Shohei Ohtani's $700M Contract Proves Lucrative

In December 2023, Shohei Ohtani signed a 10-year, $700 million contract with the Los Angeles Dodgers. This contract includes a tax advantage allowing Ohtani to avoid around $90 million in California state income tax legally. Ohtani's performance has been exceptional since joining the league, particularly during his time with the Dodgers, where he made history by achieving 50 home runs and 50 stolen bases in a single season.

Ohtani, who started playing for the Los Angeles Angels in 2018, has received numerous accolades, including Rookie of the Year in 2018, multiple All-Star Team selections, three MVP Awards, and a World Series win. During the 2024 season with the Dodgers, he became the first MLB player to join the 50-50 club. In the 2025 World Series, Ohtani's outstanding performance led the Toronto Blue Jays to intentionally walk him multiple times to avoid his at-bat, showcasing his impact as both a hitter and a pitcher.

Beyond his baseball achievements, Ohtani has become a pop culture sensation and has contributed to the rise of MLB players with multinational brands. His contract with the Dodgers, signed in 2023 and set to start in the 2024 season, is structured uniquely to provide significant tax advantages, particularly due to California's high state income tax rate.

Ohtani's contract with the Dodgers involves receiving $2 million annually for 10 seasons, with the remaining $680 million to be paid after the contract ends. This deferral of payments results in substantial tax savings for Ohtani, as he can potentially avoid $90 million in taxes by relocating to a state with no income tax after his contract with the Dodgers concludes. Efforts to limit such tax benefits in California have been proposed but not yet implemented, allowing athletes like Ohtani to defer compensation in a tax-efficient manner.