Ohtani's 10-year, $700 million contract is the largest in MLB and North American sports history, surpassing Patrick Mahomes' $503 million deal and Mike Trout's $426.5 million contract.
The contract includes unprecedented deferrals, with Ohtani deferring $68 million per year of his $70 million annual salary, resulting in him being paid only $2 million over the next 10 seasons.
The deal has a unique opt-out clause tied to the Dodgers' personnel changes. Ohtani can opt-out if specific Dodgers executives are no longer with the team.
Despite the headline figure, Ohtani's contract's real value for luxury tax purposes is estimated at around $460 million over 10 years, averaging $46 million per year.
Due to the deferrals and the time value of money, the contract's present-day value is significantly less than the $700 million reported figure.
The deferred payments allow the Dodgers greater payroll flexibility and help manage their luxury tax situation.
The deferral might enable Ohtani to potentially move to a lower-tax jurisdiction in the future, impacting the taxes owed on the income.
Ohtani will receive the deferred $680 million after the 10-year contract period, essentially extending his income from the Dodgers into his 40s.
Despite the complex structure, Ohtani is guaranteed the full $700 million from the Dodgers.
Ohtani's contract averages $70 million per year and $1.35 million per week, setting new highs in MLB contract averages.