Angels, Shohei Ohtani Avoid Arbitration With One-Year, $30MM Contract For 2023

The Angels and Shohei Ohtani have avoided perhaps the most unique arbitration case in baseball history by agreeing to a one-year, $30MM pact for the 2023 season.  Ohtani is still scheduled to reach free agency following the 2023 campaign.  Ohtani is represented by CAA Sports.

The two-way star becomes the 20th player in baseball to receive a $30MM average annual value on a contract, and that $30MM figure also establishes two other notable thresholds.  Ohtani will now receive the largest salary ever for an arbitration-eligible player, and he also gets the biggest year-to-year raise for an arb-eligible player, after he earned $5.5MM this season.  That $5.5MM salary was established in an earlier extension that avoided arbitration, as Ohtani and the Angels agreed to a two-year, $8.5MM contract in February 2021 that covered the first two of his three arb-eligible years.

At the time of that deal, Ohtani has pitched only 1 2/3 total innings over the 2019-20 seasons, due to a Tommy John surgery and then a flexor strain.  He was also coming off a mediocre year at the plate, hitting only .190/.291/.366 over 175 plate appearances during the pandemic-shortened 2020 season.  Though Ohtani was hardly the only player to struggle under the unusual circumstances of the 2020 campaign, there was speculation that his 2018 rookie season might have been his peak, and that Ohtani would be better served by choosing either hitting or pitching.

Instead, Ohtani bounce back with two of the most extraordinary seasons in baseball history.  Since Opening Day 2021, Ohtani has hit .267/.366/.560 with 80 home runs over 1282 plate appearances, while also posting a 2.72 ERA and an array of dazzling secondary metrics over 291 1/3 innings.  After winning AL MVP honors in 2021, it looks as if Ohtani will be at worst a second-place finisher in this year’s MVP race (due to Aaron Judge’s all-timer of a season), and he’ll also earn a good chunk of votes in the AL Cy Young Award race.

With this in mind, it can certainly be argued that $30MM is still a bargain from the Angels’ perspective, considering that Ohtani would earn hefty salaries if he was “only” an All-Star hitter or “only” an All-Star pitcher.  It would’ve been fascinating to see what arbitration figures the Angels and Ohtani’s camp would’ve submitted in this unprecedented scenario, but this agreement sidesteps that possibility.

Los Angeles now has three players earning at least $30MM in 2023, as Ohtani joins Mike Trout ($35.45MM) and Anthony Rendon ($38MM).  In practical terms, it doesn’t change much for the Angels’ payroll situation, as the team naturally figured it would be paying Ohtani some type of gigantic salary in his final arb-eligible year.  In pure dollars and cents, it doesn’t actually represent much different from the Angels’ 2022 payroll, as the since-released Justin Upton was earning $28MM in the final year of his contract with the club.

Ohtani’s future beyond 2023 remains a mystery, as he’ll be heading into free agency presumably still in his prime both on the mound and at the plate.  Though Ohtani turns 29 in July, his two-way ability might still land him the biggest contract in baseball history, topping the $365MM in new money given to Mookie Betts in his extension with the Dodgers prior to the 2020 season.

In reaching an agreement with Ohtani now, the Angels front office gets one big question mark settled heading into what might be one of the most uncertain offseasons in franchise history.  Owner Arte Moreno is looking into a possible sale, and with this situation lingering over the organization, it isn’t clear how aggressive GM Perry Minasian will be allowed to be in upgrading the roster.  The Halos are struggling through their seventh consecutive losing season, so while a teardown isn’t out of the question, it is also possible Moreno might order a final push to try and return to the postseason one final time under his ownership.

Until there’s more clarity with the potential sale, it is hard to gauge what will happen with Ohtani in Anaheim.  Given that Ohtani has already expressed his displeasure with losing, it seems hard to believe that he would agree to an extension unless he was satisfied that the team was heading in the right direction — even if a new owner does take over within 7-8, their influence might not be apparent in the short window of time before Ohtani can test the open market.  A new owner might bring a new willingness to exceed the luxury tax threshold, and thus it wouldn’t necessarily be an obstacle in adding a massive Ohtani deal worth more than $40MM (at least) in AAV on top of the long-term Trout and Rendon contracts.

A trade also can’t be ruled out, though it seems like the least likely scenario considering that Moreno vetoed any possibility that Ohtani would be swapped prior to the last trade deadline.  As noted by The Athletic’s Fabian Ardaya, establishing Ohtani’s 2023 price tag early gives any interested trade partners more time to plan offers, yet not having Ohtani on the roster could also impact purchasing interest for any potential new owners.  From a practical baseball sense, it is also hard to gauge what exactly an Ohtani trade would look like, considering his elite two-way talent but also just one remaining year of control.

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