Should Ehrhoff fire his agent?

As we sift through the deals completed on Fantastic Free Agent Frenzy Friday, I'd like to take some time to look at probably the most important Canucks-related signing of 2011- Christian Ehrhoff's 10 year deal with the Sabres. What struck me most about the deal was the average value of 4 million per year. At first glance, it seems to be less than what Ehrhoff could have earned by taking the 'Nucks contract and then hitting the open market at the age of 33. With the help of a finance-literate advisor, I did some simple number crunching to see whether or not Ehrhoff had actually taken less money to go with the Sabres.

The first thing to do is to lay out the numbers we know for sure. Assuming the Canucks did as they said and offered Ehrhoff the same deal as Bieksa, the two deals will compare over ten years as below.

Year	Money with Canucks(millions of USD)	Money with Sabres(millions of USD)
1	7.0	10
2	4.5	8
3	5	4
4	4	4
5	2.5	4
6	?	4
7	?	3
8	?	1
9	?	1
10	?	1

We don't know for sure how much Ehrhoff would have recieved once his Canucks contract was up- injuries or inconsistency could mean his next contract would vary from 5 million per year to to a big fat zero. At 33 however, Ehrhoff would be by no means in the twilight of his career. Let's make a pretty conservative estimation, barring any injuries, and say Ehrhoff nabs a 17 million, 5 year contract at the age of 33, which is mildly front-loaded. The two contracts stack up like so:

Year	Money with Canucks(millions of USD)	Money with Sabres(millions of USD)
1	7.0	10
2	4.5	8
3	5	4
4	4	4
5	2.5	4
6	4	4
7	4	3
8	4	1
9	3	1
10	2	1
Total $	40	40

Well isn't that interesting. Using only our conservative estimation, Ehrhoff actually moved to the Sabres for... the same amount of money. If he cashes in a la Ed Jovanovski once his Nucks contract is up, Ehrhoff actually ends up making less money with the Sabres. That's not even taking into account intangibles like living quality in Vancouver, and the higher likelihood of winning a Cup (or at least making it to Game 7 before losing and crushing the dreams of certain high school students turned bloggers).

And this guy.

But there must be some reason for Ehrhoff taking the Sabres contract. Figuring it out takes a bit of math and finance knowledge. As my advisor reminds me, he is getting a whopping 18 million over the first two years. The other option- the Canucks/UFA "deal"- is structured more evenly. What that results in is a higher present value for the Sabres deal. For those not as finance-literate as my advisor (like me), present value works out like this; money that you get today can be invested immediately, and will earn money on that investment. Money that you get five years from now will not have been earning money during that five years, and its present value (its value to you at this moment) will be correspondingly less.

So, assuming Ehrhoff could have gotten a 6 percent return on whatever investment he's making with the cash- maybe he opens up a roadside currywurst-and-sauerkraut stand with Dirk Nowitzki- the present value (or PV) of each deal works out like so:

Year	Money with Canucks(millions of USD)	Money with Sabres(millions of USD)
1	7.0	10
2	4.5	8
3	5	4
4	4	4
5	2.5	4
6	4	4
7	4	3
8	4	1
9	3	1
10	2	1
Total $	40	40
PV	30.73	32.66

Now it starts to make sense. Ehrhoff gets 18 million in the first two years with the Sabres, but only 11.5 million with the Canucks. If he's earning 6 percent each year on the difference, it becomes pretty significant, even if the two contracts end up giving him the same amount of cash. Of course, there's a whole host of unknown variables that we ignored, simply because its hard to calculate, say, the odds of injury for a player other than Sami Salo. (110 percent).

So to answer our first hypothesis- no. Ehrhoff should not fire his agent. But he should start on that currywurst stand quick, before Dirk spends all of his championship bonus on lederhosen or comically oversized beer steins or whatever it is that those crazy Germans like.