enormous expenses ($240 million in payroll). But that’s the way of doing things in major league baseball, much more than in the NHL. Owners in big markets spend lavishly to win.
I’m thinking of the Tampa Bay Rays who are worth about Ohtani’s contract and who pay all their players $52 million. Every year, the Rays work miracles to stay at the top. It is therefore another slap in the face for small markets which will soon have no chance of winning, even if they can sometimes come close. The Rays will try to find a rare gem at $4 million per year to solidify their team. It can work, but at some point, money ends up being right.