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Originally Posted by Strange Brew
I assume he’s not really taking on any credit risk and that they built in language so Dodgers will be required to fund this liability similar to a pension fund. Otherwise this is quite likely the dumbest thing I’ve ever heard.
I guess the tax angle is that he avoids CA state tax (or any state income tax) if he is retired and living elsewhere. He’d still be subject to federal taxes.
In a league without a salary cap where AAV doesn’t matter, I wish they’d report these deals in today’s dollars.
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Apparently it is required by the cba.
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The CBA requires only that the “present value” be funded within that two-year period. According to a person with knowledge of how the league calculates such contracts, the present value of that $68 million payment in 2034 is worth about $46 million in today’s money (since money in the present, because of inflation, is worth more than money in the future). Also, funding mechanisms can include cash or “readily marketable securities.”
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https://www.latimes.com/sports/dodge...-next-10-years
It really is exactly the same thing to the team as a 46m/year contract just when he takes his money out is all weird for whatever income tax avoiding or bragging rights reason. It's not even different from a cash flow perspective.