
402 ◾ Sports Finance and Management
e nal technique examined is the risk-adjusted net present value. is takes
risk into account in the same way as the risk-adjusted discount rate and, therefore,
has the same pluses and minuses. If one can easily value the risk of the investment,
then the risk-adjusted net present value is a very attractive method. Table11.5 pres-
ents ve dierent players with varying signing bonuses, yearly salaries, marginal
revenue products, and risk levels.
To sign player A, the team needs to oer a $1 million signing bonus and a yearly
contract of $3 million. e player gives the team a marginal revenue product of
$3 ...