In a groundbreaking development, Shohei Ohtani's record-setting 10-year, $700 million contract with the Los Angeles Dodgers includes a series of unprecedented deferral arrangements, according to sources familiar with the terms. The unique structure of the deal aims to facilitate the Dodgers' ability to invest in other star players while granting Ohtani greater earnings potential through endorsements and off-the-field ventures.

Under the terms of the agreement, Ohtani has agreed to defer all but $2 million of his annual salary. This means that out of his $70 million yearly earnings, $68 million will be deferred and paid out without interest from 2034 to 2043. These previously undisclosed deferrals were reportedly suggested by Ohtani himself during negotiations, which ultimately pushed the deal to the staggering $700 million mark.

The primary objective behind these deferrals is to provide the Dodgers with increased cash flow and payroll flexibility. By deferring a significant portion of Ohtani's salary, the team can navigate the competitive balance tax, commonly known as the luxury tax, more effectively. The expected average annual value of the contract, for luxury tax purposes, is said to be approximately $46 million per year.

This unique contract structure also highlights Ohtani's commitment to long-term success with the Dodgers. While the deferrals allow the team to have financial maneuverability, Ohtani continues to capitalize on lucrative endorsement deals and off-the-field ventures, estimated to earn him a staggering $50 million annually.

The significance of this contract cannot be understated, as Ohtani's deal surpasses the previous record-breaking contract signed by his former teammate, Mike Trout, with the Los Angeles Angels worth $426.5 million. Ohtani's agent, Nez Balelo of Creative Artists Agency, hinted at the deferral arrangement when Ohtani's decision to join the Dodgers was announced.

"He is excited to begin this partnership, and he structured his contract to reflect a true commitment from both sides to long-term success," said Balelo in a statement.

With this unprecedented deal set to be finalized soon, the Dodgers are poised to continue their pursuit of top-tier players in the market, potentially including free-agent Japanese right-hander Yoshinobu Yamamoto and Rays right-hander Tyler Glasnow.

Shohei Ohtani's contract not only represents a monumental financial milestone in baseball but also showcases the evolving strategies teams employ to balance payroll, competitive balance tax, and player endorsements. The impact of this groundbreaking agreement will undoubtedly shape the future of baseball contracts and player earnings for years to come.