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Tom Brady and Efficient Capital Markets

Table 2: Dropping Back The reported value of three NFL player contracts is reworked using a present-value calculation. (thousands of dollars)
Player	Reported value	Present value	Present value	Present value	Present value	Present value
		r=5%	r=8%	r=10%	r=15%	r=20%
Ronde Barber	18,275	15,270	13,826	12,982	11,213	9,825
Martin Gramatica	12,100	10,058	9,091	8,398	7,200	6,324
Mike Alsott	8,000	7,282	6,917	6,695	6,210	5,805
r = risk adjusted discount rate Source: "Using Football to Teach Finance," 2003, James Mahar, Jr., Rodney Paul, St. Bonaventure University.

Table 3: Out for the Season? Unique and systematic risks play a part in the expected value of player contracts over time.
Player	Expected value p=0.8	Expected value p=0.8	Expected value p=0.8	Expected value p=0.8	Expected value p=0.8	Expected value p=0.8
		r=5%	r=8%	r=10%	r=15%	r=20%
Ronde Barber	18,275	7,644	7,118	6,809	6,154	5,632
Martin Gramatica	12,100	5,080	4,750	4,750	4,147	3,824
Mike Alsott	8,000	5,107	5,107	4,924	4,568	4,362
p = probability of remaining under contract for the entire year Source: "Using Football to Teach Finance," 2003, James Mahar, Jr., Rodney Paul, St. Bonaventure University.