My Contract's Bigger Than Your Contract!
Response to the following problem:
You are an agent for professional athletes. One of your clients is a superstar in the NBA. Last month you negotiated a new deal for your client that pays him $22 million per year for each of the next six years. Your client was very pleased with this $132 million contract, especially because it was a bigger contract than any of the other players on his team received.
This morning, while you were relaxing in your Jacuzzi, you got an angry cellular call from your client. It seems that one of his teammates just signed a $150 million deal, paying him $15 million per year for each of the next 10 years. Your client is outraged because you guaranteed that no one on his team would be receiving a bigger contract this season. Your client has threatened to terminate his agreement with you and also to spread the word among all his friends that you are not trustworthy.
Write a one-page memo to your client explaining that the actual value of his $132 million contract is greater than the $150 million contract signed by his teammate. Your client has a marketing degree from an ACC school, so he has had some exposure to the concept of the time value of money.