tag:blogger.com,1999:blog-5064547517730087223.post5960775190479500747..comments2024-02-17T04:00:25.925-06:00Comments on The Platoon Advantage: Contracts, Back-Loading, and the Time Value of MoneyThe Common Manhttp://www.blogger.com/profile/09994070642805307798noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5064547517730087223.post-54294410759932781232011-12-22T06:05:44.517-06:002011-12-22T06:05:44.517-06:00Is it possible, especially under the old CBA, that...Is it possible, especially under the old CBA, that agents got the highest salary in the final year of the deal as protection against the impact of the old CBA's arbitration rules for players entering free agency. A player who made $8M, $10M and $12M in a $30M / 3 deal was less likely to be offered arbitration than a player who gets a $6M signing bonus and $8M per year. We'll see if the new CBA changes this practice as one would think that agents (or their financial advisors) know the time value of money.hknoreply@blogger.comtag:blogger.com,1999:blog-5064547517730087223.post-12479832697475889302011-12-14T13:59:41.473-06:002011-12-14T13:59:41.473-06:00Highly enjoyable post even if I feel like Costello...Highly enjoyable post even if I feel like Costello looking at Abbott and saying, "I don't even know what you're talking about."William J. Taskerhttps://www.blogger.com/profile/02313204947130235560noreply@blogger.comtag:blogger.com,1999:blog-5064547517730087223.post-60504657750213185672011-12-14T12:34:13.934-06:002011-12-14T12:34:13.934-06:00for the purposes of considering payrolls for luxur...for the purposes of considering payrolls for luxury tax purposes, they use the player's AAV. So whether Pujols makes $25.4M each year or $30M in the out years is irrelevant when figuring out payroll for luxury taxes. I am betting most teams budget this way as well...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5064547517730087223.post-20061789104937201682011-12-14T10:27:47.636-06:002011-12-14T10:27:47.636-06:00I also wonder whether some of these back-loaded co...I also wonder whether some of these back-loaded contracts are driven by the agents. <br /><br />The agent can say to his Player X that "Look, I got you a 5 year $100M contract" when of course the reality is that the contract in real dollars is worth substantially less. It can make for good client-relations as between agent and player.<br /><br />It also works to artificially increase the market for everybody else, as the agents and media will all compare the relative worth of today's free agents against the 5 year $100M contract that player X received without consideration for the fact that the actual present value of the contract is something much less than $100M.rdillon99https://twitter.com/#!/rdillon99noreply@blogger.comtag:blogger.com,1999:blog-5064547517730087223.post-15143181545061563382011-12-14T09:40:43.336-06:002011-12-14T09:40:43.336-06:00My uneducated intuition tells me that the value of...My uneducated intuition tells me that the value of back-loaded contracts may be diluted by an overpay in actual dollars over the course of the entire agreement. To calculate a team's net surplus value of the back-loaded contract, you would have to consider whether any potential savings in terms of real dollars could have been incurred if the deal was not back-loaded. The approach is limited if it examines the contract assuming that its total value is fixed, regardless of the schedule of payments. The more important inquiry is whether the Angels in signing Pujols overpaid in terms of real dollars in order to back-end the deal, or if they could have committed fewer actual dollars by flat-lining or front-ending the schedule of payments.Fraserhttps://www.blogger.com/profile/10982867670126326875noreply@blogger.com