Quote:
Originally Posted by The Cobra
No, because the value of his contract is actually equal to the cap.
If the deferred money was paid a year later, say year 10, the cap would be reduced even more, since the time value of the contract would be less.
having the money paid the first day of the 9th year isn't some sham. The deferred money being paid as soon as the contract is over simply means the time value of the money isn't lessened so much.
The cap is reduced simply because the value of his contract is not as great as the actual money he receives. Carolina will not need to pay the full $63.2M, they actually pay about $60M, since they will need to put the deferred payments into escrow and let it earn money.
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You keep missing the point (and actually arguing against yourself)
The issue here is not the time value of the contract. It is the fact that, because the contract is deferred beyond the 8 year max, it is allowed to NPV the future payments. NO CONTRACT OF 8 YEARS OR LESS CAN DO THIS.
As a result, the cap hit is less. Adding the one day beyond 8 years allows for the cap hit to be reduced.