Playing the Long Game: What Shohei Ohtani’s Contract Can Teach Canadian Business Owners
Photo from @Shohei Ohtani Instagram - Article: Asian Journal News
When Los Angeles Dodgers star Shohei Ohtani signed his record-breaking $700 million contract, the number alone turned heads. But the real intrigue lies in how he’ll be paid: only $2 million per year for the next decade, with $680 million deferred until after 2034, and no interest applied.
By signing, Ohtani effectively gave up between $49 million and $91 million in opportunity cost, which some might call a massive “cost of patience.” In essence, Ohtani agreed to lend his team hundreds of millions of dollars, interest-free, through an arrangement known as deferred compensation.
The Planning Power Behind the Deal
By deferring the majority of his earnings for a decade, Ohtani gave his team something even more valuable than star power: cash flow. That flexibility allows the Dodgers to sign and retain top talent now, giving them the best chance to compete for championships while Ohtani is still in his prime.
Now, that decision wasn’t made in isolation. It was the result of a coordinated strategy between the Dodgers, Ohtani, and his team of advisors: financial, legal, and tax experts working together to balance near-term goals with long-term outcomes.
For Canadian business owners approaching an exit or acquisition, there’s an important parallel. The smartest financial decisions aren’t about chasing the biggest number; they’re about structuring the deal properly to ensure that cash flow, strategy, and team resources are working together toward a shared goal.
One Theory: Why Ohtani’s Advisory Team May Have Recommended This Strategy
Financially speaking, deferring income isn’t always advantageous. Ohtani is effectively giving up millions in potential investment returns by waiting to be paid. But his advisors likely saw a bigger picture.
By deferring income, Ohtani helps the Dodgers stay competitive under Major League Baseball’s luxury tax rules, allowing them to sign the complementary players he’ll need to win. And if he later resides in a lower-tax jurisdiction once his 10 years are up when the payments come due, he could possibly reduce his overall tax exposure, avoiding California’s 13.3%.
In other words, the strategy wasn’t solely about short-term optimization, but rather about alignment: balancing personal goals with organizational success, and structuring income around opportunity, not just timing.
That’s the same kind of thinking that drives the best business planning decisions.
Lessons for Business Owners: Turning Strategy Into Structure
Just as Ohtani’s advisors worked together to engineer his deal, business owners benefit most when their accounting, legal, and financial professionals are aligned around a unified strategy.
Whether you’re growing your business, preparing for a transition, or planning your retirement, collaboration between your advisors can unlock powerful advantages:
Cash Flow Management
Strategic deferral can help balance income and expenses, ensuring your business has the liquidity to fund growth while maintaining your personal financial goals.
Executive and Employee Incentives
Deferred bonuses or share-based compensation can align team performance with long-term business success, fostering stability and retention.
Tax Timing and Efficiency
Coordinating how and when income is realized; through dividends, capital gains, or deferred payouts can minimize tax drag and maximize what you keep after tax.
In all cases, success depends on more than the tactic itself; it’s about having a coordinated team that sees the full picture and ensures each decision fits within your broader plan.
Strategic Deferral: Making Room for a Championship Roster
At first glance, Shohei Ohtani’s decision to delay $680 million of his own compensation might seem like an enormous financial sacrifice. But there’s a method behind the move.
By backloading Ohtani’s contract, the Los Angeles Dodgers free up cash flow today, enabling them to field the most competitive team by signing and retaining other elite players. In other words, he deferred personal income to help build a stronger team around him now.
For business owners, the parallel is clear: sometimes deferral serves a broader purpose. Whether to align with executive incentives, strategic tax planning, or cash flow management reasons, deferred compensation can play a significant role in financial planning strategies. But like Ohtani, those decisions should be made with clarity on what you’re gaining and what you’re giving up.
Ready to Build Your Own Championship Strategy?
Shohei Ohtani may be a once-in-a-generation talent, but even the brightest stars don’t win championships alone.
Behind every record-breaking performance is a team built for the moment. The same holds true for business owners preparing their next big move.
Take the next 2 minutes to see if your own advisory roster is championship-ready with the Championship Advisory Scorecard — a quick way to evaluate whether your legal, tax, accounting, and wealth professionals are aligned to help you win your next season of success.
Important Note:
Although this article is entirely about Ohtani’s contract, we here at WealthCo remain loyal and committed fans of Canada’s team. Let’s Go Blue Jays!
Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or tax advice. This article does not endorse or promote any individual, product, or service and is intended for educational purposes only. The strategies discussed may not be suitable for all situations. Canadian tax laws are subject to change, and outcomes depend on individual circumstances. Please consult qualified professionals before implementing any business transition or compensation strategy.
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