Los Angeles Dodgers pitcher Shohei Ohtani (17) throws a pitch during the MLB game between the Philadelphia Phillies and the Los Angeles Dodgers on September 16, 2025 at Dodger Stadium in Los Angeles, CA.

Brian Rothmuller | Icon Sportswire | Getty Images

Major League Baseball officially announced a new three-year media rights agreement with NBC, Netflix and ESPN on Wednesday, foreshadowing the league’s more significant TV deal to come in 2028.

The new deal stems from ESPN’s decision to opt out of its “Sunday Night Baseball” package earlier this year. ESPN struck a new deal with MLB, acquiring the rights to MLB.TV and a midweek game package. NBC Sports will take over the Sunday Night games, and Netflix will be the new home for the next three Home Run Derbies. All the deals begin with the 2026 season.

CNBC previously reported most of the details of the agreement in August.

“Our new media rights agreements with ESPN, NBCUniversal and Netflix provide us with a great opportunity to expand our reach to fans through three powerful destinations for live sports, entertainment, and marquee events,” said MLB Commissioner Rob Manfred in a statement.

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The new deal foreshadows MLB’s quest to raise TV revenue at the end of the 2028 season, when it will get these rights back plus existing broadcast rights from Fox and Warner Bros. Discovery.

While it’s not an exact apples-to-apples comparison, MLB had to take a haircut of about $300 million per year relative to what ESPN had been paying before opting out earlier this year. NBC is paying about $200 million a year for its new package, and Netflix is paying about $50 million annually for the Derby, CNBC reported in August. The two packages, together, roughly make up what ESPN had been paying for.

Even so, MLB has a chance to expand its reach through the new and streaming-exclusive partners.

The average ESPN Sunday Night Baseball game averaged 1.8 million viewers this past season.

The loss in revenue for the Sunday Night package suggests MLB may have to get creative with the way it carves up new packages of games in 2028 to ensure it continues to grow media revenue. In aggregate, the league is now making more in overall media revenue, but it needed to sell ESPN rights and games it hadn’t previously offered. ESPN is paying about $550 million for its new package, CNBC reported in August.

The NBA nearly tripled its national media revenue in its most recent rights deal, and the NFL is so confident it can generate a huge increase on the deal it signed in 2021 that it’s open to accelerating talks with its current media partners as early as next year, NFL Commissioner Roger Goodell told CNBC in September.

New deal details

ESPN’s new deal allows it sell and distribute MLB.TV, the league’s out of market streaming service, through the ESPN app. ESPN will also receive a new 30-game midweek package of live games on ESPN’s linear networks and the ESPN app.

ESPN also will sell and distribute MLB Network and in-market games for select MLB teams via the ESPN app. Those teams are the Cleveland Guardians, San Diego Padres, Minnesota Twins, Arizona Diamondbacks and Colorado Rockies — franchises whose games have been produced and distributed by MLB after the collapse of regional sports networks that carried those teams.

NBC will now have MLB, NBA and NFL on Sunday for its broadcast network, its new cable sports channel, and its Peacock streaming service. NBC will also carry MLB’s entire Wild Card round, ranging from eight to 12 games each season. 

In addition to three years of the Home Run Derby, Netflix will own the rights to a singular game on Opening Night for the next three seasons. Netflix will also exclusively deliver all 47 games of the 2026 World Baseball Classic to its audience in Japan. 

Disclosure: NBCUniversal is the parent company of CNBC.

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Members of the Los Angeles Dodgers celebrate on the field after winning Game 5 to win the 2024 World Series presented by Capital One between the Los Angeles Dodgers and the New York Yankees at Yankee Stadium on Oct. 30, 2024.

Mike Lawrence | Major League Baseball | Getty Images

As Major League Baseball’s spring training kicks into gear, the Los Angeles Dodgers are wrapping up a nearly perfect offseason.

After the Dodgers captured the World Series in October, the team notched more wins in the winter. The club retained key players, brought in coveted free agents and deferred over $130 million in new contracts — sending many baseball fans into an uproar that has reignited backlash to the sport’s financial model.

Criticism of the Dodgers deferring money, or delaying paying players much of their salary until after their contract with the team ends, first began in 2023. The team signed Shohei Ohtani to a then-record 10-year, $700 million deal, but deferred $680 million of that total. The team’s offseason this year amplified that criticism into outright fury, provoking allegations that the Dodgers manipulated MLB’s salary system to build a superteam.

While contract deferrals have become more common across MLB, the Dodgers have relied on them more than any other team. Of roughly $1.5 billion in known deferred money on active MLB contracts, the Dodgers account for about $1.04 billion — or two-thirds, according to data from sports contract website Spotrac compiled by CNBC.

