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Steelers RB Le'Veon Bell was offered a 5-year, $70M contract with a $10M guaranteed signing bonus. Bell declined the offer.
I was running the numbers on Le’Veon Bell sitting out for 10 games in the 2018 Steeler season. In finance, you learn to think in terms of cash flows: cash doesn’t have a set value, but changes in value over time.
10 weeks at $855k per week = $8.55M.
Pay taxes on that (federal, state, local) and you’re left with approx. $4,531,500.
Assuming Bell has already made enough in his career to cover living expenses, he could invest that principle in S&P 500 index funds for the next 25 years. At an avg. annual return of 9.8%, he would have over $48M dollars at age 51. That’s the power of compound interest & the power of thinking in terms of cash flows, rather than just a principle cash payment. Can you imagine passing up $48M dollars, ‘cause you think you’re worth $1 million per week rather than what your only employer is actually paying ($855k/week)?
If I had to guess & I don’t know jack about NFL salaries, but I’d guess Bell leaves the Steelers as a free agent next year and never sees an offer for a $14.5M annual salary again. He can still end up with wealth like you can barely imagine if he invests the rest of his NFL career earnings, but he’ll still end up with 48M or $79M less by sitting out part or all of this 2018 season.
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