2023-24 MLB offseason thread

[FiddySicks]

10 minutes ago, BBTV said:

 

I'm not sure how this is relevant.  Should they not spend just because half the other owners are greedy or crying poor?  That's collusion.

 

In real life, I agree with the arguments about splitting have from have-not.  But sports isn't real life.

No, that particular part of it unfortunately I can’t be mad at the Dodgers about. They’re only doing what they can. Hard to fault them for that, as much as I’d like to. 
 

My lament is precisely with everyone else. 
 

 

And I do think it’s relevant in the grander scale of things because it’s following the same pattern. It’s taking some of the other, seedy aspects of our society and throws it into the same circle with something that’s supposed to be an escape from all of that. And in an era where people are whining about rainbow armbands (somewhat similar complaint, but much dumber and lacking any actual relevance), I think I have the room to complain about that. Because that’s the actual problem! 
 

Sigh. Go Giants. I guess. 

[infrared41]

13 minutes ago, FiddySicks said:

And I do think it’s relevant in the grander scale of things because it’s following the same pattern. It’s taking some of the other, seedy aspects of our society and throws it into the same circle with something that’s supposed to be an escape from all of that. And in an era where people are whining about rainbow armbands (somewhat similar complaint, but much dumber and lacking any actual relevance), I think I have the room to complain about that. Because that’s the actual problem! 

 

And it will remain that way exactly as long as we stay focused on the dumb stuff - which is the goal, I guess.

[ruttep]

51 minutes ago, BBTV said:

 

I'm not sure you know what money laundering is.

 

Also, they're keeping payroll down for tax purposes.  They're still paying the cash every year, it's just that his share goes into escrow.  It only helps them sign players because of the tax break (though we don't know how much that actually is) not because they have all that extra money to give to other players.

 

I mention the money laundering part mostly because the most infamous deferred contract ever involved copious money laundering. Excuse me if it's stupid to find OVER 97 PERCENT of the contract deferred to be extremely fishy. 

 

That aside, I don't think the Dodgers should be allowed to defer that amount of money to have more available payroll to sign more players. You want to sign Ohtani to that ridiculous contract, you should have to deal with the consequences of spending that much on one player -- if that means you can't afford other expensive free agent, so be it.

[FiddySicks]

20 minutes ago, infrared41 said:

 

And it will remain that way exactly as long as we stay focused on the dumb stuff - which is the goal, I guess.

I think that’s been the most frustrating part of getting older as a sports fan. All of these leagues have serious issues that they either don’t handle, or handle very poorly. We should be focusing more on this (and it stands out to me more and more all the time), but every time one of these leagues throws out something new and bright, we forget about all of that (I wouldn’t have spent two decades of my life posting here if I wasn’t one of them, either). It’s a conflicting feeling, and I have no idea how to fix any of this. 
 

Go Giants? I guess? 

[who do you think]

2 hours ago, FiddySicks said:

The Dodgers started spending stupidly about 12 years ago

 

The Time Warner contract (signed around then when cable and baseball interest were already on the way down) is what's making all this possible, right? When's this bubble popping? I was promised a bubble pop.

[FiddySicks]

31 minutes ago, who do you think said:

 

The Time Warner contract (signed around then when cable and baseball interest were already on the way down) is what's making all this possible, right? When's this bubble popping? I was promised a bubble pop.

They’re owned by the Guggenheim (Old European money) Group, so, probably whenever the next assassination of an Archduke happens. They have like $500 billion in total assets. 

[GDAWG]

1 hour ago, FiddySicks said:

They’re owned by the Guggenheim (Old European money) Group, so, probably whenever the next assassination of an Archduke happens. They have like $500 billion in total assets. 

 

that group also owns multiple European soccer teams, including Chelsea, but also parts of the Golden State Warriors (Peter Guber), Washington Commanders (Magic Johnson), LA Sparks of WNBA and LAFC of MLS (Guber and Johnson).  They have yet to buy an NHL team, but that seems inevitable.  

[McCall]

8 hours ago, ruttep said:

 

I mention the money laundering part mostly because the most infamous deferred contract ever involved copious money laundering. Excuse me if it's stupid to find OVER 97 PERCENT of the contract deferred to be extremely fishy. 

 

That aside, I don't think the Dodgers should be allowed to defer that amount of money to have more available payroll to sign more players. You want to sign Ohtani to that ridiculous contract, you should have to deal with the consequences of spending that much on one player -- if that means you can't afford other expensive free agent, so be it.

How IS it money laundering, though?

[BBTV]

2 hours ago, McCall said:

How IS it money laundering, though?

When the Dodgers owner opens up a restaurant in the Ozarks, or a car wash in New Mexico, we’ll talk about money laundering. 

[McCall]

2 hours ago, BBTV said:

When the Dodgers owner opens up a restaurant in the Ozarks, or a car wash in New Mexico, we’ll talk about money laundering. 

Quite a few rich people actually open up restaurants in Branson.

[Cujo]

20 hours ago, FiddySicks said:

Go Giants? I guess? 

 

Happy now?

 

 

[ruttep]

35 minutes ago, Cujo said:

 

Happy now?

 

 

 

Farhan Zaidi to Giants fans:

[BBTV]

If Ohtani were to move to Florida or one of the no-tax states in 2034, would he be exempt from tax for the deferred payments?  He's not technically working in California at that point, and I'm not sure how the IRS treats situations like this.  

[ruttep]

Just now, BBTV said:

If Ohtani were to move to Florida or one of the no-tax states in 2034, would he be exempt from tax for the deferred payments?  He's not technically working in California at that point, and I'm not sure how the IRS treats situations like this.  

 

I think they said he would be exempt, yeah. Smart by him, I just don't like what this contract means for the future of baseball. I'm all for players getting the bag, but this is just ridiculous. 