Contract deferrals can provide advantages to both franchises and players, sports business experts told CNBC. But the practice is just one piece of larger criticism of the fairness and sustainability of MLB’s financial structure. Critics aren’t just angry at the Dodgers’ ability to defer money; they’re frustrated by what they see as a league with no salary cap creating unfavorable conditions for teams unable or unwilling to spend as much as the Dodgers do year after year.

“The Dodgers are definitely way, way, way out in their own space when it comes to these deferral deals,” said N. Jeremi Duru, law professor and director of the Sport & Society Initiative at American University.

The benefits of deferrals

Teams kick salary down the road for a simple reason: They save money now, controlling the cost of a star-studded roster. They may decide present success is worth future liabilities.

Unlike many other professional sports leagues, MLB doesn’t have a salary cap limiting how much teams can pay players. It does, however, enforce a “competitive balance tax,” which levies a fee on teams that exceed a certain payroll threshold. The tax payment depends on the amount by which the payroll exceeds the threshold.

For luxury tax purposes, a team’s payroll is calculated by summing the average annual values of each contract, according to MLB’s current collective bargaining agreement. For contracts with deferred salary, that number typically turns out smaller than if the pay weren’t deferred, so teams can use the practice to lower their tax bills.

The Dodgers, for instance, would have paid Ohtani $70 million a year on a standard version of his contract. But with deferrals, his yearly salary for luxury tax purposes is only $46 million, according to FanGraphs.

Most teams would not feel comfortable punting over $1 billion in salaries to the future, but the Dodgers are one of MLB’s most popular and financially successful franchises. They’ve led the league in home attendance every season since 2013, according to ESPN, and are the second-most valuable team in the league behind the New York Yankees, according to Forbes.

The Dodgers’ market size and global reach grant them the “firepower” to ink expensive but deferred contracts, said David Carter, sports business professor at the University of Southern California and founder of consulting firm Sports Business Group.

“How far down the road can you see revenue coming in from media deals, particularly your local or regional deal? What about sponsorship and sponsorship upside, and what about ticketing? And the Dodgers have been off the charts in those areas for a very long time,” Carter told CNBC.

The Dodgers declined to comment on their use of deferrals.

The benefits of deferrals for players are less obvious. Just as teams save money on tax bills for considerations of how money depreciates over time, players lose out by delaying their payments, Robert Raiola, director of the sports and entertainment group at accounting firm PKF O’Connor Davies, told CNBC.

But players can sacrifice money now to help a club build a World Series contender. Dodgers All-Stars Freddie Freeman and Mookie Betts accepted a combined $172 million in deferrals in the years before Ohtani’s deal.

Freddie Freeman #5 of the Los Angeles Dodgers celebrates as he walks to first base after hitting a grand slam home run in the 10th inning during Game 1 of the 2024 World Series presented by Capital One between the New York Yankees and the Los Angeles Dodgers at Dodger Stadium on Friday, October 25, 2024 in Los Angeles, California.

Rob Tringali | Major League Baseball | Getty Images

And they can recoup some of those losses by deploying strategies, like negotiating for a signing bonus in a contract, to minimize their personal tax bill.

Signing bonuses are taxed by a player’s state of residency, not the states where they play games, so players who live in a state with a smaller or no income tax can receive a larger chunk of the bonus, Raiola said.

Some players with contract deferrals can also save on or avoid state taxes on their deferred payouts if they move to a different state or country. Federal tax law prohibits states from taxing the retirement income of nonresidents, and deferral plans that include relatively equal payments over at least 10 years, like Ohtani’s contract does, stand to qualify as retirement income.

The state of the game

The Dodgers’ extensive usage of deferrals has drawn ire from some baseball fans. As more and more reports of Dodger free agent signings receiving deferred money surfaced on social media this offseason, commentators accused the team of skirting the competitive balance tax and sarcastically compared the Dodgers to buy now, pay later services like Klarna.

Sports business experts stress that the Dodgers are following the rules and are far from the first organization to defer payments. Many current and retired MLB players are still receiving deferred payments from deals struck years ago with former teams — the most notable of which is Bobby Bonilla’s agreement with the New York Mets.

The Dodgers’ ability to shell out on salaries both now and later has sparked fresh complaints about the league’s competitive balance. Even by reducing their tax payments with deferrals, the Dodgers will still pay a league-leading $142 million in luxury taxes in 2025, according to Spotrac. The current deferral debate is a microcosm of a broader gripe that the wealthiest and most successful MLB franchises can use their financial muscle to eliminate parity within the sport.

“Without question, I think there’s a lot of concern from a lot of corners that this is bad for the competitiveness of baseball,” Duru said.

