Utilizing deferred salary in contracts has been a useful tool for the Los Angeles Dodgers as they continue to stockpile their roster with talent.
This offseason alone has seen Tommy Edman, Blake Snell, Michael Conforto, and Teoscar Hernández sign new contracts with the Dodgers that include deferred money in some capacity. Of course, the most notable example is the contract that Shohei Ohtani signed with the Dodgers last offseason.
Including deferred money is an obvious benefit for the Dodgers, but it isn’t immediately clear why players are willing to take less money up front. For some, such as Snell who have already made a good amount of money and name for themselves, they are more willing to accept a contract that is beneficial for both sides in the interest of winning.
“I think it’s just how it all played out,” Snell said. “It played out how people around me felt comfortable with, I felt comfortable with, they felt comfortable with. We talked, found something that could work for both of us.
“I’m more focused on playing than money. You want your worth, you want your respect and you want an amount of time to make a name for yourself. I’ve made a name for myself outside of L.A., but I’m going to be invested to make one in it.”
Snell’s career earnings total more than $79.5 million, which allows him to be less focused on the monetary aspect of being a professional athlete. Of his five-year, $182 million contract with the Dodgers, $66 million of it is deferred.
It also helps that Snell’s contract included a $52 million signing bonus, which not only gives him more immediate compensation but it is also extremely valuable for tax purposes.
It is more advantageous for athletes to be paid these larger amounts in bonuses because they are taxed according to where a person is currently residing. That allows those who play for the Dodgers to avoid California’s high income tax rate.
Additionally, signing bonuses are especially important to players who could be signing their first big contract as a free agent or an extension with their current team. In the case that they do sign a contract with deferred salary, the signing bonus can offset the delayed salary.
Then there are special cases like Ohtani, who doesn’t need to rely solely on his contract with the Dodgers as his brand is so strong that he can earn a living through sponsorships alone.
Dodgers believe Blake Snell has upside
Snell was arguably the best pitcher on the market, and with the success he’s had, the Dodgers would be happy with similar results. However, the front office also believes they can get even more out of Snell and help him take another step.
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