How does Shohei Ohtani’s contract change the free agent market and the Cardinals plans?

There is no story which has consumed even a fraction of the oxygen this winter as Shohei Ohtani’s free agent odyssey which saw him relocate just a few dozen miles north up the California turnpike.

There was no secret visit to a facility in limbo in Jupiter, Florida; there was no convincingly photoshopped Ohtani visage projected on the Busch Stadium scoreboard. There was no serious consideration of a key man provision in a contract which would’ve locked John Mozeliak into employment for the next decade – though many heads of baseball operations are surely taking note of Andrew Friedman’s navigation on that front.

For all the St. Louis Cardinals were needing and planning to do this offseason, there was no reality in which Ohtani was part of their plans. That does not mean, however, that his decision to sign with the Los Angeles Dodgers – and the financial machinations which accompanied that decision – doesn’t weigh on their winter.

Indeed, it’s just now beginning to take shape.

Ohtani’s unprecedented contract structure will see him defer all but $2 million of his $70 million annual salary over the next decade, interest-free. That sort of deferment is explicitly permitted by the collective bargaining agreement but rarely pursued, in large part because it’s broadly calamitous to a player’s own financial interests.

For Ohtani, though, who pulls in 10s of millions in endorsements annually, the deferrals amount to little more than a minor inconvenience with potentially major benefits in trade. MLB’s formula for determining the average annual value of a contract for competitive balance tax purposes has tagged his deal as worth approximately $46 million on an annual basis, creating much more breathing room for the Dodgers below the CBT.

That is already manifesting in their pursuit of pitching.

Yoshinobu Yamamoto toured Dodger Stadium as part of his recruiting trip to the United States, and Ohtani was included among the group pitching the pitcher. The Dodgers are also engaged in trade discussions with the Tampa Bay Rays which would see Tyler Glasnow added to their rotation, shoring up what is clearly for them a weak spot on the roster.

The Dodgers could pursue either or both of Glasnow and Yamamoto if Ohtani’s full dollar value was paid up front if they were willing to simply pay the competitive balance tax, but ownership and management become a great deal less reluctant to do so in the face of that relief. That would allow the Dodgers to escape the winter with three of the half dozen or so most coveted prizes, and next year, they would be paying roughly what they’d expect to pay for only two.

The Cardinals have utilized deferrals on a much smaller scale to provide themselves some short term cash relief. Willson Contreras and Sonny Gray both signed backloaded free agent contracts, though both will be paid out during the contract’s term and are mostly designed to provide some cushion when and if Diamond Sports Group defaults on the team’s television rights contract. Others, like Matt Holliday and Adam Wainwright, accepted deferrals on previous deals, but those were not interest-free and provided the player some tangible financial incentive.

Indeed, for all of the attention paid to the decades-long payout structure Bobby Bonilla received from the New York Mets, it’s Hall of Famer Bruce Sutter who may be baseball’s king of creative payments. He accepted a deferral in the vicinity of $5 million on his last contract from Atlanta, and by the time the last payment was made in 2021, he’d collected approximately $50 million. The value of the dollar may have declined over time, but Sutter profited greatly from the structure.

In the short term, for the Cardinals, seeing the Dodgers crowd back into a top-end pitching market is a not an insignificant annoyance. The team has said it will not exceed the first payment level in the CBT structure, leaving them with about $35 million in additions to be made through the end of the year after the trade of Tyler O’Neill to Boston.

That’s enough room to add a significant back end reliever, as they’ve said they intend to do, and to supplement the starting rotation or perhaps the outfield mix during the season if either or both become necessary. With the Dodgers among competitors, though, as well as the Mets still poised to strike and Toronto and the Chicago Cubs desperate to make a splash, what started as a cleverly positioned winter is suddenly much more complex as the market begins to move in earnest.

The team’s early moves to add starting pitching reflect some of their concerns about that inevitability, as they can now be sure they’ll start the season with a minimally acceptable amount of covered innings. What’s less clear, though, is whether they have the wherewithal to compete with the class of offers that might start to flow toward players as different musical chairs open up.

The Cardinals could swim in those waters if they wished. They could even have made their pitch to Ohtani. Historically, though, that has not been their approach, and now they’re left waiting to see if their fast start will still see them lapped.

This story was originally published December 15, 2023 at 7:00 AM.