Note how the Yearly Present Value of his salary decreases over time - one good way to read this is to think: “In order to pay Bryce Harper’s 2031 salary of $22M, I only need to have $9.7M of capital invested to earn a 7% return - I don’t need the full $22M right now”. Harper’s deal with Philadelphia is slightly front-loaded, which a win from his perspective. This gives us the best way of making an apples-to-apples comparison of options (in this case, Harper’s contract offers) that pay out differing amounts of money over varying amounts of times. As such, we need to discount future cash flows by the rate we expect to earn in the market (7% again) to actually understand what the Present Value of all of those cash flows are today. Because of the ability to invest money today to pay for tomorrow’s bills, an equivalent amount of money today is always worth more than the same amount of money into the future. This concept is rooted in the fact that a dollar today is more valuable than a dollar next year, because we could have invested that dollar, earned a 7% return in the stock market (a common estimate for long-run earnings), and had $1.07 next year instead of $1. This approach reveals a lot more information than strictly focusing on yearly pay totals because of the time value of money. Let’s take a look at the value of the offers Harper had to make his decision on, and use Net Present Value as a lens to understand how contract length, annual value, and present value intersect. Furthermore, there’s even news that the Giants and Dodgers tried to splash the pot at the end with interesting offers of their own. There has been a lot of publicity in recent hours about the amount of deferred money which the Nationals including in their “10 year, $300M offer”, especially compared to the Phillies deal which included no deferred money at all and also pays a $20M signing bonus. Harper reportedly rejected late pushes by the Dodgers and Giants in order to sign with the Phillies instead.Now that Bryce Harper has officially signed with the Philadelphia Phillies on a 13 year, $330M megadeal, it’s interesting to conduct a retrospective look at the different offers he had on the table when making his decision. The signing means that Nick Williams will slide into a fourth outfielder role - or perhaps even head to Triple-A Lehigh Valley since he has options remaining - with two out-of-options guys, Aaron Altherr and Roman Quinn, facing tougher odds to make the major-league roster, and Dylan Cozens almost certainly headed back to the minors to serve as extra depth. Harper will join Andrew McCutchen and Odubel Herrera as part of Philadelphia’s everyday outfield. He had an atrocious -3.2 defensive WAR and was rated by WAA (a metric similar to WAR, but that measures a player’s value compared to the average player, rather than a random Triple-A player) as -0.8 wins below average. In 695 plate appearances, he got on base at an extremely impressive rate but struggled to make contact and was a liability in the field, hitting. That’ll be important in case Harper is more like the player he was in 2018 - and really has been for the majority of his career. But by giving him more years (paying him through his age-38 season) and a $25.3 million average annual value (lower than the ones Machado and Nolan Arenado received in recent weeks), the Phillies give themselves a bit more wiggle room from an annual budget/luxury tax standpoint. Obviously, the Phillies will hope that he’s able to bounce back to his MVP form of 2015, when he hit. Though he’s only hit more than 30 homers in a season twice over seven years in the big leagues, it wouldn’t be surprising to see him hit 40-plus on an annual basis with the Phillies. Harper, 26, will have the ability to fully showcase his best skill - his power - at hitter-friendly Citizens Bank Park. Realmuto, Jean Segura, Andrew McCutchen, David Robertson, Juan Nicasio, and James Pazos this offseason. The signing of Harper - which seems likely to conclude their offseason spending - completes a very busy offseason of upgrades for Philadelphia, which also added J.T. The addition of Harper doesn’t make the Phillies clear favorites for the NL East title, but it does give them a very real shot at winning the division for the first time since 2011. Harper didn’t want one.”- Ken Rosenthal February 28, 2019
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