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Palffy's Salary misreported?

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08-08-2005, 05:09 PM
  #1
bcrt2000
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Palffy's Salary misreported?

http://nhlpa.com/WebStats/PlayerBiography.asp?ID=4315

2005/06 Compensation: $3,500,000.00

Does this mean that his contract is backloaded? or does it mean that Ziggy is getting only $10.5 over 3 years? Could also be a typo though...

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08-08-2005, 05:10 PM
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Palffy, 33, a free-agent right wing from the Los Angeles Kings, signed a deal that pays him $3.5 million this season, $5.5 million in 2006-07 and $4.5 million the final year of the contract.

http://www.post-gazette.com/pg/05220/550623.stm

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08-08-2005, 05:10 PM
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Ziggy Stardust
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They also have Gonchar reported to be making $3.5M this season. Looks like both Gonchar and Ziggy received backloaded contracts.

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08-08-2005, 05:12 PM
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bcrt2000
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Quote:
Originally Posted by Claypool
Palffy, 33, a free-agent right wing from the Los Angeles Kings, signed a deal that pays him $3.5 million this season, $5.5 million in 2006-07 and $4.5 million the final year of the contract.

http://www.post-gazette.com/pg/05220/550623.stm
Thanks for the clarification

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08-08-2005, 06:27 PM
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kdb209
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Quote:
Originally Posted by Ziggy Stardust
They also have Gonchar reported to be making $3.5M this season. Looks like both Gonchar and Ziggy received backloaded contracts.
Yes, but the cap hit is not based on this years salary, but on the deal's average, so Ziggy counts $4.5M against Pittsburgh's cap this year, and Gonchar $5M.

This works out fine for the Pens. They wouldn't be near the cap this year anyway, and by year 3 they get them for below salary agaisnt the cap. And in 3 years, revenues will be higher, a new arena deal will be in place, or the team will be sold/moved and the backloaded salaries become somebody else's problem.

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08-08-2005, 06:33 PM
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ficklenfuddle
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wow i would have frontloaded both of theirs

bad call if you ask me

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08-08-2005, 06:38 PM
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bcrt2000
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Quote:
Originally Posted by ficklenfuddle
wow i would have frontloaded both of theirs

bad call if you ask me
As kdb209 pointed out, it doesn't matter if you backload or frontload a contract... I'm guessing they want to stay in the black this season and are banking on a new arena/crosby mania/cup contension to stay in the black next season

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08-08-2005, 06:39 PM
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Quote:
Originally Posted by ficklenfuddle
wow i would have frontloaded both of theirs

bad call if you ask me
What difference does it make?

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08-08-2005, 06:42 PM
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Quote:
Originally Posted by ficklenfuddle
wow i would have frontloaded both of theirs

bad call if you ask me
Why? Like someone said, either way the cap hit is the exact same. Time value of money suggests it's better to backload it if you can. Also, if Crosby pans out team revenues should be rising as the years go by meaning you can afford to pay the raises, and if he flops you can move the players.

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08-08-2005, 06:49 PM
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Quote:
Originally Posted by ficklenfuddle
wow i would have frontloaded both of theirs

bad call if you ask me
I'm wondering why their accountants didn't ask you.

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08-08-2005, 07:00 PM
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Quote:
Originally Posted by MentalPowerHouse
Why? Like someone said, either way the cap hit is the exact same. Time value of money suggests it's better to backload it if you can.
Outside of TVM issues (quitre frankly it's too short of a term to make a dramatic difference on NPV)...What if the Pens trade one of them?

Say they trade Palffy to Detroit for Datsyuk next year. (I'm just pulling something out of the air....I'm not claiming value or anything) Well, from a business standpoint, Detroit bears the brunt of the contract....cap hit won't change regardless. Still $4.5 million per year.

If he plays out his contract, or even gets hurt on opening night this year, it wil make no difference for the Pens (Again, too short of terms for NPV to be dramatically altered).

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08-08-2005, 07:46 PM
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Quote:
Originally Posted by clefty
What difference does it make?
Makes a big difference: time value of money stipulates that $1 is worth more today than it is next year, right? So a backloaded contract actually pays less in real dollars in the latter years.

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08-08-2005, 08:22 PM
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Munchausen
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Quote:
Originally Posted by clefty
What difference does it make?
Just thinking out loud here, but the only time when I could see it matter is for trades. If you have a player that will make 15M over 3 years, 1st year 6M, 2nd year 5M, 3rd year 4M, it might (although it's a stretch) be a bit easier to trade him during his final year, since the team acquiring the player will only pay 4M of his 3 year/15M contract. Doesn't change a thing for the cap though.

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08-08-2005, 08:34 PM
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clefty
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Quote:
Originally Posted by Bohologo
Makes a big difference: time value of money stipulates that $1 is worth more today than it is next year, right? So a backloaded contract actually pays less in real dollars in the latter years.
That hardly sounds like a big difference. Unless mass hyperinflation occurs one year from now.

Quote:
Just thinking out loud here, but the only time when I could see it matter is for trades. If you have a player that will make 15M over 3 years, 1st year 6M, 2nd year 5M, 3rd year 4M, it might (although it's a stretch) be a bit easier to trade him during his final year, since the team acquiring the player will only pay 4M of his 3 year/15M contract. Doesn't change a thing for the cap though
Right.

Palffy's contract sees him earn more money in his second year than the first and third as well.

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08-08-2005, 08:44 PM
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craig1
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Quote:
Originally Posted by Bohologo
Makes a big difference: time value of money stipulates that $1 is worth more today than it is next year, right? So a backloaded contract actually pays less in real dollars in the latter years.
You and I know this is true, but break out your PVIF formula and tell me the differene that this really makes over such a short time period. If it was 7 or 10 years, fine. But it's 3 years. It is given nominal consideration.....Assume the current Fed rate when calculating.

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