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On deferrals, please provide some numbers for context. The article shared yesterday states the Dodgers have almost $1.1 BILLION in deferrals. My wild guess is that is more money than the other 29 teams in total.
$680 million of those deferrals are Ohtani, who was in a unique situation because of his endorsement deals.
I would agree, even the other $400 million in deferrals is probably larger than all other clubs combined, and Guggenheim can do that because of their financial backing.
But when those bills come due, the Dodgers are going to struggle to maintain their competitive advantage.
The bills are already coming due. 95% of the deferred money has to be placed into an account within two years of being earned.
The advantage is that they can earn interest on the deferrd money and it lowers the CBT tax bill by lowering the AAV.
The bills are already coming due. 95% of the deferred money has to be placed into an account within two years of being earned.
In other words, the Dodgers gain little competitive advantage by using deferrals, and people complaining about their $1 billion in deferred contracts are making much ado about nothing.
I respectfully disagree. Whether the Dodgers pay the money sooner or later, they have the financial power now and the protection of the TV contract later to mitigate the risk taken on with these contracts. Most other ownership groups cannot or will not to go the extent the Dodgers have.
P.S. I am not complaining about it. As I have said before, it is within the rules. But it is a competitive advantage for them because they can buy the best players while remaining within MLB thresholds. They have perfected working the current system to their advantage. That is fact, not a complaint.
Well, what’s first and foremost in importance is that Dodger fans are happy fans and I happen to think that the fans still matter. Without baseball fans, there’s no baseball action.
Good article on deferred compensation and how it works for MLB. It makes sense as tool that can help a club secure a player. The Cardinals deferred some of Nolan Arenado’s deal, or maybe the Rockies did and we inherited it in the trade.
So in terms of the financial statements it can be a good thing – basically hedging. In terms of cash flow, it means you are adding to your future cash outflow for benefits that were utilized in the past.
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