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- Let’s say you make an even $1 million in annual salary.
- The league wants (may want) you to take a pay cut, down to $750,000.
- You say no way.
- As a result, there is no 2012-13 season, so your salary in that year is zero.
- Eventually, a compromise is reached, where you only have to take half the proposed pay-cut, down to $875,000.
- Hey, you saved yourself $125,000! Good going!
- Let’s say the next CBA lasts for 8 years. Eight times $125,000 is a cool million in savings.
- And all you had to give up to get that is…$750,000, your salary for 2012-13 after the rollback (provided that you fold now and take the crappy offer).
- Oh, and you lost a year of your career.
- So you’ve given up $750,000 NOW, because you would like to earn an extra $125,000 a year for the following eight years.
- You could invest your $750,000 and at 5% you’d end up with $1.1 million after eight years. If you wait a year and then invest that extra $125,000 a year at 5%, it comes to about $1.18 million.
- So you’ve got yourself an $80,000 windfall there.
- Or, $10,000 a year over the life of the next CBA.
- That’s 1% of your current million dollar salary.