For the Dodgers, Ohtani's megadeal could end up being a bargain. By Jason Coskrey

For the Dodgers, Ohtani's megadeal could end up being a bargain. By Jason Coskrey

Baseball has never seen a player like Shohei Ohtani. The sport has also never seen anything like the record-breaking 10-year, $700 million (¥99.4 billion) contract he signed with the Los Angeles Dodgers this week.

Ohtani is a comic book character come to life. He hits at an elite level, pitches at an elite level and can run like the wind. There have been two-way players in baseball’s distant past, such as Babe Ruth and various Negro League stars, but none like Ohtani.

His deal with the Dodgers is equally unique and could impact the team in such a way that people may one day view a $700 million contract — believed to be the largest in global sports history, according to MLB.com — as a bargain.

Ohtani’s most obvious potential impact is on the field. He is baseball’s unicorn, compiling a .922 OPS and 171 home runs at the plate in six seasons for the Los Angeles Angels while also posting a 3.01 ERA and 1.08 WHIP across five seasons as a starting pitcher. He was the American League MVP in 2021 and 2023.

Ohtani, who won’t pitch in 2024 after having surgery to repair his UCL in September, joins a team that features Mookie Betts and Freedie Freeman and is on a run of 11 straight playoff appearances and three consecutive 100-win seasons.

The Dodgers have the makings of a juggernaut with the two-way star on the roster, and success on the field will allow the franchise to cash in on Ohtani’s transcendent marketability.

“The No. 1 thing a player like Shohei does by being almost certainly the best all-around player that we've seen in 100 years is he just makes the team flat out better,” sports economist Victor A. Matheson, a professor at College of the Holy Cross in Massachusetts, told The Japan Times. “Better teams, more ticket sales, more chances to have postseason success, any of those sorts of things increase overall revenues of the team, increase the demand for the team on television, which helps their TV ratings."

The Dodgers led MLB in attendance in 2023, but the allure of seeing Ohtani play could attract even more fans through the turnstiles in 2024.

“There are examples of this,” Matheson said. “There is the Tom Brady effect. There's the Lionel Messi effect. There's the Michael Jordan effect. These people generate money for their team because they make their team better, but they also generate money for the team because people want to see Brady, they want to see Lionel Messi and they want to see Shohei Ohtani.”

The Ohtani Effect is already taking root.

A welcome sign in Japanese for Ohtani at Dodgers Stadium on Thursday. The Dodgers already have deep inroads in Japan, from the Brooklyn Dodgers’ 1956 tour of Japan to the signing of players such as trailblazer Hideo Nomo in 1995.

A welcome sign in Japanese for Ohtani at Dodgers Stadium on Thursday. The Dodgers already have deep inroads in Japan, from the Brooklyn Dodgers’ 1956 tour of Japan to the signing of players such as trailblazer Hideo Nomo in 1995. | USA Today / via Reuters

In an email to The Japan Times, Fanatics, an official MLB partner, said that in the 24 hours after Ohtani announced he would sign with the Dodgers, “sales of Dodgers merchandise across the Fanatics network in Japan, which includes MLBshop.jp, soared by more than 8,350%.”

Fanatics made Ohtani’s Dodgers jersey available for orders on Monday, and the company later said it set a record for highest sales within the first 48 hours of a release, surpassing soccer icons Messi and Cristiano Ronaldo.

While MLB’s revenue-sharing system will affect the Dodgers’ overall gain from that, the demand offers a window into how the team can recoup its $700 million investment.

That is aided in large part by the unique structure of Ohtani’s deal, which will see him defer $68 million of his $70 million annual salary, according to Mark Feinsand of MLB.com. Ohtani will earn $2 million per year for the duration of the contract. The deferrals — totalling $680 million — will be paid each year from 2034 to 2043 with no interest, according to Feinsand.

Ohtani reportedly came up with the idea to give the team the financial flexibility to continually improve the roster.

"I was aware of the deferral program, or the structure, and usually when there's a big contract in the MLB, I've heard from the past that deferrals are involved,” Ohtani said. “Not all the time, but a lot of the time. So, I was looking into it and doing some calculations.”

The structure of the contract could help the Dodgers get a full return on their investment in the Japanese star.

“I do think that they can recoup their investment,” sports economist Andrew Zimbalist, a longtime member of the economics department at Smith College in Massachusetts, told The Japan Times. “In present value terms, because you're paying somebody $68 million 20 years from now, it's not worth $68 million. You have to discount that roughly 5%, and it turns out that the average annual value is closer to $46 million, not $70 million. I think $46 million is a figure that they can recuperate.

“One never knows for sure because it depends on so many other factors, but I think it's reasonable to think that he's going to add, say, 5000 fans per game. I think the ticket prices will go up because of him. There'll be more corporate advertising at the stadium. There'll be more memorabilia sales, there'll be more corporate sponsorships in general.

“So you put that all together, plus the halo effect that benefits (Dodgers controlling owner) Mark Walter from being associated with Ohtani, and I think it's possible that he could be adding $46 million a year to their coffers.”

Fans in Oshu, Iwate Prefecture, celebrate after hometown hero Ohtani was named American League MVP on Nov. 17. Sales of Dodgers merchandise spiked in Japan after Ohtani announced he would sign with the club.

