The Dodgers Paid Double Market Value for Shohei Ohtani’s Future WAR — And They Were Happy to Do It

Based strictly on stats, L.A. massively overpaid the 2-way star whose pitching is a concern. But Ohtani’s $700 million deal is as much about sponsorships and international fans as future production.

After months of anticipation, the Los Angeles Dodgers signed Shohei Ohtani on Saturday to a 10-year, $700 million contract that ranks as the richest in North American sports history and broke the mold of what MLB teams traditionally value in free agency. Ohtani’s unmatched skills as both a hitter and a pitcher helped make his worth equally unprecedented, but that only scratches the surface of what led the Dodgers to pay him more than the GDP of some countries.

First things first: Now that they’ve snagged the most coveted free agent to ever hit the market, what kind of on-field production can the Dodgers expect to get for their money?

The answer to that question was easy for most of last season. Deep into the summer, Ohtani was on pace for a stunning 11.8 total Wins Above Replacement between his batting (7.6) and his pitching (4.2). That would have ranked as the most valuable season in MLB since Barry Bonds in 2002 (12.2) — and among the top 20 performances by any player since 1901. 

If Ohtani had remained healthy, that production would have set the stage nicely for all the two-way value Ohtani was going to provide over the next decade. But not long after, Ohtani suffered an elbow injury and underwent his second Tommy John surgery in mid-September. He’s expected to only hit for the Dodgers in 2024, with plans to pitch again in 2025. The bottom line: he’ll give the Dodgers something less in terms of production than he would have if he’d never hurt his elbow last season.

But how much less? 

Assuming Ohtani hadn’t gotten hurt last season, our projection of his career Wins Above Replacement would have made him roughly as valuable as Hall of Fame players like Derek Jeter or Larry Walker. (We'll explain below.) When we account for the injury, Ohtani’s career WAR comparables line up more alongside players like Chase Utley or Gary Sheffield. Of course, Ohtani is such a unique and historic talent that he will probably land in the Hall of Fame regardless of his final WAR tally — but the disparity in those projected comparables tells us what kind of difference his injury might make to the rest of his career. 

Here’s what a comparison of those projections looks like:

To arrive at these projections, I looked separately at the 20 retired batters and 20 retired pitchers whose career arcs were most similar to Ohtani’s on each side of the ball through age 28. To capture his two-way value, I then added them together to get his total expected WAR for each season.

Based on this method, Ohtani’s pre-injury pace (through Aug. 23) had him set to produce 36.7 total WAR over the next 10 seasons, between his 22.2 wins as a batter and 14.5 as a pitcher. That would have started with an 8-WAR projection in 2024 — which, even after some serious regression to the mean, is another MVP-caliber performance most years — followed by a 7-WAR forecast for 2025 and roughly 5 WAR in both 2026 and 2027 (by which time Ohtani would be entering his mid-30s).

How do things change when we account for Ohtani’s injury?

We can answer that by using his final 2023 stats for the similar career arcs (rather than his pre-injury numbers), canceling out his pitching value for 2024, and reducing his expected value in the immediate wake of Tommy John surgery based on the history of players who underwent the operation in the past. (For instance, hitters saw their WAR undershoot expectations by 60% in the first season after the surgery.)

Even if we cut that reduction in half because Ohtani plans to hit all year (and he’s done it after Tommy John before), he’d project for only 3 WAR in total — all as a batter — in 2024, the first year of his new deal. That’s 5 fewer WAR than Ohtani would have been expected for without the injury — a difference that basically means the Dodgers are missing out on an entire extra All-Star’s worth of performance in 2024 if Ohtani hadn’t been hurt.

Crucially, and this goes a long way toward explaining why the Dodgers went all-in with Ohtani, both hitters and pitchers who come back from Tommy John surgery tend to meet their WAR projections for all seasons after the initial one following the surgery. So the biggest difference in our no-injury and injured projections for Ohtani’s career WAR comes in 2024, when we know for certain that he won’t pitch and when historic trends suggest he won’t be the same hitter.

And that leads to maybe the most important takeaway from this whole exercise: The Dodgers paid Ohtani like he hadn’t been injured (and then some). In the process, they also ignored the math around how teams usually value future production.

If 1 WAR was worth roughly $9 to 10 million last season (estimates of this value do vary quite a bit), and we assume a 6% year-over-year growth rate in that figure, Ohtani’s pre-injury projection would be worth a grand total of about $440 million over the 10-year span of his new deal. His post-injury projection, on the other hand, would be worth only a shade over $350 million. If the free-agency process were just purely about expected WAR, Ohtani’s record-breaking $700 million contract was far more (roughly doubled) than what we would have expected. 

Sure, the large amount of deferred cash involved (reportedly more than half of the entire contract) makes the true/present value of the deal something less than that eye-popping number. But still, this contract is about a lot more than just Ohtani the player. It’s a testament to Ohtani’s power as an ambassador — both for brands and for an entire country of fans (it’s been said that the Dodgers just bought Japan as a fanbase) — as well as the bidding frenzy that drove up the value of Ohtani’s services. 

Let’s not forget what’s called the “winner’s curse”: The idea that the winning bid in any auction-style process will belong to the person who (over)values an item the most. In addition to star power and marketability, which added a premium to Ohtani’s asking price, it’s also likely the Dodgers were the team that discounted the risk from his injury to the greatest degree, ignoring the effect it might have on his future production. (As Scott Miller wrote for The Messenger over the weekend, the Dodgers knew they were probably the only team that ever made sense for Ohtani all along.)

That’s not necessarily an indictment of L.A.’s process, since Ohtani’s upside is huge if he returns to full health as a two-way superstar, and the Dodgers have so much high-end supporting talent that they can afford to be patient with Ohtani’s recovery. But the money they eventually landed on tells us how much (or how little) Ohtani’s injury and expected future value played into their assessment of his worth, relative to all of the off-field factors such as sponsorship activations and brand-building.

(Sorry, agents of players not named Shohei Ohtani: This probably won’t be true for anybody else, as the dollars-per-WAR framework generally does a good job of predicting how free agents get paid.)

Ohtani’s injury in 2023 brought a premature end to the greatest two-way season we’ve ever seen, which was still good enough for him to be named the American League MVP for the second time in his career. It also ensured that Los Angeles will only be getting its biggest star as a hitter, at least for the next season. (That’s not a terrible bargain by any means; the batting version of Ohtani led the American League with 44 homers and a 1.066 OPS last season.) One thing the injury and subsequent surgery didn’t do, however, was dampen the enthusiasm around Ohtani’s free agency — nor did it reduce the price he was able to command in that process.

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Filed under: Baseball