Ohtani Dodgers Deal Breaks Record. Here Is What’s Next.

Shohei Ohtani just signed a deal with the Los Angeles Dodgers for a reported $700 million dollars for 10 years averaging $70 million per year. Ohtani’s deal blows away previous big MLB deals of $360 million for Aaron Judge and Mike Trout’s extension of $426.5 million. Ohtani’s deal even surpassed Lionel Messi’s $674 million contract signed in 2021 with FC Barcelona. Quite simply, it is the biggest player contract in sports history.

Here’s the reason Ohtani’s deal is so significant. It underscores the importance of paying star players in the high growth industry of sports which has proven to be the surest bet in the entertainment industry for drawing consistent viewership. It’s akin to the old movie industry where paying top talent a fortune assured you of a box office hit.

In recent years, the entertainment industry has changed radically. Gone is appointment TV where families would often gather once a week to watch regular programming? NBC used this effectively with its “must-see TV” on Thursday nights, when the network’s line up included “Friends,” “Seinfeld” and “ER.”

However, Amazon
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, Netflix
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and the streaming world destroyed all that by dropping an entire series all at once and the term “binge watching” was born. This time shifting also eliminated appointment TV for almost everything but live sports and the risk of producing original programming has continued to increase. It has become a crap shoot. Even franchises like Marvel can be worn out.

But sports is a different story. You can always count on your viewing audience and the major sports seem to just be getting bigger. Just ask the NFL, having its best viewership year ever, or the NBA, who just instituted an In-Season Tournament which significantly drove up ratings as it begins a media rights negotiation where they project to triple their rights fees to $75 billion.

The two constituent groups that have most greatly benefited from this sports boom are owners of sports teams and players. Over the past 40 years or so, every single team in all four of the United States’ major sports has increased exponentially in value—inexorably through all manner of catastrophe, and at an average rate that far outpaces that of both inflation and the S&P 500. The Golden State Warriors, at a $7 billion value worth 61 times than it sold for in 2010. And from 2012 to 2021, the value of NBA franchises has increased 387 percent, according to Sportico. You’ll see similar examples of extraordinary returns in both the NFL and MLB.

Similarly, player contracts have exploded over the past 10 years raising an average of 300% for the major sports. Sports is a high growth industry and the talent is what drives value in the content. To that end, on the heels of the Ohtani deal will be the first $1 billion player contract.

I predict the first athlete to reach this milestone will be Kylian Mbappé who contract expires in 2025. He is arguably the best player in the world and since soccer is a global sport he will be coveted not only by his current team in the Premiere League but by MLS and the big money coming out of the Middle East. Mbappé is my prediction for the first $1 Billion player agreement.