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Christian Watson signs a 4 year 110m extension
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<blockquote data-quote="OldSchool101" data-source="post: 1098867" data-attributes="member: 10086"><p>Yes. That’s the part that is easy to forget. Prorating Signing Bonus’ is only advantageous until the player is no longer on the team, then it accelerates onto today’s Cap ledger for the original contracting team. </p><p>Voids are especially helpful when </p><p>A. You’re internal projection is to heavily in favor of keeping said player through most or all of those void intervals. </p><p>B. The Player stays put. Just as a savings account loses value if it doesn’t pay interest (due to the spending power decreasing through inflation). Also the players contract loses steam towards the Cap as each year they raise the team Cap thresholds. </p><p></p><p>I always like to say a $10Mil yearly player’s contract today loses whatever the % Cap increase the league decides each season, but it’s also compounding. This by spreading it across 5 years is significant. An investment gaining 15% compounding annually is doubling every 5 years. Meaning if the league increased the Cap % (for demonstration purposes) by 15% annual? The contract would really be closer to 50% of today’s feel because it’s not all applied today. Obviously that % is smaller and the voids are smaller (not equal portions of entire guaranteed). A $40mil contract with 50% guaranteed and turned to a signing bonus and spread $each season ($4mil voids) I bet has the effect of around a 66-75% of the original when all is said and done.</p></blockquote><p></p>
[QUOTE="OldSchool101, post: 1098867, member: 10086"] Yes. That’s the part that is easy to forget. Prorating Signing Bonus’ is only advantageous until the player is no longer on the team, then it accelerates onto today’s Cap ledger for the original contracting team. Voids are especially helpful when A. You’re internal projection is to heavily in favor of keeping said player through most or all of those void intervals. B. The Player stays put. Just as a savings account loses value if it doesn’t pay interest (due to the spending power decreasing through inflation). Also the players contract loses steam towards the Cap as each year they raise the team Cap thresholds. I always like to say a $10Mil yearly player’s contract today loses whatever the % Cap increase the league decides each season, but it’s also compounding. This by spreading it across 5 years is significant. An investment gaining 15% compounding annually is doubling every 5 years. Meaning if the league increased the Cap % (for demonstration purposes) by 15% annual? The contract would really be closer to 50% of today’s feel because it’s not all applied today. Obviously that % is smaller and the voids are smaller (not equal portions of entire guaranteed). A $40mil contract with 50% guaranteed and turned to a signing bonus and spread $each season ($4mil voids) I bet has the effect of around a 66-75% of the original when all is said and done. [/QUOTE]
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Christian Watson signs a 4 year 110m extension
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