Davis Signs With Baltimore (7/$161M, incl $42M deferred)

[Chavez Ravine]

This sounds almost like a retirement plan. A new creative way for large deals in Sports?

Annuities are hip again!

[Can_of_corn]

It does take the contract from about a 30% overpay to maybe a 5% overpay, based on reasonable assumptions.

Would have still rather given that contract to Cespedes.

[TradeAngelos]

How about I trade you $25 a year for four years and you give me $100 today? Even steven, right?

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No money clearly has a time value, as I just explained.

[Going Underground]

Would have still rather given that contract to Cespedes.

Cepedes would have wanted an opt-out and no deferred money.Wait till the Orioles sign Fister.

[Cakes2Kakes]

I wouldn't categorize Heyward as being primarily a speedster.

Anyway guys with the speedster profile age better then 3TO guys.

Then I'm curious how you do categorize him?

He is not a power bat, he has an average at best batting eye, his OBP is nothing to brag about, and if he is not the speedster at the top of the order where would you bat him?

5' 9" speedsters might age better, but not so much 6' 5" 250 lb. outfielders who go after everything head first and wide open!

[eddie83]

So is this how we look on defense now?

C - Matt Wieters

1B - Chris Davis

2B - Jonathan Schoop

SS - J.J. Hardy

3B - Manny Machado

LF - Mark Trumbo

CF - Adam Jones

RF - Alvarez/Kim

DH - Reimold/Paredes

Kim will be in LF. I know you are saying right now but I don't see Trumbo as anything more than a part time at most OF.

[Can_of_corn]

Then I'm curious how you do categorize him?

He is not a power bat, he has an average at best batting eye, his OBP is nothing to brag about, and if he is not the speedster at the top of the order where would you bat him?

5' 9" speedsters might age better, but not so much 6' 5" 250 lb. outfielders who go after everything head first and wide open!

All around player.

[weams]

How about I trade you $25 a year for four years and you give me $100 today? Even steven, right?

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But. What if you die? Or go Bankrupt.

[Can_of_corn]

But. What if you die? Or go Bankrupt.

Get caught up in a Ponzi scheme?

[Frobby]

The interest-free deferrals probably amount to a savings of, what... $15M, maybe $20M?

My rough calculation assuming a 5% interest rate is that the present day value (compared to a straight $23 mm/yr) is only about $139-140 mm. Obviously, the interest rate assumption is key. The lower the rate, the less of a discount off the $161 mm.

[eddie83]

This news makes the deal much better. I think we overpaid but it is more palatable.

[Going Underground]

My rough calculation assuming a 5% interest rate is that the present day value is only about $139-140 mm. Obviously, the interest rate assumption is key. The lower the rate, the less of a discount off the $161 mm.

So if rhe Treasury raises rates?

[ChuckS]

I don't consider the deferrals to have any impact on our ability to spend when they are being paid out (3.5 or 1 per year is nothing). This is essentially a 17 AAV contract. I'm off the ledge, but still would have much preferred this to be a five or even six year deal.

Anyone know what our total payroll is at this point for 2016?

[George Zuverink]

$42 mm deferred

I'm an actuary and I deal with this kind of analysis every day. All of the commenters are underestimating the financial impact of deferring $42M in payments without crediting interest. Suppose that Angelos put the money in high grade corporate bonds that matured when the deferrals begin. They're yielding 4%. Suppose he could reinvest the money then at the same 4% rate. Because he is not paying Crush interest on the deferrals, he would need to sock away only $26M today. PA's financial advisers would probably tell him he could expect better than 4%, but let's be pessimistic and say 4% throughout. Add that to the $119M for the seven years of the contract and you have a $145M deal.

[SilentJames]

Wow that deferred money is a huge difference

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