22 min
Could Paying $700M to MLB Star Shohei Ohtani actually make sense? Mastering Entrepreneurship
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- Entrepreneurship
Last week Major League Baseball superstar Shohei Ohtani reportedly agreed to a mind-melting $700M, 10-year contract to play baseball for the Los Angeles Dodgers. That's $70M / year, or $190K / day, whether he's actually playing baseball or not.
Mind-blowing to say the least!
As we dig deeper into the deal we learn more and more about why this deal might actually make incredible business sense for the Los Angeles Dodgers, for three main reasons:
The worldwide - and especially Japanese - fever around Shohei Ohtani. Japan's population is the same size as the top-5 most-populous US states combined, and the entirety of Japan loves one athlete more than all others, and that is Shohei Ohtani
The off-field revenue possible by such a mega-star; this includes TV deals, ads, sponsorships, and all derivatives
The fascinating term on the deal; an astounding $68M of each year's $70M is actually being deferred by 10 years; so in the 2024 season, he'll earn $70M, but only be paid $2M. the other $68M will be paid to him in 2034. The same, 10-year delay will happen on each of the 10 years of the agreement
There will always be a fevered debate on whether any single athlete or entertainer is deserving of such a colossal salary. That debate aside, it really is fascinating to see the economics at play.
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Last week Major League Baseball superstar Shohei Ohtani reportedly agreed to a mind-melting $700M, 10-year contract to play baseball for the Los Angeles Dodgers. That's $70M / year, or $190K / day, whether he's actually playing baseball or not.
Mind-blowing to say the least!
As we dig deeper into the deal we learn more and more about why this deal might actually make incredible business sense for the Los Angeles Dodgers, for three main reasons:
The worldwide - and especially Japanese - fever around Shohei Ohtani. Japan's population is the same size as the top-5 most-populous US states combined, and the entirety of Japan loves one athlete more than all others, and that is Shohei Ohtani
The off-field revenue possible by such a mega-star; this includes TV deals, ads, sponsorships, and all derivatives
The fascinating term on the deal; an astounding $68M of each year's $70M is actually being deferred by 10 years; so in the 2024 season, he'll earn $70M, but only be paid $2M. the other $68M will be paid to him in 2034. The same, 10-year delay will happen on each of the 10 years of the agreement
There will always be a fevered debate on whether any single athlete or entertainer is deserving of such a colossal salary. That debate aside, it really is fascinating to see the economics at play.
Follow me on Social:
Instagram
Facebook
Twitter / X
LinkedIn
22 min