Dear Friends,
Here are your outrages of the day:
Harvard’s President is a Hamas-apologist and also an academic fraud. The Board stands fully behind her. Big surprise.
Hunter Biden has (finally) been indicted on tax charges—the same charges the prosecutors tried to make go away with a sweetheart deal earlier this year, only to have a Federal judge blow it up. So Hunter and his dad are deeply corrupt. Who knew?
Let’s talk about something more interesting.
Shohei Ohtani is a Japanese baseball player and he is one of a kind. He’s essentially a unicorn—something that is not supposed to exist. A legitimate argument can be made that he is the best pitcher in Major League Baseball. And a legitimate argument can be made that he is the best hitter in baseball. Those two things never mix. Really, not since Babe Ruth has there been a “two-way” player of this caliber.
Mr. Ohtani’s contract with the Los Angeles Angels expired at the close of last season, so he finally hit the open market looking for the highest bidder. And this week he found that highest bidder: the Los Angeles Dodgers. They offered to pay him:
$700,000,000.00 for ten seasons.
I had to triple check to make sure I put in enough zeroes. Seven hundred million dollars. This a wonderful opportunity to make some very important points.
First, good for Shohei Ohtani! What an accomplishment. He’s earned his success and nothing about the size of his reward should make us uncomfortable. Not in the slightest. Envy is a sin. We should be very happy for him because his gain is not ill-gotten. He has worked hard in a legitimate athletic enterprise and he has surpassed them all with his skills and value.
Second, we should rejoice that baseball and baseball players are thriving. Just think of how incredible is our economy that it can support that kind of payroll for an organization whose business is entertainment. However, we can and should lament that most of these organizations seek and receive taxpayer funding and subsidies for their facilities. If the Dodgers can afford a cool $700 Million to Shohei, they can pay the rest of their bills on their own.
Third, so many people view such a large sum of money and they lament something like this: Imagine how many hungry people we could have fed with that money! I just saw somebody online the other day outraged at the price at which a certain famous Eric Clapton guitar was auctioned. He needs to hear this newsflash, too: when the Dodgers pay Shohei Ohtani $700 Million, that money is not lit on fire or flushed down a toilet. It does not disappear. It now flows through Mr. Ohtani’s bank accounts and is then tasked to the many things he wants to purchase, invest in, donate to, and so forth. I am certain he will endow a great many charities of his choice, but even every luxury car he buys helps to feed the hungry kids of the people who made the car. The money does not disappear; it flows out into the economy and benefits others in millions of different ways. It is a gross and simplistic conceit to believe that someone else—some “collective” run by our betters—can or could manage and deploy Shohei Ohtani’s money better or more fruitfully or more morally than he can.
Fourth, the Dodgers are probably overpaying. I was surprised at the number, if for no other reason than Ohtani blew out his elbow this season and needed surgery. Lots of pitchers recover from “Tommy John” surgery and go on to pitch lengthy careers, so this isn’t a career-ender, by any means. But injury concerns should have dampened his market value a little bit. The Dodgers disagreed, but I suspect they will get less value than they hope in the second half of this contract. Ohtani might be a $30 Million-a-year hitter, and maybe a $40 Million-a-year pitcher, but if the pitching half of that equation disappears you are paying $40 Million a year for literally nothing.
Fifth, you have to admire human beings and ability to figure out complex financial transactions. It is reported that Ohtani is actually only getting $2 Million a year. The other $68 Million is deferred until after the contract expires. This allows the Dodgers the yearly cashflow to keep signing other great players. That’s great “in the moment” accounting, but make no mistake: they are going to be writing Shohei Ohtani very large checks when the guy is in a rocking chair bouncing a great-grandkid on his knee.
Sixth, how much money is that, anyway? Let’s just pretend that the money isn’t deferred for a moment and I’ll put it to you this way:
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