LOS ANGELES — The Dodgers have a big credit card and they’re not afraid to use it.
As baseball convenes for its annual winter meetings in Dallas this week, the Dodgers are the latest team ruining baseball. It’s usually a big-market franchise accused of ruining the game by spending, wisely or unwisely, at a level other franchises are unwilling to – or their fans wish they would.
Barely five weeks after winning the World Series, the Dodgers made the first big move of the offseason by signing two-time Cy Young Award winner Blake Snell to a five-year, $182 million contract. They are a good bet to spend more this winter – on Japanese right-hander Roki Sasaki, outfielder Teoscar Hernandez or others.
Coming on the heels of last winter’s billion-dollar spending spree, the Snell signing was annoying enough to the less-endowed franchises and their fans. But the Dodgers aren’t just spending now, they’re spending later.
Snell’s contract includes $66 million in deferred salary. The $74 million contract extension the Dodgers gave to utilityman Tommy Edman last month also included deferred salary, $25 million in his case.
The Dodgers now have more than $1 billion in deferred salary on their future books. Starting in 2035, they will be paying over $100 million annually to players likely to be spending their days on golf courses or pickleball courts, not baseball fields.
This has caused enough discontent around MLB for speculation to begin that capping deferred salary might be a divisive item on the agenda when baseball tries to negotiate a new Collective Bargaining Agreement following the 2026 season.
“I don’t know,” Dodgers president of baseball operations Andrew Friedman said when asked why the Dodgers’ use of the strategy to lessen the impact on their payroll for luxury tax purposes has upset so many.
“I think the Shohei (Ohtani) one was just very extreme. But if you set the Shohei contract aside, the rest are within the norm and standard operating procedure that a lot of teams have done. But I think the Shohei one is just jarring to people because it’s so different, and I think the others just unfairly get lumped into that.”
Ohtani’s contract was different indeed. His decision to defer $680 million of his record $700 million contract – an offer he made to all of the teams he considered signing with last winter – has been a significant factor fueling what the Dodgers have been able to do in building around him.
But he wasn’t the first. Mookie Betts’ 12-year, $365 million contract extension signed in July 2020 includes $115 million in deferred salary. Freddie Freeman’s six-year, $162 million contract signed in March 2022 includes $57 million in deferred salary.
“I mean, it’s just a lever,” Friedman said. “We’ve talked about this. We’ve done deals recently that don’t have it (most prominently Yoshinobu Yamamoto’s 12-year, $325 million deal). We’ve done deals that do.
“In a negotiation I think it’s always challenging and so you’re looking to any lever you possibly can to help get to a point where there is overlap. There are times where that deal lines up in a more straightforward way. There’s times where it’s less straightforward. Including deferrals helps as a lever to find that overlap. It’s been a useful tool for us. … We just like to get deals done.”
Friedman has said more than once he doesn’t want the Dodgers to be one of those “large-revenue teams that had a run of success and then fallen off a cliff and taken years and years to build back.”
On the surface, a billion dollars in deferred salary sounds like a dangerous strategy – akin to the old Popeye cartoon character, Wimpy, whose ravenous desire for instant gratification combined with his constant lack of funds led to his catch phrase, “I’ll gladly pay you Tuesday for a hamburger today.”
In this case, there is no concern that the Dodgers will be unable to pay up when Tuesday comes, thus crippling their future roster-building.
“We have a lot of our ownership group from a financial background and can have that money going to work right now and just making it not something that sneaks up on us,” Friedman said. “We’re not going to wake up in 2035 and be like, ‘Oh my god, that’s right, we have this money due.’ We’ll plan for it along the way.”
MLB requires that they do.
Deferred salary has to be funded beginning a year and a half after the season from which it is deferred. So, for example, the Dodgers began setting aside the money they will owe to Betts in July 2022, Freeman in July 2023. They will have to set aside the first $68 million of Ohtani’s deferrals in July 2026.
But that money won’t be sitting around doing nothing for the next 10 years. The CBA allows teams to invest that money (with some restrictions) while it waits to be paid out. Teams can keep any profit made from those investments.
The money behind the Dodgers, Guggenheim Partners, is an investment firm with more than $300 billion in assets. Their business is making money off of other people’s money.
“In sport, we want the excitement of intellect operating,” agent Scott Boras said. “We have rules that prevent certain owners from doing certain things, you get the vanilla of what you see in the NBA and NFL. Here, you have chances for goliaths. Goliaths, I think, in the game are always good. Why? Because there’s love and hate. And that’s part of sport. I think it makes it more exciting. And the fact of it is that major markets, there’s a greater air factor. You can venture into things that often don’t work out and you can recover from them much quicker.”
The Dodgers’ big spending last winter paid off in the biggest ways possible – a World Series championship, a unanimous MVP award for Ohtani and a massive boost in revenue thanks to his popularity.
“Our business is very healthy,” Friedman said. “We have a really good team. We have a lot of different revenue sources. More than anything, we are investing it aggressively.”
