Deferred money has quietly become one of the most powerful tools in Major League Baseball’s contract negotiations.
Teams are increasingly promising players millions of dollars long after their careers end, trading future obligations for immediate flexibility on the field. This strategy is now at the center of a growing debate about whether it helps or hurts the competitive integrity of the sport.
The Los Angeles Dodgers, who now owe more than one billion dollars in deferred payments stretching into the 2040s, have turned this negotiation mechanism into a central part of their roster-building model. Their success raises a basic question: If one club can push deferred money further than anyone else, does baseball still feel fair to everyone else?
In this sense, deferred money should remain legal but face reasonable limits, as a compelling middle ground.
Why Teams and Players Embrace Deferred Money
Deferred compensation creates breathing room for the present.
Instead of paying the full salary in the year it is earned, a team spreads those dollars out into future seasons, lowering its current cash outlay and its competitive balance tax (CBT) calculation in many cases. Its CBT is calculated by the average annual value of all player contracts on the team.
For front offices in a win-now window, this can be the difference between adding one more star or keeping the same roster. By smoothing out payroll, clubs can keep multiple high-salary players on the roster at the same time without blasting through tax thresholds every single year.
For players, deferred money can be attractive for different reasons. Long-term streams of income provide financial stability deep into retirement, and some players can negotiate higher total contract values if they agree to push part of the money into the future.
The practice also allows agents and teams to get creative—mixing signing bonuses, present salary, and staggered payments to solve both sides’ short and long-term financial goals. In theory, even smaller-market teams can use these limited deferrals to compete with wealthier clubs by matching total dollars over time instead of matching every dollar up front.
The Dodgers’ recent contracts show how powerful this tool can be. The Dodgers deal with Shohei Ohtani, for example, defers hundreds of millions of dollars into future decades, dramatically lowering what Los Angeles actually pays him in the 2025 season while still giving him a record-setting guarantee over the life of the contract.
According to public contract databases, several other core Dodgers players—Mookie Betts, Freddie Freeman, and others—also have significant money pushed into the 2030s and 2040s, contributing to an overall deferred obligation that exceeds one billion dollars to just nine players. The result is a 2025 roster stacked with stars at a present-year cost that looks far smaller than the true bill that will come later.
When a Tool Becomes a Loophole
The same mechanism that gives teams flexibility can also distort the competitive balance baseball claims to protect. When clubs shift large portions of salary into future years, they reduce the apparent size of their current payroll while committing their future selves to massive bills. Critics argue this mechanism is essentially an accounting trick that lets rich teams “game” the system and stay under CBT thresholds, even while assembling rosters other franchises cannot realistically match.
The Dodgers sit at the center of that criticism. By the end of 2025, reports showed Los Angeles owing roughly $1.06 billion in deferred payments to nine players, with peak years in 2038 and 2039, where more than $100 million in deferred obligations will be due annually. For some small and mid-market clubs, numbers like that are more than their entire current payroll. That gap feeds the perception that only a handful of franchises have the financial depth to copy the Dodgers’ approach without risking their own stability.
These contracts also create long-term risk for future owners and front offices. Decisions made in one competitive cycle can lock a franchise into payments 15 or 20 years later, limiting what future teams can spend on rosters, facilities, or player development. If revenues fall or a team’s on-field performance collapses, those fixed obligations do not disappear.
Scholars have warned that aggressive use of deferred money can threaten long-term financial health if it is not matched by reliable future income streams.
Meanwhile, fans are often left in the dark. Because so much of the money is hidden in future calendars, it becomes harder for the average fan to understand what their team is truly spending and whether ownership is investing in winning or simply moving costs around.
The Dodgers’ 2025 Blueprint
The 2025 Dodgers offer a clear, concrete example of how deferred money operates as a competitive weapon. Public reporting and contract data show that Los Angeles is able to field a roster featuring stars like Ohtani, Betts, Freeman, and a high-priced pitching staff while paying significantly less in the current year than the total value of those players’ services would suggest. One legal analysis estimated that the Dodgers were receiving roughly $241 million in on-field value in a season where they only needed to pay around $115 million in immediate salary for their top players because so much money was delayed.
The Diaz contract pushed that strategy even further. When Los Angeles signed closer player Edwin Díaz to a three-year, $69 million deal, they again chose to defer a portion of each season’s salary into a long series of future July 1 payments stretching all the way to 2047. That single move helped push the organization’s total deferred commitments past $1 billion , including the already‑massive obligations to players such as Ohtani, Betts, Blake Snell, Freeman, Will Smith, Tommy Edman, Tanner Scott, and Teoscar Hernández.
The short-term effect is obvious: the 2025 Dodgers can afford more elite players at once because they are paying part of their contracts with tomorrow’s dollars. The long-term effect is less certain: someone in Los Angeles will still be cutting checks for the 2025 roster long after many of those players have retired.
This makes the Dodgers more than just a case study; they are a test of the system itself. If they continue to win while carrying record levels of deferred money, pressure will build on other clubs and on the league to either copy the strategy or change the rules that allow it. If the experiment backfires—if the financial weight of those future payments eventually slows the team down—it will become a cautionary tale about the hidden cost of chasing championships with creative contracts.
Toward Guardrails, Not a Ban
Instead of banning these deferrals altogether, Major League Baseball could cap the percentage of any contract that can be deferred and limit how many years into the future those payments can be pushed. That would preserve flexibility for teams and players while preventing the most extreme cases from undermining the spirit of competitive balance.
Another proposed reform is to require teams to place deferred amounts into escrow accounts once contracts are signed. That step would guarantee that players receive the money they were promised, no matter what happens to the franchise decades later, and force owners to prove they truly have the resources to support long-term deals.
Finally, the league could address the transparency issue directly by mandating clearer public reporting of total commitments, including future deferrals, so fans, media, and even players’ unions can see the real financial picture rather than just the current-year payroll.
Deferred money remains a powerful and justifiable tool in baseball contract negotiations. It can help teams keep core stars together, give players long-term security, and even offer smaller clubs a way to stay in some bidding wars.
But the Dodgers’ aggressive use of the practice in the 2025 season shows how easily it can also become a loophole that deepens the divide between the richest franchises and everyone else.
The challenge for MLB’s next round of labor talks is not to eliminate deferred money, but to design guardrails that let teams use tomorrow’s dollars without losing sight of what fans still want today: a game that feels fair.
Jeremy Son is a writer for The Setonian’s Opinion section. He can be reached at jeremy.son@student.shu.edu