NEW YORK, NEW YORK – OCTOBER 30: Stan Kasten, President and CEO of the Los Angeles Dodgers, celebrates with the Commissioner’s Trophy after defeating the New York Yankees 7-6 in Game Five to win the 2024 World Series at Yankee Stadium on October 30, 2024 in the Bronx borough of New York City. (Photo by Elsa/Getty Images)

Elsa | Getty Images Sport | Getty Images

Complaints about the best teams dominating the league are nothing new, and MLB does have a revenue-sharing system that redistributes income to the lowest-earning franchises. But some current trends in baseball are amplifying these fears. MLB teams earn much of their revenue from their media rights deals with regional sports networks, many of which have faced financial crises in the past few years.

The Dodgers, meanwhile, enjoy one of the more stable broadcasting arrangements in the league. The team’s current contract, inked in 2013 with Time Warner Cable (now owned by Charter Communications), is reportedly worth between $7 billion and $8 billion over 25 years, according to the Los Angeles Times.

The Dodgers are also at the forefront of MLB’s global expansion efforts, especially in Asia. Already one of the most recognizable MLB teams worldwide, the Dodgers feature three top Japanese players (Ohtani, Yamamoto and Roki Sasaki). All Dodgers games are broadcast in Japan, and this year the team will open its season in Tokyo.

Steven Bank, a business law professor at the University of California, Los Angeles, said the Dodgers are beginning to resemble soccer “superclubs”: historically successful teams like Manchester United that have global fanbases. MLB has to maintain a delicate balance between its biggest names racking up championships and other teams having a chance to win, he said.

“There is an argument from a business perspective that superclubs draw more eyeballs and that that benefits everybody,” Bank said.

Case in point: TV ratings for the Yankees-Dodgers World Series in 2024 jumped 67% from 2023’s championship series between the Texas Rangers and the Arizona Diamondbacks and set several postseason viewing records in Japan.

MLB wants to maintain the competitiveness of the sport, Carter said, but above all the league’s job is to increase the value of its franchises — even if some teams benefit more than others.

“Ultimately, it’s best for the league if these big-market franchises do really well,” Carter told CNBC.

What’s next for MLB

Deferrals will likely remain a contentious topic in MLB for years to come, especially before the league’s collective bargaining agreement expires at the end of 2026.

The league previously tried to eliminate deferrals during negotiations for its last CBA, which took effect in 2022. Commissioner Rob Manfred said in December that deferrals can “at some point become problematic.”

He pointed to a repayment crisis two decades ago, when former Diamondbacks owner Jerry Colangelo negotiated about $250 million in deferred salaries to build a roster that ultimately won the World Series in 2001. The team then faced financial turmoil, raising ticket prices and trading star players to help pay off its debts. The episode spurred MLB to change its rules: Team ownership must now have the funds for deferred salary fully available within a year and a half of a contract being signed, according to the MLB collective bargaining agreement.

“We’ve strengthened our rules in terms of the funding of deferred compensation in order to avoid that kind of problem. But, you know, look, obviously the bigger the numbers get, the bigger the concern,” he said.

MLB referred a CNBC interview request to Manfred’s comments.

Any MLB effort to stop deferrals will likely face opposition from the players union, Duru said, and a prolonged disagreement over the issue could lead to a work stoppage for the league.

For now, deferrals aren’t going anywhere in MLB. Raiola said he expects to see more teams located in higher-tax states to “catch on” and negotiate deferred contracts.

The Dodgers haven’t been the only franchise pushing salary to the future this offseason. Alex Bregman deferred $60 million of his $120 million contract with the Boston Red Sox, while Anthony Santander will receive $61.75 million of his $92.5 million deal with the Toronto Blue Jays as deferred compensation.

It’s not just baseball fans who are upset with the practice. Some California politicians, displeased about the possibility of athletes retiring elsewhere and depriving the state of income taxes, are taking matters into their own hands.

In March 2024, state Sen. Josh Becker introduced legislation that would call on Congress to impose a cap on deferred compensation. The bill, which calls out Ohtani’s contract and claims he could save over $90 million in taxes if he were to retire outside of California, passed the state Senate but was withdrawn by Becker after it received insufficient support in the state Assembly.

“Ohtani’s dodging taxes like curveballs,” Becker told CNBC. “Everyone else is playing fair.”

Becker said deferred compensation was originally intended to help people retiring from more typical jobs, rather than professional athletes. He hopes to reintroduce the bill next year.

Malia Cohen, California’s state controller and a bill sponsor, said the state’s wealthiest residents have an “outsize impact” on California’s income tax revenue and should pay their fair share. Additional tax revenue would help all Californians, she added.

The Dodgers, especially Ohtani, are at the epicenter of the deferral controversy because of the sheer amount of money involved, USC’s Carter said. But until the rules change, the team is entitled to continue its spending spree.

“Everybody seems to be skiing inbounds now,” Carter said. “And so until that’s no longer the case, then this issue need not really be actively revisited.”

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