Dodgers Break the Bank: Yamamoto's $375M Deal

On December 27th, the Los Angeles Dodgers officially announced the signing of superstar pitcher Yoshinobu Yamamoto to a 12-year, $325 million contract. Although he’s never pitched a single inning in the MLB, he is now the proud owner of both the largest and longest contract ever to be signed by a pitcher in league history!?

Before Yamamoto, the largest contract signed by a pitcher in the MLB was Gerrit Cole, who in 2019 signed a 9-year $324 million contract with the New York Yankees. It seems the Dodgers were more than happy paying the extra million to add Yamamoto to their collection of superstars and create an even bigger buzz around this historic signing.

If you were to compare the AAV (average annual value) of both deals, Cole’s contract is obviously the more valuable one ($36 million AAV vs $27 million AAV). However, to sign Yamamoto, the Dodgers had to pay a posting fee of over $50.6 million USD to his former team, the Orix Buffaloes. Players with less than nine years of professional experience in Japan’s top league NPB (Nippon Professional Baseball) aren’t considered true international free-agents. To sign these players, teams must pay their clubs a release fee based on a percentage of the new contract signed. With this factored in Yamamoto's deal is technically worth over $375 million, even though it won’t be reflected in the actual contract.

An important factor to consider is that the baseballs used in NPB are slightly smaller and have a slightly better grip than the balls used in MLB. While playing in Japan, Yamamoto dominated as the best pitcher in the league winning almost every individual award possible over the past three seasons (2021-2023), including three consecutive MVP awards. In 2022, he played a pivotal role in helping the Buffaloes win their first championship in 26 years. Top pitchers from the NPB have found success in the MLB before, such as Kenta Maeda and Yu Darvish, so it’ll be intriguing to see if Yamamoto can follow in their footsteps.

Deals of such magnitude are nothing new to the Dodgers, given their track record of landing high-profile players over the past few years. Most notably, the recent signing of the current American League MVP, Shohei Ohtani, for $700 million. Just between Yamamoto and Ohtani alone, the Dodgers have committed over a billion dollars this offseason. This figure surpasses $1.2 billion when factoring in their other December acquisitions: Tyler Glasnow ($136.5 million for 5 years), Joe Kelly ($8 million for 1 year), and Jason Heyward ($9 million for 1 year).

So how are the Dodgers able to have unlimited money for players? One of the reasons was deferring $680 million from Shohei Ohtani's $700 million contract until 2034, freeing up a significant portion of that money in the short term. In addition, it's because of the ‘soft’ cap team salary system used by sports leagues like the MLB and NBA, as opposed to the ‘hard’ cap team salary system used by the NFL and NHL. The distinction lies in the fact that a 'soft' cap permits teams to exceed the budget amount with penalties, whereas ‘hard’ caps strictly prevent teams from surpassing the budget. It’s clear, the Dodgers wealthy ownership group doesn’t mind paying the hefty tax penalties to build a team that’s almost guaranteed to win championships.

Another reason that made this deal possible is the exorbitant amount of money the Dodgers are able to generate at home games by having the highest average attendance in baseball for the last ten years consecutively. According to the MLB attendance report, the second-place team averaged four to seven thousand less fans per night than the Dodgers over the past few years. They also have the most expensive beer out of all MLB teams. According to a USA Today article, in 2023, beer at Dodgers stadium was 30 cents more per ounce than beer at any other MLB stadium.

Unlike Ohtani’s deal, Yamamoto’s contract has two opt-out opportunities hinging on the health of his right elbow. It’s structured in a way that if Yamamoto has elbow surgery, or is placed on the injured list for a right elbow injury for 134 consecutive service days from 2024 to 2029, he would have the right to opt out after the 2031 and 2033 World Series. However, if he avoids elbow surgery and doesn't miss that much time with an elbow issue, he can instead opt out after the 2029 and 2031 World Series. Considering this is the longest pitching contract in MLB history and the fragility of players in that position, it’ll be interesting to see how things play out with these opt-outs.

If you enjoyed reading about this record breaking deal, consider checking out my previous article where I analyze an even bigger deal that may have been the catalyst for this one. Click here to read more about the biggest contract in sports history#MLB #Baseball #Yamamoto #Dodgers #Forbes #History #Sports #Ohtani