Quote:
Originally Posted by Enoch Root
In baseball, they may allow payments in the future ("we'll make you VP of public relations" or whatever), I don't know.
But deferring a contract like this does not allow or require segregating. The team would have to make the payments in year 1, 2 and 3. The money would be held in a trust account, earning whatever interest it is earning, so that it matures at $900k each year for the 10 years.
The team would have no access to those funds.
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Agreed on all - but the interest rate the trust is earning is negotiable - not what the team and player agree is the discount rate they are applying /negotiating within to the contract
At the end of the day all Vatrano cares about is in the future he gets X$ on X date. He doesn’t care exactly how much is put into trust - just that amount Plus interest eventually equals the proper amount
This is where the Dodgers and their 1$ billion in deferred salaries can (and have ) negotiated a better interest rate then the used calculated rate for real
Value - or to put it another way - they have to put less in the trust because it earns more then they would have paid to the player up
Front because when they negotiate with the player they use a lower interest rate to calculate present / future values
This isn’t even including the teams ability to offer less to the player in deferred situations as the tax implications mean the player still takes home less
Basically the team can use this to negotiate a total lower contract because player and team end up ahead (and the state of California gets screwed )