How does the LA Dodgers’ deferred salary policy affect MLB imbalance?
Los Angeles Dodgers' deferred money policy has angered the baseball world, questioning the balance among other teams.
Follow Us
Los Angeles Dodgers players celebrating (Image Credit: AP)
The idea of deferred money in MLB has been long passed down in history, however it wasn’t popular back in the day. The team and the person who turned it into the latest trend is Los Angeles Dodgers two-way superstar Shohei Ohtani.
It was Ohtani who brought up the idea of deferring 97% from his 10-year $700 million deal to provide flexibility to the Dodgers. The sole aim of this was for the organization to build a winning team surrounding Ohtani for the next decade.
Even before Ohtani’s historic signing, several players and teams used the deferred salary policy in MLB. However, the policy recently came into the spotlight after the Dodgers continued its use and added some top-tier players to the roster.
The fans have been angered at the Dodgers’ usage of the policy, claiming that it causing disturbance and imbalance among the other teams. Since they are signing top players from free agency, other teams will have lower competitive value. However, the argument is variable as other teams can also use the same strategy to build a solid team.
What is deferred money in MLB?
Deferred money in MLB is essentially a salary paid out to players after their contract ends. This is beneficial for both the player and the team as they get to have a solidified income even after retirement.
On the other hand, a team can use the present time to use the current savings and invest in other club activities or player signings. This gives them the room to grow and challenge rivals on a higher level.
It’s a strategy that many teams have applied in the past and are still doing so. The current hottest team under the spotlight is the Los Angeles Dodgers. Other than them, the Toronto Blue Jays, and the Arizona Diamondbacks have used the same strategy to sign players for the 2025 race.
Shohei Ohtani setting deferred salary policy trend
Shohei Ohtani and the Los Angeles Dodgers took the limelight in 2023 when they agreed on a 10-year $700 million deal. Instead of receiving the whole AAV during his tenure with the team, he will get the rest amount after his contract expires.
From 2024 to 2033 Ohtani will get $2 million annually, and from 2034 to 2043 he will get $68 million annually. MLB calculates the present-day value of Ohtani’s deal to be approximately $460 million today.
Throughout 2033 the team will hit the CBT payroll around $46 million each year. While it may seem harsher on the surface, the Dodgers can focus on the present to sign big money contracts with top free agents from the market.
It will ensure they always have a winning team ready for a championship with Shohei Ohtani at the center. While Ohtani will only get $2 million from the Dodgers, his endorsements and sponsorships have him paid $65 million in 2024.
While many baseball stars have entered the deferred salary zone, none had made it so popular as Ohtani due to his high deal signing. Furthermore, Ohtani’s deferred money allowed the Dodgers to sign top tier players like Tyler Glasnow, Yoshinobu Yamamoto, Will Smith, Blake Snell, Michael Conforto, Tommy Edman, Blake Treinen, Teoscar Hernandez, Hyeseong Kim, Roki Sasaki, and Tanner Scott.
Impact of deferred salary policy in MLB
With the Los Angeles Dodgers continuing to sign top players from free agency, there have been plenty complaints and criticisms against them. From MLB teams, to front offices, fans, and even pundits have called out the team for their luxury expenditure.
While they are not violating any MLB rules, many believe that this is causing the sport to have an imbalance. One team hogging all the good players while the other teams getting to sign couple of them.
The 29 other MLB teams can also follow what the Dodgers are doing and there aren’t any restrictions for it. However, no other teams are using the deferred policy to this extent, making many question it’s legality and impact in the future.
Several even claimed that it won’t be fun to watch MLB games in the future as the teams will have a large imbalance among them. Current teams incurring luxury tax payrolls are the Dodgers, the New York Yankees, and the Philadelphia Phillies.
The Dodgers are in line to pay roughly $120 million in luxury tax penalties on top of their payroll which is more than the projected Opening Day payroll of 10 teams. With all the contracts the team has now, they have guaranteed $1.778 billion with $874 million deferred. This is an unprecedented scenario in MLB.
Apart from Ohtani, players who have used deferred money policy are – Manny Ramirez, Chris Davis, Ken Griffey Jr., Bobby Bonilla, Max Scherzer, Francisco Lindor, Anthony Santander, and Corbin Burnes.
While the LA Dodgers deferred money strategy has caused unrest in MLB, the other teams are free to follow the same example. Even without the deferred money, the Dodgers have become an organization where top players willingly want to go due to their player development programs and stable front office.
Roki Sasaki is the latest one to talk about the stability of Dodgers front office that led him to sign with them and not with the San Diego Padres or the Toronto Blue Jays. Whether other teams will follow the deferred policy trend in future still remains to be seen.
Let’s check out the difference between the three MLB teams with lower payroll’s in 2025 vs. teams with higher payrolls:
| Teams with lower payroll (2025) | Projected Payroll | Luxury Tax Payroll | Guaranteed % |
| Colorado Rockies | $123 million | $144 million | 78.0% |
| Pittsburgh Pirates | $80 million | $104 million | 63.0% |
| Oakland Athletics | $74 million | $106 million | 65.6% |
| Teams with higher payroll (2025) | Projected Payroll | Luxury Tax Projected | Guaranteed % |
| Los Angeles Dodgers | $367 million | $370 million | 91.4% |
| Philadelphia Phillies | $288 million | $308 million | 85.0% |
| New York Yankees | $284 million | $303 million | 85.2% |
As of now, the Dodgers aren’t breaking any MLB rules and their clever strategy has allowed them to lock in top players. The future games might be challenging for couple teams to keep up considering the talent in lineup, but the Dodgers aren’t the only team guaranteed to win a championship ring.
Any team with current roster can do so. The upcoming 2025 race will be worth the wait as it will give a rough shape to how the future years are going to turn out to be with the Dodgers being the current villain team in MLB.
Currently the team’s with payroll above $200 million are – LA Dodgers, NY Mets, Phillies, NY Yankees, Toronto Blue Jays, Texas Rangers, Houston Astros, Atlanta Braves, and the San Diego Padres. Teams with payrolls below $120 million are – Milwaukee Brewers, Detroit Tigers, Cincinnati Reds, Cleveland Guardians, Pirates, Chicago White Sox, Athletics, and Miami Marlins.
In 2024, the teams who qualified for the ALCS were – NY Yankees vs. Cleveland Guardians, whereas in NLCS match took place between – NY Mets vs. LA Dodgers. Eventually, the Yankees and Dodgers fought for the WS title with the Dodgers winning the 2024 Fall Classic trophy.
Flexibility in payrolls often cause teams with lower payrolls to have an effect on their AA/AAA players. Their player development system may often cause a talent to remain unsigned for MLB debut for longer period of times. In case of free agency, many teams also use their top draft picks or players from the minor league for trade clause in exchange for a top-tier player in MLB.
While this may raise issues in talents going to sign with top teams, MLB has not sided with the Dodgers. Any teams are free to use the deferred money policy to raise talents and build a strong team around them. The reason why the Dodgers were criticized was due to their consistent use of the deferred policy.
Given the other teams also start following their steps, it won’t be long that MLB will have to put on a pause or a rule for deferred money. However, as of now, it has become a trend to add talented players with deferred money clause and win a championship ring to continue their growth.
Stay Updated!
Kaushani Chatterjee
(2162 Articles Published)