[FiddySicks]

2 hours ago, Cujo said:

 

Happy now?

 

 

Happier, yes. Now if they go get Yamamoto, all sins will be forgiven! 

[Digby]

On 2023-12-11 at 8:48 PM, BBTV said:

* this line: "teams have to set aside the present-day value of the deferred money -- in Ohtani's case, around $44 million in cash each year -- into an escrow account" doesn't make sense... UNLESS his deal is NOT for $700M in today's money, but actually much less, and the $700M is what he'll get total by 2044.  Adjusting for present value, that's actually way less than it seems.  If that's the case, which I'm not sure of, but would explain the $44M in escrow part.

 

 

I think this is it, and you're right that it's NOT $700m in today money.

 

Very back-of-envelope calculations here, but $44 million dropped into an account right now, and given 10 years to accrue interest at the fed's current mid-term rate, gets you to the $68 million in annual salary that's deferred.

 

I keep seeing that the luxury tax hit for this deal stems from a $46 million AAV, and not knowing anything about the CBA rules otherwise, this is the only explanation for that number that I can think of.

[McCall]

7 hours ago, Digby said:

 

I think this is it, and you're right that it's NOT $700m in today money.

 

Very back-of-envelope calculations here, but $44 million dropped into an account right now, and given 10 years to accrue interest at the fed's current mid-term rate, gets you to the $68 million in annual salary that's deferred.

 

I keep seeing that the luxury tax hit for this deal stems from a $46 million AAV, and not knowing anything about the CBA rules otherwise, this is the only explanation for that number that I can think of.

I don't know how it works, but I kept reading that there's a formula to determine a player's AAV for Luxury Tax purposes when there's deferred money. Not sure what the formula is or how they come to the final number.

[BBTV]

2 hours ago, McCall said:

I don't know how it works, but I kept reading that there's a formula to determine a player's AAV for Luxury Tax purposes when there's deferred money. Not sure what the formula is or how they come to the final number.

 

That's not what we're talking about.  The Dodgers are required to put his salary in escrow, so that 1) they can't use this deal just to have more cash on hand for other players, and 2) they cant blow it and screw him later.

 

But the escrow amount is lower than it seems like it should be, which implies that the "today value" deal is more like 10//$460M (the 44 in escrow each year plus 2 he's receiving in cash), and the $700M number is what he'll eventually get paid out if you include interest made on the escrow account. 

 

You're right about there being a formula to calc tax, but they'd still have to put the full amount in the account.  So I'm not sure there's another explaination.

 

Oh, and for the Giants fans that are "done with baseball", they offered the exact same deal.

[Digby]

Okay, sorta kinda have this figured out. I was mostly right! Always knew I should've went into finance.

 

Per https://www.latimes.com/sports/dodgers/story/2023-12-12/shohei-ohtani-contract-cost-dodgers-next-10-years

 

Quote

 

In 2024, Ohtani will “earn” $2 million in salary, and $68 million in deferred payments. By July 1, 2026, the Dodgers will also have to show the league how they plan to fund the $68 million that will come due in 2034.
 

The CBA requires only that the “present value” be funded within that two-year period. According to a person with knowledge of how the league calculates such contracts, the present value of that $68 million payment in 2034 is worth about $46 million in today’s money (since money in the present, because of inflation, is worth more than money in the future). Also, funding mechanisms can include cash or “readily marketable securities.”

 

 

and also per https://apnews.com/article/ohtani-dodgers-deferred-27aa3212bac2c454d4ef814d7fea0291

 

Quote

 

Ohtani’s record-setting deal, agreed to Saturday, calls for annual salaries of $70 million, according to details obtained by The Associated Press. Of each year’s salary, $68 million is deferred with no interest, payable in equal installments each July 1 from 2034-43.
 

For purposes of baseball’s luxury tax, the contract is valued as a yearly addition to the Dodgers’ payroll of about $46 million. Under the collective bargaining agreement, for the calculation of a team’s tax payroll the value of deferred money is discounted at the federal mid-term rate. For all agreements this offseason, the discounting will be at the October 2023 rate of 4.43%.

 

 

So the $700 million figure is a future number, adjusted for inflation and interest. Out of the proverbial Dodgers wallet, it's really a $480 million deal, and the average annual value -- while still a record -- is not a massive departure from the current record. (Plus you have to remember that inflation 10-20 years from now will somewhat eat into the spending power of the final number, so that, too, somewhat tempers down the extreme-ness of the number.)

 

It doesn't seem like the CBA "discount" formula, and the literal amount the Dodgers put into escrow, are exactly the same numbers. But they're functionally the same as I imagine that federal rate is also what's determining the rate on the escrow account and is what gets us from 46m to 68m from now to payday.

 

I'm curious if the escrow account doesn't have a fixed interest rate, if the Dodgers would get a further discount by getting to keep any extra interest on top of what's needed to make Ohtani whole in years 10-20 -- or if what the backstop is if we enter a Great Recession-type of period where interest rates collapse again. (I'm assuming the CBA at least includes enough detail that this sort of money can't be held in escrow in a shady crypto exchange or otherwise invested stupidly. But it would be hilarious if there wasn't.)

[Lights Out]

On 12/11/2023 at 6:05 PM, ruttep said:

 

This is legal how?

 

I shrugged when the Dodgers signed Ohtani since all the spending and big names haven't amounted to much for them in the playoffs, but this is just dumb. Any restrictions on spending the league can come up with are toothless if teams can just avoid the consequences of their spending by deferring most of the money.

 

I wish I could say I'm amazed the league didn't anticipate a loophole like this, but Manfred is a moron and most of the owners are apathetic at best. I also don't get why everyone bitched so hard about the Mets' and Padres' spending but they ignore the Dodgers'.