For years, Major League Baseballteams have sought ways to outmaneuver their rivals, from the analytics revolution of Moneyball to innovations in player development and scouting. Now, the Los Angeles Dodgers may have unlocked the next market inefficiency: deferred money. This creative financial strategy, allowing the team to pay players over extended periods, has propelled the Dodgers into uncharted territory-while leaving other franchises in their wake.
The latest example of this approach came on Tuesday, when the Dodgers introduced Blake Snell as their newest acquisition. Snell, fresh off winning his second Cy Young Award, signed a five-year, $182 million deal. What raised eyebrows wasn’t just the hefty price tag-it was the $66 million in deferred money embedded in the contract, set to be paid out in the 2030s. This deal pushes the Dodgers’ deferred money obligations past an astounding $1 billion, with payouts stretching into the 2040s.
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At the heart of the Dodgers’ financial strategy lies the willingness to postpone immediate costs in favor of long-term payments. Much of this deferred money is tied to Shohei Ohtani’s massive contract, which the team has justified as profitable thanks to the global marketing dollars and brand recognition he generates. Even after accounting for Ohtani, the Dodgers still owe over $320 million in deferred salaries to other players-a number that dwarfs the commitments of most other MLB teams.
The question many are asking isn’t why the Dodgers are doing this, but rather, why isn’t everyone else following suit? Deferred money agreements are entirely legal under the MLBcollective bargaining agreement (CBA) and must be mutually agreed upon by players and teams. Yet few franchises have embraced the tactic to the same extent.
The Guggenheim edge
The Dodgers’ ownership group, Guggenheim Partners, has a unique advantage. As a global investment firm, Guggenheim can strategically reinvest the money saved by deferring payments. By leveraging those funds over the coming years, they expect to generate returns that will more than cover their future financial obligations. Essentially, the team is betting on their ability to grow wealth faster than inflation and future payroll commitments-a luxury many other MLB owners are hesitant to risk.
For other teams, the hesitancy often comes down to ownership structure and long-term planning. Many team owners prefer to maintain financial flexibility to facilitate potential sales of their franchises. Long-term deferred obligations can complicate valuations and limit suitors. By contrast, the Dodgers’ ownership appears committed to maintaining control for decades, allowing them to invest boldly in their roster today.
A superteam by design
Critics argue that the Dodgers are using deferred money to construct a “superteam,” creating an unfair advantage. Yet this strategy is available to all MLB teams-it simply requires vision and a tolerance for financial complexity. “It’s not about breaking the rules; it’s about playing smart within them,” said a front-office executive to The Athletic.
As the Dodgers continue to dominate both on and off the field, other teams may eventually follow their lead. For now, LA’s bold approach to building and retaining talent could set the standard for a new era in baseball finance.