The Largest Sports Contract in North American History

Shohei Ohtani's recent signing with the Los Angeles Dodgers marks a historic moment in professional sports contracts. The deal, worth $700 million over 10 years, not only sets a record for the largest contract in MLB history but also stands as the most significant in North American sports history. This surpasses the previous MLB record held by Mike Trout's 12-year, $426.5 million contract and the 10-year, $503 million contract of NFL's Patrick Mahomes.

The Details

Ohtani's contract has an average annual value (AAV) of $70 million, which is significantly higher than the next highest AAVs in MLB, held by Justin Verlander and Max Scherzer at $43.3 million each. However, it's important to note that Ohtani's deal includes "unprecedented deferrals," as reported by Ken Rosenthal of The Athletic. These deferrals, suggested by Ohtani himself, are designed to ease the Dodgers' luxury tax and cash flow burdens, thereby allowing the team greater flexibility in remaining competitive. This means that the Dodgers will continue to pay Ohtani beyond the 10-year term of the contract, although the exact duration of these deferrals isn't specified. The deal also does not include an opt-out clause for Ohtani.

The magnitude of Ohtani's contract reflects not only his on-field performance but also his unique position in the sport. Since joining MLB in 2018, Ohtani has emerged as one of the game's biggest stars, showcasing remarkable two-way abilities as both a hitter and a pitcher. His 2023 season was particularly impressive, culminating in his second AL MVP award. Unfortunately, an elbow injury late in the season required a second surgery, which will keep him from pitching in 2024.

Obstacles Overcome

Ohtani's journey to this record-breaking contract was not without challenges. He had to overcome injuries early in his MLB career, including a Tommy John surgery. Despite these setbacks, his performance, especially from 2021 onwards, silenced many skeptics and reaffirmed his status as one of baseball's most talented players.

A Deal in the Works

Believe it or not, the signing of Ohtani has been a long time coming for the Dodgers. The 2012 acquisition of the team by the Guggenheim Group for $2 billion, bailing the franchise out of a dire financial situation following the expensive divorce of former owner Frank McCourt, got the ball rolling for the extremely successful and sustainable team. Two years later, the Dodgers made a franchise-changing hire by bringing in Andrew Friedman, the team’s president of baseball operations. The Dodger's watched closely as their neighbors, the LA Angels, failed to make a postseason with Ohtani on the roster.

The Dodgers are one of few Major League teams that can flex a strong farm system as well as financial power: The projected 40-man roster for the Dodger's include the multi-hundred million dollar contracts of Ohtani, Mookie Betts, and Freddie Freeman as well as 21 completely homegrown players, providing a unique blend of stardom and young talent.

This contract significantly enhances the Dodgers' already strong lineup, which includes stars like Betts and Freeman. Ohtani's signing is expected to bolster the Dodgers' World Series aspirations, adding to a team that has been consistently successful, making 11 straight postseason appearances and maintaining a winning record in 22 of the past 24 seasons.

A Standard Set

In comparison to other professional sports, Ohtani's contract sets a new benchmark. It demonstrates the increasing value placed on top-tier talent in sports, especially in MLB, where long-term, high-value contracts have become more common for elite players. Ohtani's deal not only reflects his exceptional skills and marketability but also sets a new standard for future contracts in professional sports.