Deferred Salary

CapFriendly wrote a great [article](//web.archive.org/web/20240705024024/https://www.capfriendly.com/articles/32/shane-doan-deferred-salary-and-bonuses-explained) explaining how deferred salary works, but I wanted to illustrate it further here with a year-by-year breakdown of a simple example of deferred salary.

In this example, we have an 8 year contract that defers a million dollars in each of the first three seasons at a 5% interest rate. The team that signed this contract is charged $1M against the salary cap in each of years one, two, and three ($3M total). The player that signed this contract is paid $4.22M in deferred salary and interest in year 9.

<table>
    <tbody>
        <tr class="head">
            <td></td>
            <td>Amount Deferred</td>
            <td>Y1 Value</td>
            <td>Y2 Value</td>
            <td>Y3 Value</td>
        <tr>
            <td>Year 1</td>
            <td>$1,000,000</td>
            <td>$1,000,000</td>
            <td></td>
            <td></td>
        </tr>
        <tr>
            <td>Year 2</td>
            <td>$1,000,000</td>
            <td>$1,050,000</td>
            <td>$1,000,000</td>
            <td></td>
        </tr>
        <tr>
            <td>Year 3</td>
            <td>$1,000,000</td>
            <td>$1,102,500</td>
            <td>$1,050,000</td>
            <td>$1,000,000</td>
        </tr>
        <tr>
            <td>Year 4</td>
            <td></td>
            <td>$1,157,625</td>
            <td>$1,102,500</td>
            <td>$1,050,000</td>
        </tr>
        <tr>
            <td>Year 5</td>
            <td></td>
            <td>$1,215,506</td>
            <td>$1,157,625</td>
            <td>$1,102,500</td>
        </tr>
        <tr>
            <td>Year 6</td>
            <td></td>
            <td>$1,276,282</td>
            <td>$1,215,506</td>
            <td>$1,157,625</td>
        </tr>
        <tr>
            <td>Year 7</td>
            <td></td>
            <td>$1,340,096</td>
            <td>$1,276,282</td>
            <td>$1,215,506</td>
        </tr>
        <tr>
            <td>Year 8</td>
            <td></td>
            <td>$1,407,100</td>
            <td>$1,340,096</td>
            <td>$1,276,282</td>
        </tr>
        <tr>
            <td colspan="5"><hr/></td>
        </tr>
        <tr>
            <td>Year 9</td>
            <td></td>
            <td>$1,477,455</td>
            <td>$1,407,100</td>
            <td>$1,340,096</td>
        </tr>
</table>

Please note: decimals were used when making these calculations. They were truncated for formatting ease.