Wolves should use the signing bonus

[LordBaldric]

Let's face it, one of the few advantages we have as a franchise is an owner with deep pockets, so let's take advantage of it.

It's rarely discussed, but the CBA has provisions whereby a player's contract can be somewhat manipulated. One option is to have up to 30% of it's total as deferred money, paid in an annuity in distant years. This is used by cheap owners to pay out less real dollar value to a player than the amount it is counting against the cap. For example, Luol Deng's contract has max deferred money, but all that deferred money still counts against the cap as if he's getting it over the 6 year contract term.

Conversely, teams can offer up to %20 of a contract up front as a signing bonus (17.5% on another team's RFA). The bonus is spread evenly over the full contract term as far as cap hit goes. This allows the owner to pay out a contract that has more monetary value than the face value of the contract or the cap hit. Certain Talyor has the $$$ to be able to do this.

Why do this?

Clearly any player would relish up front money. Even ignoring any ego stroking effects, money today is indeed more valuable than money up to 5 or 6 years later. A rational player may even accept a little bit less in raw total dollars in order to get max signing bonus. Thus the Wolves would be squeezing every drop of value out of their cap space by including a signing bonus or bonuses, at a cost to Taylor's pocketbook.

There are some other advantages. If you are trying to sign a RFA like Rudy Gay, including a max signing bonus could be the straw that breaks the camel's back of a team bleeding money on whether to match the offer.

Another big advantage is if you decide you want to trade the player sometime down the line, with so much $ already paid on the contract, the money left to be paid is going to be a lot less. Boom! That contact is going to be a lot more attractive to other teams. Imaging if Big Al was only owed around $11 mil per year instead of $14. Suddenly he looks a lot better.

[john2jer]

While I can see upfront money being a huge negative for an opposing owner, like it was in the Paul Milsap offer sheet from Portland that Utah had to swallow, I don't think upfront money is a HUGE positive for the actual player. Deferred money means a HUGE tax savings.

So yeah, it could prevent Memphis from matching a reasonable contract if Heisley?(Their owner?) has to drop 10.5mil up front in a 60/5 contract, on top of his yearly salary, making it close to $20mil that Gay gets paid in the first year.

[Esohny]

It's a good idea. Could be a useful strategy in certain situations.

[LordBaldric]

While I can see upfront money being a huge negative for an opposing owner, like it was in the Paul Milsap offer sheet from Portland that Utah had to swallow, I don't think upfront money is a HUGE positive for the actual player. Deferred money means a HUGE tax savings.

So yeah, it could prevent Memphis from matching a reasonable contract if Heisley?(Their owner?) has to drop 10.5mil up front in a 60/5 contract, on top of his yearly salary, making it close to $20mil that Gay gets paid in the first year.

How is deferred money huge tax savings? These guys make so much money that it's all at the max tax rate strung out or not. If deferred money is so great why does buying an annuity cost so much less than the up front money equivalent? I don't see any tax savings and do see inflation and opportunity cost losses.

I've heard some people say the same thing before about deferred money, I think though in the context of corporate taxes. I don't any benefit deferring income vis a vis max personal income taxes.