At first glance, it seems like financial magic: The Los Angeles Dodgers have somehow figured out a way to pay the two-way superstar Shohei Ohtani $700 million, while also kind of only paying him $460 million, at least as far as Major League Baseball’s luxury tax rules are concerned.
But what the team is doing actually relies on some pretty familiar financial math. Many readers who will never be in the conversation for best baseball player of all time employ a similar maneuver in their own lives—albeit at far lower dollar levels—if they have a retirement plan. It might even become more common, thanks in part to Jerome Powell and the Federal Reserve’s interest-rate policies.
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