September 16, 2010 by esarsea
The wife and I watched the finals of America’s Got Talent last night, where the winner is awarded $1,000,000 and a shot at their own show in Vegas. A singer named Michael Grimm won the contest.
As the final credits were rolling at the close of the program I saw something scroll by regarding the $1,000,000 prize award. It went by too fast to read. Curious, I grabbed the DVR remote and hit rewind.
The fine print stated that the $1,000,000 prize would be awarded in the form of a 40 year annuity, or the contestant could opt for the current value of the annuity.
Michael Grimm stated that he was going to use his prize money to buy his grandparents a new house, as they had lost their home during hurricane Katrina. I hope it’s a small house. $1,000,000 paid out over 40 years will bring him $2083 per month before taxes. That’s the equivalent gross income of a $12 per hour worker.
Or Michael could take the annuity cash value option. Assuming a (potentially optimistic) 6.50% return, a 40-year $1,000,000 annuity would be worth a little more than $80,000.
I’m sure the winner of this contest will have income from other sources; record deals, endorsements, performance fees, etc. I’m sure he’ll do just fine. I am just put-off by NBC’s constant advertising of this $1,000,000 prize, and then rolling the fine print past the viewers at the close of the show.