Deferred money deferential

[Carp]

It caught up to the Nats after the geriatric owner who handed out all those contracts with deferrals died.

They were hemorrhaging money after handing out terrible contract afterterrible contracts.

[chop2chip]

They were hemorrhaging money after handing out terrible contract afterterrible contracts.

Ted Lerner was 93 when he won a World Series. I promise you he probably doesn’t mind some other schmuck is on the hook for Scherzer’s deferred money

[The Chosen One]

Most people haven't cared about deferred money gaming the system because it wasn't done as egregiously until Shohei's contract.

But Shohei is an interesting unique situation. He agreed to it.

He also made a ton of money in endorsements alone last year. He also didn't have to come up on a rookie contract and go through arbitration control years like minor leaguers. He already had a nice multi million dollar contract when he came Stateside.

He saidnhe wants to win a ring. He's putting his own money where his mouth is by deferring that much money now to layer when it's less valuable. At the same time, he's one of the few athletes internationally that can make a killing off endorsements comparative to his player wages.

The players union shouldn't intervene since this was something he agreed to as a free agent. MLB might intervene if there's some clause in the rules we don't know about that jeopardizes the competition and integrity of the league. But if you're gonna crackdown on this then you have to crackdown on teams not spending any money at all into their teams like Oakland

[50PoundHead]

I wonder if the players union would fight a cap on the percentage of a contract that can be deferred. Deferred money isn't favorable to players as money now is worth more than money in the future. However, capping deferred money would probably mean a lower total figure on these kinds of contract. I think the value would probably come out in a wash.

Personally, I think they should put a cap on deferred money at 10% of the value of the contract. If you want to sign a guy to a contract for $700 million for 10 years, then at the end of 10 years you should have paid out at least $630 million.

Deferred money is in the union's short-term interest. More money deferred means more money available for current free agents. If it goes overboard and everyone starts doing it, we won't have major league baseball in 15 years because franchises will be paying players who no longer play. MLB needs to think about that and a cap on how much can be deferred will probably be on the owners' priority list (especially small market owners) when the next CBA is negotiated.

[sturg33]

Does the deferred money count against CBT in 2035? Or is it handled by the fair market valuation they came up with 46M today?

[UNCBlue012]

The problem, to me, is that the Dodgers will find some lame-ass way to circumvent the rules and lessen the impact of Ohtani's signing when the deferred payments start.

[Tapate50]

It should count against the CBT as long as they have to pay him

[striker42]

I'd love to see one of these clubs with a ton of deferred money file for bankruptcy. The players union would riot.

[Tapate50]

I'd love to see the state of California challenge when it gets its money.

[cajunrevenge]

I'd love to see the state of California challenge when it gets its money.

Is there an argument Ohtani should be forced to pay taxes on money he hasnt even received yet?

[cajunrevenge]

I'd love to see one of these clubs with a ton of deferred money file for bankruptcy. The players union would riot.

That would trigger a forced selling of the team and whoever buys it would assume all debts of the team. It would effect the sale price so in a way the current owner would still be paying for it by getting less in a sale. Fortunately for the Dodgers MLB vetod their 2 billion TV deal and forced them to seek a higher paid deal right before rubber stamping TimeWarner selling our TV rights to a TimeWarner owned company for pennies on the dollar right before the sale. Liberty was okay with it because it lowered the sale price but it screwed us by crippling the annual revenue which determines our payroll.

[Tapate50]

Is there an argument Ohtani should be forced to pay taxes on money he hasnt even received yet?

The IRS wants its share on money that was stolen, so why not?

Plus, its like an interest free loan.

[striker42]

That would trigger a forced selling of the team and whoever buys it would assume all debts of the team. It would effect the sale price so in a way the current owner would still be paying for it by getting less in a sale. Fortunately for the Dodgers MLB vetod their 2 billion TV deal and forced them to seek a higher paid deal right before rubber stamping TimeWarner selling our TV rights to a TimeWarner owned company for pennies on the dollar right before the sale. Liberty was okay with it because it lowered the sale price but it screwed us by crippling the annual revenue which determines our payroll.

