LA’s Fiscal Cliff: How the Dodgers Deferred Dollars Will Impact the…

The winter meetings haven’t even started yet, and the Dodgers have already made two large splashes this offseason, in signing Blake Snell and extending Tommy Edman. Both contracts run through 2029, and both contain deferred money.

Snell deferred $66 million of his $182 million contract, with the deferrals paid in annual installments from 2035-46. Edman deferred $25 million of his $74 million deal, with his later payments coming each year from 2035-44.

“It played out the way people around me felt comfortable with. I felt comfortable with it, they felt comfortable with it,” Snell said of the deferred money. “We talked, and found something that worked for both of us.”

Deferred money has been used by the Dodgers in recent years, sometimes as a means to an end to get a deal done. Shohei Ohtani and Will Smith each signed 10-year deals in the last year that contained deferred money. Teoscar Hernández’s one-year deal even included deferred money.

They joined perennial MVP candidates Mookie Betts and Freddie Freeman, whose big contracts with Los Angeles also contain deferred money. In total, the Dodgers have just over $1 billion in deferred salary from those seven players alone, to be paid in schedules running from 2028-46.

But in reality, Ohtani’s contract is doing the heavy lifting here, as he deferred $680 million of his $700 million deal, paid in annual installments from 2034-43, after his 10-year contract expires.

“I think the Shohei [deferral] was just very extreme,” Dodgers president Andrew Friedman said Tuesday at Dodger Stadium. “But if you set the Shohei contract aside, the rest are all within the norm, and standard operating procedure that a lot of teams have done.”

Ohtani deferred a whopping 97.1 percent of his contract, but he is the outlier. The other six contain somewhere near a third of the total that is paid after the contracts expire:

Snell: $66 million of $182 million (36.3 percent)

Hernández: $8.5 million of $23.5 million (36.2 percent)

Smith: $50 million of $140 million (35.7 percent)

Freeman: $57 million of $162 million (35.2 percent)

Edman: $25 million of $74 million (33.8 percent)

Betts: $120 million of $365 million (32.9 percent)

How deferred money is perceived depends a lot on context. If Frank McCourt is the owner, on his way to dragging the team into bankruptcy, postponing payments down the road rightfully raises eyebrows as those bills would come due long after he skips town with briefcases overflowing with cash.

But the current ownership group has led MLB in payroll and paid the most in competitive balance tax during their 12 full seasons, dating back to 2013. They’ve earned the benefit of the doubt in terms of financial solvency.

Take Ohtani’s contract for example. The Dodgers will pay him $2 million in salary in 2025, with the other $68 million coming to him in 2035. But the team isn’t only spending that $2 million next year. The collective bargain agreement requires teams to set aside money for the express intent of paying for future deferrals.

“It’s just how you account for it. You have to fund a lot of it right now, and having that money go to work for you,” Friedman said. “A lot of our ownership group are from financial background, and can have that money going to work right now, and not something that sneaks up on us. We’re not going to wake up in 2035 and say, ‘Oh my God, that’s right. There’s this money due.’ We’ll plan for it along the way.”

In 2035, the Dodgers will owe a total of $94.85 million in deferred salaries to Ohtani, Betts, Freeman, Snell, Smith, Edman, and Hernández. During the years of the Ohtani deferrals (2034-43), the total deferred salaries run between $87.85 million and $97 million.

The first payment of deferred salary comes in 2028, when Freeman will receive his first $4 million payment. The last such scheduled Dodgers deferral payment comes in 2046, when Snell gets $5.5 million on July 1.

Here’s a look at all the scheduled Dodgers deferred payments. Betts’ total includes the final $5 million of his $65 million signing bonus, which is paid from 2033-35, after his contract ends.