Quote:
Originally Posted by topfiverecords
And again, there is zero way of us knowing what the contract would have looked like without the deferred amount. You can’t assume it would be the NPV of this deal divided by 8, so therefore you can’t judge whether he did or did not in fact do better or did or did not in fact do worse.
The calculation of this exact contract amount both ways is determining a cap reduction relative to itself, not relative to what the other contract would have been. The other deal would have panned out differently. But we’ll never know. We weren’t involved in negotiations. So did he really actually get slightly more money in the end than just going straight 8…
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Ah so you now agree with me all that matters is the discount rate.
It’s only the discount rate that matters in terms of gaining any kind of cap advantage. If the discount rate is 7.5% and the player accepts a contract with 6.5% then the team saves the 1% cap hit.
The player has to take less than the NPV of the deferred rate using LIBOR + 1.25% to generate tax savings. But that isn’t special it’s just the player taking slightly less NPV. There is no magic cap space created outside of the player taking a lower discount rate as part of his chosen investment portfolio.