How is deferred money in a contract handled?
Deferred money is allocated, on a luxury tax basis, to the season in which the money would have been paid. If the deferred money was not attached to a particular season, it is spread out evenly over all years of the contract. The calculations for deferred money make use of the “Imputed Loan Interest Rate” – which is defined in Article XXIII, Section A.4 of the Basic Agreement as the “annual Federal mid-term rate defined in Section 1274(d) of the Internal Revenue Code for October”. If the deferred money is paid out at an interest rate within 1.5 percentage points of the imputed loan rate, the deferred money is included at its face value. Otherwise, the deferred money is included at its present value (calculated by increasing the money with any interest paid, and then reducing back to present value using the imputed loan rate). In many cases, the present-value calculation only results in a difference of a few hundred thousand dollars, so I have opted to ignore the present-value calculati
