The Los Angeles Dodgers made the news on Tuesday night by signing top lefty Blake Snell to a five-year, $182 million contract. The Boston Red Sox, the New York Yankees, and many other squads were behind the services of the two-time Cy Young award winner, but LA pulled off another miracle and added him to an already star-studded roster.
The Dodgers have unlocked a contract cheat code
The Dodgers had Snell defer $62 million for the future, but gave him a $52 million signing bonus for his trouble. Why do they like contracts with deferred money so much? Well, because it helps them bring down the CBT number of the player, thus giving the team more wiggle room.
As Mark Feinsand explained last year when the Dodgers signed Shohei Ohtani, “Any money deferred outside the term of the contract is calculated using its present-day value.” Since the value of the dollar decreases over time, this strategy is perfect for teams like the Dodgers to keep their overall CBT in (relative) check.
If Ohtani hadn’t deferred $680 million, his CBT number would be $70 million. There is almost no way to build a competitive roster circumventing that. But the deferrals took his CBT number down to a more manageable $46 million.
The Dodgers did it again
In Snell’s case, his CBT value will be $32.5 million when his average annual salary (AAV) is $36.4 million. It’s not the first time this strategy has been applied, but it’s the backbone of the Dodgers’ ability to absorb so many huge contracts.
“The Dodgers have now secured $964M of deferred payments since July 2020. Shohei Ohtani: $680M/$700M; Mookie Betts: $115M/$365M; Blake Snell: $62M/$182M; Freddie Freeman: $57M/$162M; Will Smith: $50M/$140M,” Michael Ginnitti, co-founder and editor of Spotrac, posted on X.
There is frustration among many fan bases because of the Dodgers way of doing business, but truth be told, any team is able to apply this blueprint. The league doesn’t have a restriction on how much money can be deferred after the term of a specific contract.
Once again, the Dodgers pulled off a miracle. And it’s one that sets up an all-time rotation.
