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America's Got Talent 2

NBC’s America’s Got Talent $1 million is actually worth $25,000 a year, or maybe just $375,000

America's Got Talent logo

by Andy Dehnart 3 Aug. 2007 | 9:23 am

Although NBC’s web site promises that “one act will walk away with a million dollar prize” on America’s Got Talent, the prize is actually worth less than half a million in today’s dollars.

The fine print dictates how the money will be distributed.

During the end credits, the following disclaimer flashes on the screen for a couple of seconds:

The prize, which totals $1,000,000, is payable in a financial annuity over forty years, or the contestant may choose to receive the present cash value of such annuity.

In other words, the prize is like many lotteries: take a smaller amount of cash now, which over time will earn enough interest to make it worth the big amount, or wait for the full amount to trickle in over time as inflation makes each payment less and less valuable.

Doing the math on America’s Got Talent’s prize

reality blurred‘s math consultant Jeff Hamrick, a principal at Bulwark Capital Management, explained that if we assume the annuity pays a fixed 5 percent interest rate, that would make the one-time payment worth $450,426.

That, of course, would be subject to income taxes, so maybe the prize is worth $375,000, about a third of the advertised $1 million.

Otherwise, $1 million over 40 years would yield $25,000 per year, assuming that whoever’s paying it out is still around after 40 years.

America's Got Talent, Simon Cowell, Mel B, Grace VanderWaal, Howie Mandel, Heidi Klum, Nick Cannon

Simon Cowell, Mel B, America’s Got Talent season 11 winner Grace VanderWaal, Howie Mandel, Heidi Klum, and Nick Cannon. (Photo by Trae Patton/NBC)

The season’s eventual winner, Terry Fator, for example, is 42; if he decided to take the payments, he’d be 82 when his last check of $25,000 arrived, which in 2047 will probably be enough to fill up a gas tank.

There is an upside to the other option: Taking the lump sum and investing it wisely could make far more than $1 million over 40 years.

Advertising a big prize and screwing the recipient in the fine print isn’t exactly new.

FOX’s Hell’s Kitchen has failed to award the announced prize during its first two seasons, while NBC’s For Love or Money offered a $1 million prize over 40 years, or a one-time payment of $800,000.

And The Amazing Race once offered free gas for life, which turned out to be limited to $1,200 a year for 50 years.

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about Andy Dehnart

Andy Dehnart’s writing and criticism about television, culture, and media has appeared on NPR and in Vulture, Pacific Standard, The Los Angeles Times, and other publications. He has covered reality television for more than 18 years, and created reality blurred in 2000.

A member of the Television Critics Association who serves on its board of directors, Andy, 41, also directs the journalism program at Stetson University in Florida, where he teaches creative nonfiction and journalism. He has an M.F.A. in nonfiction writing and literature from Bennington College. Learn more about reality blurred and Andy.

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about reality blurred

reality blurred is your guide to the world of reality TV and unscripted entertainment, with reality show reviews, news, and analysis. It was created in 2000 by Andy Dehnart. He's still writing and publishing it today.

reality blurred is regularly updated with highlights from the world of reality TV: news and analysis; behind-the-scenes reports; interviews with reality TV show cast members and producers; and recaps and reviews of these reality TV shows, including Survivor, Big Brother, The Great British Baking Show, Shark Tank, The Amazing Race, The Bachelor, Project Runway, Dancing with the Stars, Top Chef, and many more.

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