Soto's Next Move: Can He Outbid Ohtani's Deal?

In the world of sports, contracts often make headlines, and baseball is no exception. Last year, Shohei Ohtani signed a record-breaking 10-year, $700 million deal with the Los Angeles Dodgers, leaving the sports world in awe. Now, as free agency begins, all eyes are on Juan Soto, who could potentially top Ohtani's deal. But in the era of deferred money, how likely is it that Soto will outbid Ohtani? Let's dive into the numbers and explore what might happen.

Ohtani's deal, worth $700 million over 10 years, includes a hefty $680 million in deferred money payable through 2043. This structure allows for a lower average annual value (AAV) when calculated using different discount rates. Using MLB's luxury tax system (4.43% discount), Ohtani's deal is valued at $46.1 million per season. However, if Soto seeks a deal worth $462 million without deferred payments, it would be the most valuable in MLB history, surpassing Ohtani's contract in terms of total value.

But the era of deferred money complicates matters. Deferred payments can significantly impact the perceived value of these contracts, depending on the discount rate used. Using a 5% discount rate, as the players' association does, Ohtani's contract is valued at $43.8 million per year. Alternatively, considering a 10% discount rate for MLB's regular payroll calculations, Ohtani's deal is valued at just $28.2 million. This variation in valuation methods highlights the importance of considering deferred payments when evaluating the true worth of these contracts.



While Soto has the potential to top Ohtani's deal, it's essential to consider the luxury tax implications. Teams like the New York Yankees, Mets, Dodgers, and Philadelphia Phillies are likely to face higher surcharges due to consecutive luxury tax payments, potentially limiting their ability to offer high-value contracts without straining their budgets. This could reduce the pool of potential bidders for Soto and, consequently, the maximum contract he can secure. However, teams with lower payrolls, such as the Toronto Blue Jays, may have more flexibility to bid aggressively without incurring significant penalties, potentially increasing their chances of signing Soto.

In conclusion, while Juan Soto has the potential to top Shohei Ohtani's deal, the era of deferred money and luxury tax implications may complicate matters. The structure of Soto's potential contract, especially regarding deferred payments, could differ significantly from Ohtani's, depending on the team that secures his services. As the winter meetings approach, teams with high luxury tax rates may look to make a splash in the free agency market, potentially driving up the value of Soto's contract. However, the final outcome will depend on the math behind deferred payments and the specific incentives offered by each team. The stage is set for an intriguing showdown as Soto's negotiations unfold.