Quote:
Originally Posted by GGG
No it doesn’t change the way the cap hit is calculated, all contracts calculate the cap hit based on the NPV of the salary in the year the Salary is earned. All contracts need to be compliant with front loading and back loading rules for th year the salary is earned.
The deferred contracts only change when money is paid out to the player, it does not change when the salary is earned.
Thats the best I can do without talking discount rate.
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No they don't. All payments are summed and averaged, regardless of timing. No NPV calculation, no discounting of cash flows.
Three contracts:
1) Year 1: $5M, Year 2: $6M, Year 3: $7M --> cap: 3 X $6M
2) Year 1: $6M, Year 2: $6M, Year 3: $6M --> cap: 3 X $6M
3) Year 1: $7M, Year 2: $6M, Year 3: $5M --> cap: 3 X $6M
With the additional day, this contract discounts some of its cash flows, i.e. no longer a simple average of the nominal payments.