💰 Ohtani's Contract Isn't Actually Worth $700M

Every publication is giving out its annual “end of the year” awards, and I think it’s time we do ours here at Bottom of the Ninth Inc.

I’ll be announcing BOTNIOY (Bottom of the Ninth Individual of the Year) at the end of today’s edition.

In the meantime:

🗞 The Big Story: 2020 Olympics are on Trial

📉 Biggest Loser: Baseball’s Bankrupt (Near) Champs

🏆 Winner’s Circle: Ohtani’s Contract Loophole

🗞 The Big Story

There might never be another Olympics in Japan ever again, and it’s all because of one company.

2020 Disaster: The 2020 Summer Olympics in Tokyo went about as poorly as you can imagine. They were:

• Delayed until 2021 due to the COVID-19 Pandemic

• Held the event amidst a state of emergency (80% of the Japanese public was opposed to this decision)

• Recorded record-low viewership in the US

• Over budget by nearly $13 billion

But there was one company that walked away as the big winner, and now they’re facing a trial because of it.

Advertising Mafia? Japan’s largest ad firm, Dentsu, is credited with helping Tokyo land the Olympics in the first place.

The company’s extensive relationships with politicians and large corporate sponsors meant they were the clear choice to organize Japan’s bid for the 2020 games.

However, it’s since been revealed that even that initial bid might have involved bribery of IOC officials, but regardless they did their job and were then immediately selected to lead marketing for the event.

This meant they got to sell all of the sponsorships for one of the largest events in the world and collect a commission on each sale.

And given their extensive connections, the company was able to sell a record $3.3 billion in local sponsorships.

Goosing the Numbers: Now, the way they were able to clear so much in sponsorships was by doubling up on sponsors in each category.

Whereas past Olympic Games were sponsored by only one bank or one airline, for example, Tokyo 2020 was sponsored by two of each.

This effectively doubled the revenue, and, in turn, the commissions Dentsu made from the Olympics but now it’s all come crumbling down.

The Charges: Dentsu, as well as five other Japanese companies, are currently standing trial for something called bid-rigging, which basically means they colluded to get paid more by sponsors and the IOC.

And the best part is these companies aren’t even denying it. Instead, their lawyers are just trying to “minimize the damages” by saying they couldn’t break the bidding rules because there were no bidding rules.

The Penalties: Even if these companies and individuals are found guilty, the maximum penalties aren’t much:

• $3.3 million per company

• Five years in prison and a $33,000 fine for individuals

Definitely less than what they made from the Olympics.

But by far the worst part of all of this is the fact that because of this scandal, Japan was taken out of the running for the 2030 Winter Olympics.

That’s gotta hurt.

📉 Biggest Loser

What happens when a professional baseball team that’s one game away from winning its first-ever championship goes so far into debt that it can’t even pay its players?

Well, that’s what happened to the Gastonia Honey Hunters this year, an independent baseball team in the Atlantic League that just went out of business only a few months after nearly winning the championship.

Behind the 8-Ball: The Honey Hunters were started in 2021 when there were still restrictions on how many fans could attend games, which chief operating officer, Veronica Jeon, says set the team back from the very beginning.

And things only got worse, since in the middle of the 2023 season, staff and players were constantly being paid late, and when they asked Veronica about it she would make some excuse about issues with the payroll system.

Never admitting to what we’ve now learned is the actual truth:

The team was in crippling debt, but what’s surprising is how much.

Early Signs: July of 2023 is when shit really started to hit the fan because Gasotinia Police stopped working security at games due to late payments.

But they weren’t the only ones owed money by the team:

• Police: $50,000 owed

• Paramedics: $22,000 owed

• Stadium Lease (owned by the city): $30,000 owed

In total, the team was already over $100,000 in debt just 3 months into the season and things only got worse.

• November: The Atlantic League kicks the Gastonia Honey Hunters out of the league for failing to pay $291,000 in league dues.

• December: The city of Gastonia sues the Honey Hunters in an attempt to evict them from the stadium due to unpaid debts.

And all of this resulted in the Honey Hunters filing for bankruptcy in early December where we finally learned just how badly the whole organization had been managed.

Honey Hunters Autopsy: According to court filings, the team was $4.08 million in debt, the largest of which was $1.1 million owed to a Dubai-based promotion company and then another $200,000 in unpaid taxes.

We also got an insight into how much money the team lost since it started in 2021:

• 2021: -$704,610

• 2022: -$478,617

• 2023 (through October): -$299,000

But what’s possibly most impressive is that they managed to lose all of that money all while fielding a team that was one game away from winning the championship.

That’s independent baseball for you.

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💰 Pick of the Week

I’ve been sitting on this one for a while, but I’ll be joining the great Kurt Benkert twice a week as his co-host on Pocket Presence!

Kurt’s ability to break down the game as a former player is A+ stuff, and he’s sneaky good at DFS (hitting close to 70% of his picks this year).

Needless to say, I just got a whole lot better at winning money this football season.

Join me and Kurt this season and when you use my code TYLERWEBB, you get a deposit match of up to $100 on your first deposit!

🏆 Winner’s Circle

Shohei Ohtani used an MLB loophole to become the richest athlete in the world.

But he’s not actually making $700 million. Let me explain.

Big Splash: It was reported that Ohtani would be making $70 million per year for the next 10 years.

And then later reports came out saying that he would only be taking $2 million per year while he’s playing and the remaining $680 million after he retires.

But that’s not the full story.

Because MLB actually has a formula to measure the present value of Shohei’s entire contract, taking into account things like inflation and interest across the next 20 years of the deal.

What This Means: As Joe Pompliano points out, MLB requires teams to set aside the current value of the contract regardless of how much money the player is taking every year.

This means the Dodgers will have to put about $46 million a year into an escrow account for the next 10 years.

Meaning that this contract is really only worth about $460 million when you take inflation and interest into account- much more in line with the deals we’ve seen guys like Aaron Judge and Mike Trout sign recently.

However, it does mean that the Dodgers will likely avoid having to pay millions of dollars in fines next year for going over MLB’s luxury tax, which is when teams spend over $233 million in a season.

So really at the end of the day, this is a win for everyone:

• Dodgers: It’s easier for them to stay under that luxury tax threshold and sign even more good players

• Ohtani’s Agent: He gets to brag about how they signed the richest deal in all of sports

• Shohei Ohtani: He gets to collect most of his money once he leaves California - avoiding paying a lot in taxes.

But it also means that the Dodgers are now rooting for higher inflation so the value of the contract keeps decreasing. Wild…

⏱ In Other News

• Sports Business Journal’s Most Influential Person of 2023 is someone you’ve never heard of.

• TicketMaster finally has some competition.

• The NFL is coming for your Sunday mornings.

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👋 The inaugural BOTNIOY is [insert drum roll]:

Kirk Herbstreit’s golden retriever, Ben.

The runner-up was my golden retriever, Sven.

The deciding factor? I don’t think Ben pees on strangers anymore.