When the Red Sox and Ramirez announced their $160-million, eight-year contract on Dec. 13, they said $31 million of the total was deferred with interest.
The union valued the deal at $161,904,572, the additional $1.9 million caused by the union's evaluation of payouts in the signing bonus.
The interest rate on the deferred money then was set at one-quarter of one percent annually, meaning the $3 million deferred from his $13-million salary this season will accrue $7,500 in interest this year.
Manny Ramirez's contract was sliced by $20.5 million by the players' association.
The union then decided to treat the $31 million as if it was being deferred without interest and discounted the deferred payments by nine per cent annually. That lowered the value to $141,342,731, a figure that could be used for comparisons in salary arbitration.
Cleveland also offered Ramirez $160 million for eight years, but the Indians' offer contained $75.5 million in deferred money and paid out more in the later years than Boston's offer.
"In the end, Manny's preference was for a Red Sox deal with a much better cash flow, which was heavy on principal and light on interest," said Ramirez's agent, Jeff Moorad.
As the value of baseball contracts has increased in the past few years, the amount of deferred money also has gone up.
"Whenever deferred payments are part of a contract's structure, the contract's actual value becomes a subject of interpretation," Moorad said. "Moving pieces include how long the deferral is, when the deferral is paid out and the discount factor applied."
The commissioner's office, using an 11 per cent discount rate, valued the contract at $136,738,480.
By Ronald Blum
