Contracts for the Big-3
- Thread starter Coco-puffs
- Start date
- Status
cabber24 said:
Now he's exploiting the story to get people to listen to his podcast. I gotta admit, Dean is good at what he does (being shitty).
herman said:
Wait, Daren Millard does a regular podcast with this loser? That just makes me so much happier he left Sportsnet.
ZBBM
Active member
herman said:
And it's why I guess I don't really understand how a player like Nylander wouldn't prioritize a 7- or 8-year deal for (say) $6.5. 7 x 6.5 = $45.5M. Let's say you net half of that after taxes, agent's cut, etc. Call it $23M. Unless you let Jack Johnson's parents invest it for you, you are going to get over $1M a year at 5% ROI. So after your 7 years you will have netted around $30M. All of which cannot be affected by future GMs, the next CBA, etc. It's locked in with respect to those variables. The only financial/market uncertainties you are exposing yourself to are the ones we all are exposed to.
If you somehow got your 8.5x7 that's $14M gross more, $7M after taxes/fees. That net amount is (very) roughly equal to the ROI I napkinned above over the life of the contract. So by holding out for $8.5, you basically double your ROI.
Which is great. If you can get it.
The key point is, under any long-term contract scenario at the numbers being bandied about, Nylander and his family are set for life. That kind of money is more than anyone needs to live a very comfortable life if they manage it conservatively. And once you have that kind of money, you are essentially assured that your wealth will get bigger (assuming the global economy doesn't collapse).
Bridge deals don't let you lock that in.
Highlander
Active member
Hey ZBBM, unfortunately the global economy did collapse yesterday, all us poor F----s won't find out about it till Monday when we arrive at work and find the doors chained shut!Zanzibar Buck-Buck McFate said:
Kin
New member
Zanzibar Buck-Buck McFate said:
Just for what it's worth, I don't think that's strictly true. Signed deals absolutely can be affected by a new CBA, whether it's through salary rollbacks or increased escrow payments.
Zanzibar Buck-Buck McFate said:
I think an important factor, as has been raised a few times here, is that Nylander's family is already set for life. His father made a lot of money in his career. Whatever future family he may have isn't set in the same way but it's asking a lot to think a 22 year old single guy is going to be making decisions based on what might ultimately be best for whatever children he may or may not have in the future.
But even beyond that I think you're only presenting one side of the coin here. Let's say there are three outcomes here(although there are way more):
Outcome 1: 7 years/6.5m AAV/45.5 million total
Outcome 2: 7 years/8m AAV/56 million total
Outcome 3: 3 years/5 million AAV/15 million total
Now, let's ignore the semantics of whether or not taking in the net 9.2 million or so Nylander would take home by your rough math in outcome 3 would effectively already set up his future family for life making the general premise moot. Realistically, how bad would things have to go for Nylander over those three years for him not to be able to sign a four year follow up deal that would pay him roughly what he'd make from Outcome 1 anyway? To equal that 45.5 million Nylander would have to be worth roughly 7.5 million in three years. A pretty moderate growth in his value. Even no growth at all would see him make 35 million over those 7 years. The idea of that 45.5 million being some sort of elusive target that he needs to lock down lest he risk some sense of financial security doesn't really hold up.
So that's what you're not taking into account. Nylander's family is almost certainly set no matter what and he's in a "Heads you win, Tails you win a little less" scenario no matter what he does.
Kin
New member
Zanzibar Buck-Buck McFate said:
Also, I don't think this math really works. Using your 23 million estimate of his take home he's not going to make more than a million per year at 5% ROI because he's not getting paid the entirety of his contract as a lump sum. The first year 5% ROI would be 164,000 before taxes.
ZBBM
Active member
Nik the Trik said:
Like I said, napkinned. If it's a front-loaded deal the math is pretty close. But more to the point, and as you say we can argue forever about what "set for life" means to any particular person, a bridge deal simply leaves a ton of money on table any way you figure it, and into that window of uncertainty comes, most threateningly, the prospect of a serious injury.
Your point about CBA rollbacks is well taken (though the mention of restrictions on signing bonuses has to be thrown into the balance there), but the capriciousness of GMs is still out there.
Kin
New member
Zanzibar Buck-Buck McFate said:
I think the actual chances of the sort of injury you're talking about are remote enough that it's hard to imagine it playing a huge role in Nylander's decision making. Besides, as I've said on this subject, it can be insured against.
Leaving aside that the sort of bonus/upfront salary structure you're talking about is also something that needs to be negotiated rather than just taken as a given, I think we're just back to the reality that it's a calculated gamble on Nylander's part. The idea that it's "leaving money on the table" isn't really meaningfully true. By not taking a long term deal at that AAV Nylander is betting he'll raise his value enough over the next three years that he ultimately earns more over the seven year window.
You might think that's a bad gamble but like I said, if the person making it is already rich and the downside is they get richer still then it's the sort of thing that may entice and has proven pretty successful in the past for guys like Subban and Johansen. It's certainly not hard to imagine why a very successful 22 year old might favour self-confidence over the possibility unexpected catastrophe in his decision making.
- Status