Shohei Ohtani Can Opt Out of Dodgers Deal If Execs Walter, Friedman Lose Roles with Team, AP Source Says

AP Photo/Eugene Hoshiko
Customers shop around for character goods of Shohei Ohtani of the Los Angeles Dodgers at a sporting goods store, “SELECTION,” in Shinjuku district Wednesday, Dec. 13, 2023, in Tokyo.

LOS ANGELES (AP) — Shohei Ohtani can opt out of his $700 million, 10-year contract with the Los Angeles Dodgers if either of two key executives is no longer in place, a person familiar with the agreement told The Associated Press on Wednesday.

Ohtani, who will be formally introduced by the Dodgers at a news conference Thursday, would be allowed to terminate his deal if Mark Walter no longer is controlling owner or president of baseball operations Andrew Friedman no longer is with the team, the person said. The person spoke on condition of anonymity because the terms were not announced.

Ohtani’s deal, announced Monday, provides that 97% of the money be deferred without interest and not fully paid until 2043.

The Athletic first reported Wednesday that Ohtani’s deal contained a provision allowing him to opt out at the end of a season if the Dodgers made specific personnel changes.

The deal is still in the form of a letter of agreement between Ohtani’s representatives and the team, and a formal contract has not been submitted to Major League Baseball, the person said.

Led by Walter, the private partnership Guggenheim Baseball Management purchased the Dodgers in 2012 for $2.15 billion. In his early years as controlling owner, Walter was a regular at Dodger Stadium. But his presence gradually decreased and last season he attended only a handful of games.

Walter’s global financial services company, Guggenheim Partners, has headquarters in Chicago and New York. He is a native of Iowa.

Friedman was hired by the Dodgers in 2014 after spending a decade with the Tampa Bay Rays. He gradually rebuilt that franchise and the team reached the World Series in 2008 despite operating with one of the sport’s lowest payrolls.

Friedman has an enviable record in Los Angeles, with the Dodgers winning nine division titles under his leadership, three NL pennants and the 2020 World Series during the pandemic-shortened season. He overhauled the club’s farm system and reorganized and expanded the front office.

Ohtani’s contract calls for annual salaries of $70 million and of each year’s salary, $68 million is deferred with no interest, payable in equal installments each July 1 from 2034-43.

MLB proposed as part of bargaining on June 21, 2021, to ban deferred compensation, but the union rejected the concept and MLB dropped it.

Ohtani will be introduced during a news conference in Dodger Stadium’s Centerfield Plaza starting at 3 p.m. PST.

MLB reported Wednesday that Ohtani broke Fanatics’ record for the highest jersey sales within the first 48 hours of a release, topping soccer stars Lionel Messi and Cristiano Ronaldo. Ohtani was out of sight at the stadium on Wednesday, meeting with teammates, including seven-time All-Star outfielder Mookie Betts and reliever Joe Kelly.

I had a chance to talk to him, Kelly said, surrounded by kids attending an outdoor holiday party with music blaring. “He was already working out, already grinding, getting bigger and stronger. His arm looked good to me.”

Ohtani’s deal includes a full no-trade provision and provides for a hotel suite on road trips, a premium luxury suite for home games and a fulltime interpreter. Ohtani will donate to the Dodgers’ charity an amount not to exceed 1%.

Ohtani last spoke with reporters on Aug. 9, two weeks before a pitching injury that required surgery and will keep him off a mound until 2025. He had the operation on Sept. 19, but the nature of the surgery was not fully announced. Ohtani had Tommy John surgery on Oct. 1, 2018.

A unique two-way star as both a hitter and pitcher, the 29-year-old left the Los Angeles Angels as a free agent after six years.

Kelly is switching uniform numbers after finalizing his $8 million, one-year contract with the team on Monday, opening No. 17 for Ohtani, who thanked him for the gesture.

I wasn’t going to give it up to just anybody, Kelly said. “If Shohei keeps performing, he’ll be a future Hall of Famer and I’ll be able to have my number retired. That’s the closest I’ll get to the Hall of Fame.”

Asked what Ohtani was giving him in return, Kelly said, “Oh, there’s a list, but no comment.”

Ohtani spoke infrequently to the media during his years in Anaheim, leaving his teammates to be peppered with questions about the enigmatic superstar.

Kelly said he was prepared to entertain Ohtani questions “maybe once a week.”

Ohtani’s move from Anaheim to Hollywood has sent fans on both sides of the Pacific Ocean flocking to buy Dodgers merchandise and inquire about tickets on the secondary market. The team has yet to begin single-game ticket sales for next season.

It’s going to be sold out every game, Kelly said. “Every game that we’re a part of is going to be like a playoff atmosphere.”

Ahead of his 30th birthday on July 5, Ohtani has a .274 batting average with 171 homers, 437 RBIs and 86 stolen bases along with a 39-19 record with a 3.01 ERA and 608 strikeouts in 481 2/3 innings. Ohtani has 34.7 Wins Above Replacement (WAR), per Baseball Reference.

I think all around it’s a good gig for both parties, Kelly said. “The Dodgers are competitive every year and this is one of those things, he’s the highest-paid player in all of sports, and we’re still going to be able to add to our team every single year he’s a Dodger.”

There are three different evaluations of what the contract is worth in present-day dollars.

— For purposes of the luxury tax, a 4.43% discount rate is used and the value is $460,767,685. That is the federal mid-term rate as defined in Section 1274(d) of the Internal Revenue Code, using the October 2023 rate. The figure means the Dodgers’ luxury tax payroll will be charged about $46.1 million annually for Ohtani.

— For purposes of MLB regular payrolls, a 10% discount rate is used and the value is $282,107,876. That is the J.P. Morgan Chase prime rate plus 1% rounded to the nearest full percentage point, as defined in Article XV (K) of the collective bargaining agreement.

— The players’ association evaluated the contract at $437,830,563.