Shohei Ohtani seems to make history every time he takes the field for the Angels. It’s only fitting that he makes some more history off the field.
The Angels announced Saturday that they had agreed to a one-year, $30 million contract with Ohtani for the 2023 season to avoid salary arbitration. Ohtani was already under club control for next year, but the deal sets his salary for the season before he can become a free agent.
The contract surpasses the MLB record for an arbitration-eligible player; Mookie Betts agreed to a $27 million contract with the Red Sox in January 2020.
The #Angels today agreed to a one-year, $30 million contract with RHP/DH Shohei Ohtani for the 2023 season.
With the agreement, the arbitration process is avoided.
— Angels PR (@LAAngelsPR) October 1, 2022
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This deal could have plenty of long-term implications as Ohtani nears free agency and teams weigh whether to try to trade for him in the coming offseason.
What Shohei Ohtani’s deal means for 2023 and beyond
Implications for 2023
The first major takeaway is what it means for next season, whether Ohtani is with the Angels or another team.
Ohtani made $5.5 million this season, according to Spotrac, and just $3 million in 2021. Given that he has been an MVP candidate both years, it’s easy to call his salary a major bargain.
The new deal starts to pay Ohtani more what he’s worth. According to The Athletic’s Ken Rosenthal, it is the largest year-to-year salary increase ever for a player.
The Ohtani contact is a record for an arbitration-eligible player (11% above old record of $27M by Betts). His $24.5M raise Is the biggest year-to-year increase ever for a player, and it puts him in the top 10 as of now for 2023 salary and AAV.
— Ken Rosenthal (@Ken_Rosenthal) October 1, 2022
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Assuming Ohtani stays with the Angels, Los Angeles’ three-highest paid players — Ohtani, Anthony Rendon and Mike Trout — will make a combined $105.7 million next year. That trio alone will make more than the full 2022 payrolls of seven MLB teams. With the Angels looking to improve the supporting cast around that trio, the Ohtani expenditure could limit how much Los Angeles dips into the free-agent market.
There’s also a chance the Angels won’t have Ohtani by the start of next season. Ohtani almost certainly will be the subject of trade rumors this offseason, considering his name was thrown around in rumors at the trade deadline. If the Angels believe they can get a major haul for him and won’t be able to sign him to an extension, it might be time to trade the two-way phenom.
The drastically increased salary would seem to deflate his value, as he would no longer be playing on such a steep discount, not to mention he’ll be in his walk year in 2023. Teams looking to trade for him would also have to account for one of the largest salaries on their payroll.
Implications past 2023
With free agency a year away, the question has been just how much will Ohtani make after hitting the market. This deal might give some idea.
If the arbitration figure is any indication, $30 million could be a baseline for the average annual value Ohtani would ask for in an extension. Remember how Betts signed that $27 million deal with the Red Sox to avoid arbitration? Less than a month later, he was traded to the Dodgers. A few months after that, he signed a 12-year, $365 million extension with LA. That’s an average of $30.4 million per year through his Age 39 season.
Ohtani is an almost impossible player to evaluate. On the one hand, he fills two roster spots, he is a Cy Young candidate this year, and he has one of the best combinations of power and speed as a batter. On the other hand, he will turn 30 in July 2024 and has already had Tommy John surgery.
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Given the age and injury risk of playing two ways, a deal like Betts’ doesn’t seem as likely. Then again, the immense value he brings from both a baseball — annual Cy Young and MVP contender — and marketing standpoint means he can command a massive annual salary.
Fourteen MLB players have contracts with an average annual value of at least $30 million in 2022. It’s safe to say the $30 million Ohtani got for 2023 will be an easy bar for him to clear.
There’s also what that $30 million means for the rest of the league. Players like Ohtani and Betts are rare, and with many extensions being given to younger players these days, it is even rarer that they get this late into arbitration eligibility. But this deal does set a bar for some young stars to reach. Juan Soto is perhaps the first player who comes to mind; he’s arbitration-eligible and could look at that $30 million as a baseline in contract discussions.
Implications for the Angels franchise
That the Angels avoided arbitration with Ohtani could go a long way toward them being the team that signs him long term. The team has not been remotely competitive in recent years, but reaching an agreement without an arbitrator should help keep the two sides on good terms.
Lastly, there are implications for the potential sale of the Angels franchise. Prospective ownership interests are going to want to see Ohtani happy with the team and would almost certainly like to keep him around. But again, Trout, Rendon and Ohtani will cost the team more than $100 million combined just in 2023.
If the Angels want to keep him around past then, the number will likely climb. Saturday’s agreement shows just how much it will cost to retain one of the sport’s biggest stars.
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