Quote:
Originally Posted by GGG
Three year contracts
Year 1 5M (1 paid 4 deferred), year 2 6M (5 paid 1 deferred), year 3 7m (7 paid.
Cap hit 3 x 6.
What the player earns each year is still what the cap hit is based on.
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There is no deferral there, just an average of all the nominal payments. Why are you trying to create something that doesn't exist?
Scenario 1: $1M salary and $10M bonus
Scenario 2: $11M salary and $0 bonus
Different timing of cash flows, same $11M cap hit. No deferral, no NPV of cash flows. Simple average of nominal payments.
The only contract that discounts any cash flows is the one that goes beyond 8 years.