Falcons pay OL Bill Fralic $150K/yr...for life

[panthers55]

This was a pretty smart move to me. It wasn't as if the 150 thousand was all he was going to get. This was a negotiated bonus in addition to 8 million in a rookie contract if I read that right. So he had plenty to invest and do what people are saying he should have done versus taking a yearly payout. He gets to do both. Plus he got to negotiate additional contracts. It is very likely he wouldn't have gotten that kind of money unless he structured it that way.

Magic Johnson got a 25 year 25 million contract people tout as brilliant for Buss although it was highly controversial given how much it was at the time. It allowed Magic to get huge money which he wouldn't have gotten otherwise and for the teams to stretch out payments until the financial consequences were minimal as salaries rose. These payouts benefit both parties as one side stretches payments while the other gets security for llife while he invests money from other contracts if he sticks and if his career is cut short he gets a set amount which by being annualized is going to be a lot bigger than if it were a lump time payment. Not that the lump sum payment won't grow faster with compounding interest simply that this kind of money was being handed out left and right because it wasn't. The average salary for an o linemen in 1985 was 162 thousand a year. He gets close to that for life and a big signing bonus as well. The Falcons valued the annuity at 6 million. 

[iamhubby1]

So 150K for up to to this time  = 4.5 mill. the falcons have paid.

If he would have took 3 million in 85 .. put it in a modest 5% rate of return investment he would have 13 mill right now.

 

Depends on how you look at it.

 

 

If you trust yourself---take the money.

 

If you don't trust yourself---take a piece and do some back loading like this for financial security.

[Udogg]

if you can't spend it all by the time you die, then there really is no difference.

To you yes.... To your family.. no.

 

If you are one of those people who are like "they need to make their own " etc.. etc.. it doesn't matter.

Me coming from a poorer family I understand the difference that money would do for the next generation.

 

To each his own.  But to me there is a huge difference.

[rayzor]

$150k is a nice chunk of change for doing nothing. sure, he could have wound up with more if he had invested blah blah blah. but truthfully, how much do you actually NEED to get by on comfortably? $150/year is more than enough. and if it isn't, you're doing it wrong.

[Mr. Scot]

$150/year is more than enough. and if it isn't, you're doing it wrong.

I'm sure someone will say that means you're doing it right.

[PoundCat]

But if he puts that 150 grand every year in that same modest investment, he would get, well its to early in the morning for Math, but he would have more than he would had he blown it on hookers and blow.  :)

Don't agree at all.  Many people gain wisdom in financial and other matters as they get older. 

You beat me to it! I did actually  do the math :) 

After 30 years, if he invested the 150k in that same modest investment, he would have just shy of 10.5 million. But his account will eventually overtake the value of a lump sum account since he would still be adding money each year. 

All that being said, I would still take the lump sum :)

[Sasquatch]

This was a pretty smart move to me. It wasn't as if the 150 thousand was all he was going to get. This was a negotiated bonus in addition to 8 million in a rookie contract if I read that right. So he had plenty to invest and do what people are saying he should have done versus taking a yearly payout. He gets to do both. Plus he got to negotiate additional contracts. It is very likely he wouldn't have gotten that kind of money unless he structured it that way.

Magic Johnson got a 25 year 25 million contract people tout as brilliant for Buss although it was highly controversial given how much it was at the time. It allowed Magic to get huge money which he wouldn't have gotten otherwise and for the teams to stretch out payments until the financial consequences were minimal as salaries rose. These payouts benefit both parties as one side stretches payments while the other gets security for llife while he invests money from other contracts if he sticks and if his career is cut short he gets a set amount which by being annualized is going to be a lot bigger than if it were a lump time payment. Not that the lump sum payment won't grow faster with compounding interest simply that this kind of money was being handed out left and right because it wasn't. The average salary for an o linemen in 1985 was 162 thousand a year. He gets close to that for life and a big signing bonus as well. The Falcons valued the annuity at 6 million. 

He absolutely did NOT get an $8 million rookie contract. And 162k was the NFL average not just linemen. Top salaries were barely 1 million.

[panthers55]

The number depends on what you value the annuity at.  The contract outside of that was a little over 2 million.  The annuity was valued at 6 million by the Falcons so the total is 8 million. You are right about the average salary being 162 million.  His salary average for his rookie deal was roughly 500 thousand.

 

But the point was that for people saying he should have taken a lump sum, the only way he got that kind of money was because he took it as an annuity.  There were teams losing money in 1985, salaries were escalating and there was a huge push by owners to limit salaries and come up with different and unique ways to pay players with deferred money because teams didnt have the upfront money to spend huge significant bonuses and huge contracts.  Fralic got a big contract because he was very serious about sitting out a year and going into professional wrestling.

[rayzor]

I'm sure someone will say that means you're doing it right.

probably.