A bankruptcy court judge in his courtroom is closest thing we have to a king in the US. The court could literally ignore MLB's attempt to force a sale if it wanted to. If it was a Chapter 11 and the team intended to come out of the bankruptcy a going concern, you could see plan that pays deferred money at pennies on the dollar.

Is this likely? No. Most likely MLB would force a sale of a team well before it entered into bankruptcy. If a team did somehow end up in bankruptcy, MLB would still have options. For example, MLB could buy the debt from the creditors. Offer them face value and they'd jump at it. MLB would then likely be able to end up owning the restructured team which it would then sell.

Still, it's fun to think of a scenario where these deferred money schemes blow up in the faces of those involved.

[Tapate50]

Maybe Yamamoto will get payroll loan too.

[zitothebrave]

Anyone else see this as a major issue going forward?

Signing someone to a 700M deal with MOST of it deferred seems like a real issue and a poor standard to set. I know its been done before... Manny, Bobby Bo (Mets and O's), and others. But in those instances we are talking less than 2M. Not MOST of the of the contract.

The issue is CBT.

Looking at Shohei, to me the way it should be handled that's fair, is they should guesstimate the value added, in this scenario in 10 year 680M with an approximate 10 year inflation assuming 3% inflation per year, I would guesstimate that the value of his contract over the next 20 years with deferals and no interest would be around 940M. But they should factor in the interest rate or set a standard interest rate for CBT like say 5% which would raise it and the CBT needs to apply to all the seasons he's getting paid. So they'll be paying 50+ mil for 20 years. So the dodgers will be paying for a long time. for it.

[GovClintonTyree]

Is there an argument Ohtani should be forced to pay taxes on money he hasnt even received yet?

No, the Doyers make an unsecured promise to pay in the future. The substantial risk of forfeiture means he’s not yet in constructive receipt of the money. As long as they follow this well-established structure, the tax is pushed out until the money is received.

[cajunrevenge]

The IRS wants its share on money that was stolen, so why not?

Plus, its like an interest free loan.

The interest was built into the contract.

[cajunrevenge]

A bankruptcy court judge in his courtroom is closest thing we have to a king in the US. The court could literally ignore MLB's attempt to force a sale if it wanted to. If it was a Chapter 11 and the team intended to come out of the bankruptcy a going concern, you could see plan that pays deferred money at pennies on the dollar.

Is this likely? No. Most likely MLB would force a sale of a team well before it entered into bankruptcy. If a team did somehow end up in bankruptcy, MLB would still have options. For example, MLB could buy the debt from the creditors. Offer them face value and they'd jump at it. MLB would then likely be able to end up owning the restructured team which it would then sell.

Still, it's fun to think of a scenario where these deferred money schemes blow up in the faces of those involved.

This has pretty much already played out with the Texas Rangers when Tom Hicks owned the team.

[striker42]

This has pretty much already played out with the Texas Rangers when Tom Hicks owned the team.

To a degree. The bankruptcy there was more a tool to make it easier to sell the team to the new owners. I'd like to see a team with a billion dollars in deferred compensation file bankruptcy.

[50PoundHead]

A bankruptcy court judge in his courtroom is closest thing we have to a king in the US. The court could literally ignore MLB's attempt to force a sale if it wanted to. If it was a Chapter 11 and the team intended to come out of the bankruptcy a going concern, you could see plan that pays deferred money at pennies on the dollar.

Is this likely? No. Most likely MLB would force a sale of a team well before it entered into bankruptcy. If a team did somehow end up in bankruptcy, MLB would still have options. For example, MLB could buy the debt from the creditors. Offer them face value and they'd jump at it. MLB would then likely be able to end up owning the restructured team which it would then sell.

Still, it's fun to think of a scenario where these deferred money schemes blow up in the faces of those involved.

It wouldn't be dissimilar to how MLB handled the Expos.