Fans in Oshu, Iwate Prefecture, celebrate after hometown hero Ohtani was named American League MVP on Nov. 17. Sales of Dodgers merchandise spiked in Japan after Ohtani announced he would sign with the club. | Kyodo

Ohtani can afford the deferrals as one of the most marketable athletes in sports, with brands clamoring to get on board.

“He's not going to be stuck eating ramen — I mean, the cheap kind, not the good kind — just because he's not getting paid much by the Dodgers right now,” Matheson said. “Because he's got maybe $40 or $50 million of endorsement money, and that will only get bigger if he gets some postseason success as well.”

Ohtani brings fans to the ballpark and attracts the attention of viewers at home like no other player.

“I suspect, at least based on my anecdotal evidence, that he is as big a draw as we've seen maybe since the Barry Bonds years when he was chasing the home run records,” Matheson said. “At least anecdotally trying to go get tickets for games where Shohei is going to start, the tickets will be double or triple the price on a Shohei start on (U.S. ticket exchange) StubHub.

“It's one thing seeing the Dodgers or seeing the Angels, another thing seeing the Angels and Shohei pitching. He makes the team better, but he also has this personal appeal that is extremely strong for the team, and not just the team, the league, because Shohei is a great draw on the road, not just at home.”

Katsuhiro Miyamoto, a professor at Kansai University, estimated Ohtani’s overall economic impact — pulling together various factors such as sales, travel economy, advertising etc. — was ¥50.4 billion in a news release on Nov. 21. In the same release, Miyamoto calculated the figure would rise to ¥64.3 billion in 2024 if Ohtani, a free agent at the time, signed with the Dodgers.

“The economic impact of Ohtani’s success will be enormous,” Miyamoto wrote.

Ohtani is not switching markets by joining the Dodgers, but he might as well be.

In January, ESPN’s Alden Gonzelez wrote, “The exact figure is not known — and the Angels won't provide one — but Ohtani is said to annually generate somewhere in the low tens of millions of dollars in additional revenue for the team.” It’s possible the brighter spotlight at Dodger Stadium could create an even larger windfall.

“The Dodgers just have a bigger national and international imprint,” Matheson said. “They're certainly much more a part of the American sports psyche than the Angels. The Dodgers have won many World Series over more than 125 years of existence. The Angels are relative newcomers, without much success. The Dodgers are clearly a much bigger brand name than the Angels ever have been.”

Executives at the MLB offices, meanwhile, may privately rejoice to see Ohtani land with one of the league’s glamor clubs while remaining on the West Coast and within easier reach of the Japanese market.

“To have a Japanese star on the West Coast is probably more relatable for Japanese baseball fans, and it's easier for Japanese baseball fans, obviously, to fly to Los Angeles than it would be to fly to Milwaukee or Massachusetts or New York or whatever,” Zimbalist said. “So I think there's a little bit more connectedness because he's going to the Dodgers. But more generally, when you have a superstar playing in a large-market team, it has more impact on the game.”

Ohtani with Walter and Andrew Friedman, president of baseball operations, at Dodger Stadium on Thursday. Ohtani's deal with the Dodgers is unique and could impact the team in such a way that people may one day view a $700 million contract as a bargain.

Ohtani with Walter and Andrew Friedman, president of baseball operations, at Dodger Stadium on Thursday. Ohtani's deal with the Dodgers is unique and could impact the team in such a way that people may one day view a $700 million contract as a bargain. | USA Today / via Reuters

The Dodgers already have deep inroads in Japan, from the Brooklyn Dodgers’ 1956 tour of Japan to the signing of players such as trailblazer Hideo Nomo in 1995 and pitchers Hiroki Kuroda and Kenta Maeda.

“One of our goals is to have baseball fans in Japan convert to Dodger Blue,” Andrew Friedman, the team’s president of baseball operations said during Ohtani’s introductory news conference Thursday.

Ohtani is arguably the face of MLB and the most globally recognizable star in a sport that has largely lacked a global icon on the scale of the NBA’s LeBron James or Messi in soccer since New York Yankees great Derek Jeter retired in 2014.

Angels outfielder Mike Trout is one of MLB’s most decorated players, with three AL MVP awards among numerous other honors, but he does not have the economic pull Ohtani commands.

“The comparison with Trout is incomplete,” Zimbalist said. “Ohtani is a two-way player and he's a dominant two-way player. Mike Trout is a one-way player. Ohtani in my view, he's got much more personality and charisma than Trout has. He's a much more sellable image.

“Look at the commercials on ESPN, or look at the commercials on Fox Sports or whatever. You'll see a lot of commercials that Ohtani is making that they don't go to Mike Trout for.”

In the end, however, Ohtani’s potential off-field impact begins with his on-field performance.

“I think with every athlete, the sustainability is always dependent on what they do on the field,” Matheson said. “So if Shohei can kick his injury problems and he can remain healthy for 10 years, he's going to be a star. The reason LeBron James is literally King James is not because of some aura he has or some famousness he has. It's the fact that he's been one of the best players in basketball for over two straight decades.

“It all depends what Shohei does. He’s done some unbelievable things that no one can believe. The question is can he do that for the 10 years of this contract?”