Quote:
Originally Posted by GeoPoto
Scherzer's deal with Washington was $210M/7yrs. The whole $210M counted against their luxury tax computations over the 7 years. But, it was paid $15M/yr for 14 years. Lerner figured the deferred money could stay in real estate partnerships and pay for itself. Scherzer figured he could skinny by on $15/yr. Strasburg also has deferred money. Harper turned down a 10-yr partially deferred deal that would have paid him an expected value (at a 3% discount rate) equal to the 13-yr deal he took from Philly. 10% inflation makes Harper look smart.
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From a player's standpoint, you're probably weighing the potential tax savings by deferring your salary against the cost of inflation, as to which ends up being the overall better option. And you also have to recognize and factor in the potential earnings you may forego by taking the deferred salary and not having invested at least some of that money you would have otherwise received a lot earlier. And you also need to factor in other sources of income in later years during your receipt of the deferred payments, the potential tax implications of such, and so on. It is not exactly an easy and forthright calculation to make as to which is always going to be the best option, and will vary from player to player depending on their specific situation, facts, and circumstances.