Quote:
Originally Posted by Enoch Root
The issue is with the cap. On an 8 year deal, there is no discounting on the amount. Here, they have added one day to the contract length, in order to discount $15.67M. This reduces the cap hit.
The moment you allow this, the cap is effectively dead.
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It reduced the cap hit because payments are deferred. In a normal 8 year deal, payments are made over the length of the contract, often front loaded, which actually increases the time value of the contract. It is still less that the total amount of the contract, but the more front loading there is, the more benefit to the player and the higher the actual true value of the contract. These are the true contracts in which rich teams can exploit poorer teams, by having more money paid sooner.
One might suggest that all contract should have the cap placed at the trus value of a contract based on present day value. So, a $75M contract over 5 years payable $15M per season might have a present day value of $70M (making thus up for the exact amount), so the cap hit would be $14M. If more money was paid up front, it would increase the present day value to say $72.%, so the cap hit would be $14.5M. The more deferred the payments were, the lesser the present day value and the lower the cap hit.