Dolgoff Plan

From Hoopedia

After a good college career and a brief pro career Ralph Dolgoff settled down to a career in accounting, where he made his greatest contributions to basketball. When the American Basketball Association (ABA) challenged the supremacy of the National Basketball Association they sought to build the league with talented players. Because the ABA owners did not have the kind of money NBA owners did, Dolgoff devised a deferred compensation package which came to be known as a "Dolgoff Plan."

A Dolgoff Plan required an ABA owner to buy an annuity for a player that would be paid off to the player over a twenty-year period, beginning when the player reached age 41. The deal would then be announced for its annuity value plus the actual cash salary. For example, Jim Ard from the University of Cincinnati signed a deal with the New York Nets for $1.4 million. The cash compensation, however, was for $250,000 per year for four years. In addition, the Nets agreed to invest $8,000 per year for ten years ($80,000 total) into an annuity, which would be paid out to him over 20 years in annual installments of $20,000, beginning when he reached 41 years of age. Thus the final value of the annuity to Ard would be $400,000, though the Nets only paid out $1,080,000. Other ABA stars who signed with Dolgoff Plans included Julius Erving, Spencer Haywood, Billy Cunningham, and Dan Issel.