Offseason Rumors & Transactions Thread

[Guest]

Everyone's assuming inflation and interest. But that's only half the equation. It is equally likely that there will be a deflationary period and backloading will end up costing them a lot more.

???

 

1) count the number of years with inflation and deflation and defend those being equally likely

 

 

Then we're due for deflation. Regression to the mean.

 

Unfortunately the mean is still infationary.

 

I don't think Cameron has it right. Who cares what the stock market return is - that's not the either or situation here and the time value of money isn't based on stock market return. The discounts rates on the various payments need to be different - the Nats aren't sitting on $210 million today - some of that money isn't going to be earned by the Nats until 6 years from now.

I guess it depends on the exact circumstance. I recall the deal that Luol Deng signed with the Bulls had a lot of deferred money, but it was specifically set up as a annuity so Reinsdorf was actually taking some of that present cash and making an investment in order to pay these future obligations- a net present table was actually very relevant as thats what the annuity was based on. If that Nats are actually setting money aside now, as well as at periodic times throughout the deal, they could in theory benefit from the investment of the deferred structure. At the very least you still benefit from inflation, but inflation doesn't quite keep up with the stock market, or probably even an annuity, which is going to be less than that 7% historical stock market return. So it would be a little disingenuous to use the 7% historical stock market return when a fixed payment structure is involved, because you're going to likely take a lower return to ensure fixed payouts can be made. Afterall, you have to be able to make payments in the lean years of the stock market and pulling out during a loss or having to borrow to cover would certainly effect that 7% figure.

 

So all in all, while the dollar today vs dollar tomorrow is a universal truth, the fangraphs article may be a tad aggressive in its assumptions of return. The inflation rate the past 30 or so years and its projection is a much smaller, more stable figure than the 7% annualized stock market basis being used.

[Gmoney08]

This board is going through deflation.

[Hairyducked Idiot]

What is happening to Kyle right now? Trolling?

 

Derwood was getting attention and I got jealous.

lol - and here I was ascribing a more noble purpose.

 

It's like when your older kid scrapes his knee and gets a bandaid, and your younger kid just falls on the ground holding his knee and yelling.

[ConstableRabbit]

Derwood went to Northwestern...

Hey now, it was a non MBA or Law grad degree.

[wvcbxl]

"The only function of economic forecasting is to make astrology look respectable" (Ezra Solomon)

 

The structure of the Scherzer contract seems to make sense using conventional financial logic, but I guess we'll only know for sure towards the end of the payments.

[TruffleShuffle]

Everyone should read Kyle's last two posts as him being a smart ass and not as serious posts.

 

nobody should read kyle's posts

[ctcf]

nobody should read kyle's posts

[Hairyducked Idiot]

nobody should read kyle's posts

 

Keep fighting the good fight, guys. You've been losing it for nearly a decade now, but maybe someday...

[Guest]

From a purely self-control stand point I would welcome deferred money for the 20-30 year old me.

[Guest]

nobody should read kyle's posts

 

Nah, he's better than most posters here.

[MWV]

nobody should read kyle's posts

 

Nah, he's better than most posters here.

I'll grant you that this site has nearly 5000 registered posters, and that the vast majority of them post infrequently, if at all.

That said, I still disagree with your premise.

[MWV]

Or, more succinctly:

 

I THINK YOU GOT SOME MALWARE LOL

[Careless]

Derwood went to Northwestern...

Oh, the shame.

[SABR Gamer]

nobody should read kyle's posts

 

Nah, he's better than most posters here.

I'll grant you that this site has nearly 5000 registered posters, and that the vast majority of them post infrequently, if at all.

That said, I still disagree with your premise.

 

Despite his flaws, Kyle is actually one of the better posters here.

[Guancous]

Didn't the Mets defer Bobby Bonilla's contract so they could invest with Bernie Madoff?

 

I heard Bonilla will receive over $1 million for eight years after Scherzer's contract ends.

[Tracer Bullet]

nobody should read kyle's posts

 

Nah, he's better than most posters here.

I'll grant you that this site has nearly 5000 registered posters, and that the vast majority of them post infrequently, if at all.

That said, I still disagree with your premise.

 

Despite his flaws, Kyle is actually one of the better posters here.

Unrelated - remember when people used to defend meph?

[SABR Gamer]

 

Nah, he's better than most posters here.

I'll grant you that this site has nearly 5000 registered posters, and that the vast majority of them post infrequently, if at all.

That said, I still disagree with your premise.

