Ohtani's Contract Will Not Be What You Think

Sep 29, 2023

EDITORS NOTE: Many will scoff at the contract at the bottom of this page. However, given the circumstances, I am playing it ultra-safe with this contract. The numbers can change slightly, but I am pretending it is the Red Sox signing him, and this is what I would feel most comfortable with. It does not jeopardize the team’s future but still gives Ohtani flexibility.

Photo Credit: Harry How/Getty Images

Shohei Ohtani's situation presents one of the most compelling and complicated contract scenarios in recent MLB history. Coming off what will be a second AL MVP win in 2023 but facing another Tommy John surgery, Ohtani embodies both high reward and high risk. Given that he'll be 29 years old in 2023 and entering what is generally considered an athlete's prime years, a typical contract for a player of his caliber would hover around 6-8 years. However, the impending surgery clouds this a bit. A 4-5 year contract could offer a balanced approach, allowing him a window to prove he can return to elite form as a pitcher without locking the team into an excessively long commitment.

When it comes to salary, Ohtani's dual-threat capability further complicates matters. If we consider him merely as an MVP-level hitter, he could command a salary in the ballpark of $25-30 million per year. Factor in his pitching abilities, and that number could inflate to around $35-40 million per year. However, teams may opt for a more creative, incentive-laden deal, given his recent injury. A base salary of around $25 million with additional performance bonuses for hitting and pitching could serve as a balanced middle ground.

For the 2024 season, where Ohtani is expected to contribute only as a hitter, bonuses could be tied to hitting milestones such as a number of home runs, RBIs or achieving a specific batting average or OPS. From 2025 onwards, when he's expected to return to the mound, performance incentives could shift towards pitching metrics, like the number of starts and innings pitched, or specific achievements like ERA and WHIP. These incentives could even extend to awards like Cy Young voting positions.

To add more layers of flexibility and protection for both parties, the contract could feature an opt-out clause after the 2025 or 2026 season. This would give Ohtani the chance to re-enter free agency should he return to his dual-threat form and seek a more lucrative deal. Conversely, the team could also benefit from a natural exit point if things aren't panning out as expected. Alternatively, a team option for the last year of the contract could be another safeguard. And let's not forget about a possible no-trade clause, as Ohtani's international marketability and fan appeal make him more than just a player on the roster.

Aside from the on-field considerations, Ohtani’s broad marketability could offer additional value in terms of merchandise sales, branding, and international exposure for the team. However, there's no ignoring the inherent risks associated with signing a player coming off his second Tommy John surgery. That makes a contract balancing risk and reward, perhaps laden with performance-based incentives and conditional clauses, the most sensible route for both Ohtani and the signing team. Indeed, the unique confluence of factors surrounding Ohtani makes his impending free agency one of the most intriguing and complex in modern baseball.

Here is what I think the contract could look like if teams were competent and wanted to play it safe with a player who has been injury-ridden in his career.

Base Salary:

Years 1-5 (2024-2028): $25 million per year

This amounts to a base salary of $125 million over 5 years. The $25 million figure is reflective of Ohtani's value as a high-caliber hitter, similar to other MVP-level talents.

Hitting Incentives for 2024:

$1 million bonus for reaching 30 home runs
$1 million bonus for reaching 100 RBIs
$500,000 for achieving a .900 OPS or higher

This provides Ohtani with the potential to earn an extra $2.5 million in 2024 based on hitting performance alone.

Pitching Incentives for 2025-2028:

$4 million bonus for making 20 starts in a season
$2 million bonus for pitching 130 innings in a season
$2 million bonus for achieving a sub-3.50 ERA
$500,000 for a WHIP less than 1.10

These add up to a potential $8.5 million extra per year from 2025 onwards if he meets all the pitching incentives.

Opt-Out and Team Option:

Opt-out clause after the 2026 season
Team option for a 6th year at $35 million with a $5 million buyout

The opt-out gives Ohtani the ability to seek another contract if he performs well, while the team option adds a layer of flexibility for the organization.

No-Trade Clause:

A limited no-trade clause allowing Ohtani to block trades to 10 teams

This gives Ohtani some control over his destiny while offering the team flexibility for potential trades.

So, all told, the contract would be a 5-year deal with a base value of $125 million, with the ability to earn up to an additional $11 million in performance bonuses each year from 2025 onwards and $2.5 million in 2024. This brings the total potential value of the contract to around $180 million over five years, not including the potential 6th year.

This contract structure attempts to strike a balance between rewarding Ohtani's unique talents and providing financial safeguards for the team. Given the uncertainties around his pitching future, it's heavily incentivized but still offers a strong guaranteed base salary to reflect his hitting capabilities and overall marketability. If a team wants to double this and make it a 10-year contract, keeping the same safeguards in place, particularly with the pitching would be wise.