Remind me why I quit playing sports again…
For those of you who live under a rock (or find baseball more boring than the England national team), Shohei Ohtani – the Japanese baseball superstar who uniquely excels as both a pitcher and a batter – signed a 10-year, $700 million contract with the MLB's Los Angeles Dodgers last week. This makes Ohtani the world’s highest-paid athlete in terms of total contract value, surpassing Cristiano Ronaldo’s deal with Al-Nassr by $164 million.
Ohtani has (sort of) made $1,500 since you started reading this, but what makes his contract even more unique is how it’s structured, which is already impacting the soccer world.
So, how is it structured?
Ohtani's contract is deferred on a scale never seen before in pro sports, with $680 million set to be paid out after the contract's expiration.
This means that Ohtani, who reportedly rakes in $50 million per year in endorsement deals alone, will receive a yearly salary of only $2 million through 2033.
Ohtani's contract is an extreme case of "backloading," in which $68 million of each year's salary will be deferred with no interest, significantly reducing his team's payroll and potential tax burden. This gives the Dodgers more financial flexibility to field a competitive team around him during his prime playing years. What you might not know is that...
Premier League clubs are doing this too
... but not for long. Just days after Ohtani inked his deal, Premier League shareholders voted to cap the length of player contracts to five years. Clubs have been increasingly offering players long-term deals in recent years – a practice known as amortization – to spread transfer costs over several years, which allows clubs to operate within FFP guidelines.
Chelsea signed Mudryk to an 8-year, $56m contract last January
Chelsea have come under scrutiny for widely implementing this practice under their new ownership, who have signed players like Enzo Fernández and Mykhailo Mudryk to eight-year deals as part of their €1.1 billion spending spree in the past two seasons.
Zoom out: The new rule brings the Premier League in line with similar UEFA regulations and closes a widely-used loophole that encourages financial more parity in England's top flight. 👀