I am banned from commenting at “In Lou We Trust” so I am keeping a log — a blog if you will — of my responses here. It’s as though I am actually part of the conversation, except they can’t delete my comments.
We pick up the story as a reasonable and wise law student named Joker24 engages the locals on the topic of length of contract:
The intent of the contract is to give themselves an overwhelmingly likely chance that Kovalchuk doesn’t play (at least) the final year of the deal, which means that the calculated AAV for the duration of the contract is lower than it actually would have been.
If he plays only 16 years, then the actual AAV would have been 6.345M and not the stated 6M. The Devils would have had more cap room than they should have for 16 straight years.
Prove that was the intent.
They know that it is extremely unlikely that he plays his age 43 season. Therefore they know that there is an overwhelming chance that they will have gotten extra cap space. Even if that isn’t the sole intent*, that is a definite positive to the contract from their perspective.
*which I still haven’t seen any of you guys argue with any conviction that this is not the case….[…]
[…] a 43 year old whom you have no idea whether he can still play, because it’s 17 years from now […]
Neither does one know if their house will still be standing when they sign a 30 year mortgage on it, but that doesn’t stop millions of people from doing it.
I want to frame this comment.
You should! You totally should! You should make t-shirts and sell them on your site. However:
- if one house in a thousand lasted thirty years, there wouldn’t be thirty year mortgages. Frame that, too.
Also, did you know that old people have trouble getting 30-year mortgages because actuaries know that statistically there’s very little chance they will be alive to pay it off. I wonder if the applicants have tried your fool-proof “but you don’t know! Prove I won’t be here when I’m 110!! I intend to be!” strategy.
Notice also that, with the old person in the mortgage analogy in your frame you love so much, the bank might be willing to do a shorter loan, say 15 years, presuming they believe the old person will be alive that long. The old person says, okay sure, and then sees the payment. Shockingly, it’s much higher and the tax benefits are much lower.
The old guy can only afford the mortgage when the payment is low and he’s dead for most of the loan.
The Devils can only afford the contract when the cap-hit is low and Kovalchuk is retired for the last third of the deal. /