Are MLB contracts guaranteed? Shohei Ohtani's $700,000,000 deal draws attention to league's guidelines on payment terms

Shohei Ohtani has agreed to a mind-numbing contract with the Los Angeles Dodgers, which reads $700 million over a decade. The figure is staggering, and no one would have predicted such figures being tossed around during the 2023 MLB offseason. Ohtani eclipsed Aaron Judge's highest free-agent deal, $360 million over nine years, by receiving almost double that from Los Angeles.

What about the guarantee of these contracts? As soon as any ballplayer joins the MLB, they are bound by a guaranteed contract. The law applies to all players, regardless of whether they sign a contract through an extension or as a free agent.

Every time players from the farm system and other players on the roster are given an invitation to be part of the spring training, they are given a full salary of 45 days, even if they get cut from the spring training squad on the 17th day.

The reason MLB is so well-liked by players and investors alike is because, barring unforeseen events, its contracts are virtually always guaranteed.

Upon signing a contract, MLB players receive 100% of their agreed-upon salary, outside of performance bonuses and team options. The guaranteed contracts allow the ballplayer to play for a fixed period of time with one team until further extended or traded to another team.

If a contract is guaranteed, any money owed to the player or signer will be paid in full, subject to all terms and circumstances outlined in the agreement. MLB contracts are often 100% guaranteed, in contrast to all other universal sports. It indicates that the signer will get the whole amount specified in the contract, barring an unforeseen circumstance.

Shohei Ohtani's contract stipulates a guaranteed payment of $700 million over 10 years, which comes down to $70 million a year. With this contract, Ohtani has not only eclipsed other baseball stars but also other sports athletes as a whole. Such a contract was unimaginable in U.S. sports until the LA Dodgers took out their checkbook to splurge on the greatest two-way phenomenon of the sport.

Shohei Ohtani stays on the West Coast after joining the LA Dodgers

Shohei Ohtani, a two-way superstar, stunned the baseball community Saturday by agreeing to a $700 million, 10-year contract with the Dodgers. If that record-breaking contract was accepted at face value, it would have an unmatched effect on the club's payroll as determined by the luxury tax, but management at LA wouldn't mind that since it believes it has landed a great talent in Ohtani.

Even though the Dodgers had merely $174 million in payroll for tax reasons before the deal with Shohei Ohtani, the Dodgers have cleared the first level of the luxury tax since Ohtani's contract was worth $70 million to the team's payroll directly, and according to the MLB tax laws, it all adds up.