 

Despite his flaws, Kyle is actually one of the better posters here.

Unrelated - remember when people used to defend meph?

 

Yeah, but Kyle is more capable of knowing he's wrong sometimes than Meph ever was.

 

ETA: Defending Meph was pretty bad. Although hell, I thought he had some good contributions, but I was 15 when I joined the board and probably had far worse opinions back then.

[KingCubsFan]

Unrelated - remember when people used to defend meph?

And everybody wanted the Cubs to get Khalil Greene?

[Tryptamine]

Unrelated - remember when people used to defend meph?

And everybody wanted the Cubs to get Khalil Greene?

 

Was it Meph who had the JR Towles obsession as well?

[mul21]

 

ETA: Defending Meph was pretty bad. Although hell, I thought he had some good contributions, but I was 15 when I joined the board and probably had far worse opinions back then.

 

You're 23. Your opinions are probably still pretty bad. :twisted:

[Felix Leiter]

Didn't the Mets defer Bobby Bonilla's contract so they could invest with Bernie Madoff?

 

I heard Bonilla will receive over $1 million for eight years after Scherzer's contract ends.

 

The IRS just auctioned off Darryl Strawberry's 1985-90 agreement with the Mets to pay off Straw's debts. The winning bid was $1.3M and will pay the bidder $8,891.82 monthly for the next 18+ years. That comes out in the long run to $1.9M. So the agreement lasted almost 50 years.

[Gmoney08]

Everyone's assuming inflation and interest. But that's only half the equation. It is equally likely that there will be a deflationary period and backloading will end up costing them a lot more.

???

 

1) count the number of years with inflation and deflation and defend those being equally likely

 

 

Then we're due for deflation. Regression to the mean.

 

Unfortunately the mean is still infationary.

 

I don't think Cameron has it right. Who cares what the stock market return is - that's not the either or situation here and the time value of money isn't based on stock market return. The discounts rates on the various payments need to be different - the Nats aren't sitting on $210 million today - some of that money isn't going to be earned by the Nats until 6 years from now.

I guess it depends on the exact circumstance. I recall the deal that Luol Deng signed with the Bulls had a lot of deferred money, but it was specifically set up as a annuity so Reinsdorf was actually taking some of that present cash and making an investment in order to pay these future obligations- a net present table was actually very relevant as thats what the annuity was based on. If that Nats are actually setting money aside now, as well as at periodic times throughout the deal, they could in theory benefit from the investment of the deferred structure. At the very least you still benefit from inflation, but inflation doesn't quite keep up with the stock market, or probably even an annuity, which is going to be less than that 7% historical stock market return. So it would be a little disingenuous to use the 7% historical stock market return when a fixed payment structure is involved, because you're going to likely take a lower return to ensure fixed payouts can be made. Afterall, you have to be able to make payments in the lean years of the stock market and pulling out during a loss or having to borrow to cover would certainly effect that 7% figure.

 

So all in all, while the dollar today vs dollar tomorrow is a universal truth, the fangraphs article may be a tad aggressive in its assumptions of return. The inflation rate the past 30 or so years and its projection is a much smaller, more stable figure than the 7% annualized stock market basis being used.

 

But, my guess is that the rate of inflation of MLB contracts is higher than National Inflation and the ROI of MLB Franchises is closer to the 7%, maybe even higher than 7% with new TV Deals compared to a fix rate of return.

 

Those two aspects make deferring a contract really attractive to a baseball franchise.

[SouthSideRyan]

Didn't the Mets defer Bobby Bonilla's contract so they could invest with Bernie Madoff?

 

I heard Bonilla will receive over $1 million for eight years after Scherzer's contract ends.

 

That's the rumor, sure defer him at this 7.4% (or whatever it was), we've got Madoff returns locked in at 9%.

[NOLA]

Didn't the Mets defer Bobby Bonilla's contract so they could invest with Bernie Madoff?

 

I heard Bonilla will receive over $1 million for eight years after Scherzer's contract ends.

The Mets will pay Bonilla $1.2 million annually for the next 25 years despite him not having played for them since 1999 or in the big leagues since 2001.

http://www.sportingnews.com/mlb/story/2011-05-16/mets-will-be-paying-bobby-bonilla-for-next-25-years

[Fro]

http://www.cbssports.com/mlb/writer/jon-heyman/22771879/what-you-dont-know-about-bonilla----and-saberhagen----mets-deals

 

There's actually another $500k deferred payment deal so it's $1.7 million that Bonilla gets a year.