Confirmed Signing with Link: [ANA] F Frank Vatrano signs extension with the Ducks (3 years, $4.57M AAV; $9M deferred salary)

[FiveTacos]

You’re going to get teams giving out crazy contracts with deferred money 20 years down the road. This will be a huge benefit for big market clubs to lower cap hits going forward

It's not really workable as you go up the pay scale and on longer term. On an 8 year deal of significant salary you could be talking about deferring tens of millions, and in 10-20 years that's going to be an awful lot of money to be paying. Try it with a couple core guys, and you're talking about a massive bill down the road for guys who haven't played for you in years.

Do the math on, say, an 8x13m guy, who defers 1/3 of his salary. It's not as easy a pill to swallow as 900k for 10 years. And deferring tens of millions may not be as appealing for the player either.

You could of course choose to defer a lot less money, but then the cap savings probably isn't worth the trouble.

It really only works for deferring a few million. Not a few tens of millions.

 

[TGWL]

Would he have received 18M on the open market? Very much plausible.

Doubtful. Maybe if his contract ended last year. I think he'd need a better second half scoring goals to get that 6m. This contract probably could've been the cap they settled on with nothing deffered.

 

[olli]

What the f***? lol. Okay. Well congrats to him.

edit - just looked at this contract structure, he's a smart man! That's how you plan for the future. But at the same time he could have just invested that money all now and in 10-20 years it would be worth much more than the 9M. But either way, I like it.

Yeah that’s what I thought but I guess he figured he wouldn’t have gotten that much more if he’d taken a bigger cap hit with less total money in Anaheim. He must really like it in Anaheim, cause if maximizing earnings was such a huge deal for him he would’ve waited for FA and signed in a lower tax state.

 

[Coffee]

Money now is better than tomorrow.

I think this will still be a rarity, not a norm.

But if your team and player can take advantage, you should. Even if it only saves you 300K per year, why would you not (as a team)?

So inflation will not come down!!? @olli

 

[Mark Stones Spleen]

So Marner wants 13M, why can't the Leafs sign him for 10M and pay him 3M a year a decade from now?

Because Marner the type of guy that wants 13M now and another 3M deferred in a decade.

 

[Mark Stones Spleen]

Out of curiosity, if they deferred long enough to the point where a team had to be sold or was bankrupt, what would happen?

 

[MMC]

Assume the NHL will overturn this?

Why would they? Because you don’t like it?

 

[190Octane]

If you come into $4,000,000 don’t put it in a high interest savings account.

I’m assuming you aren’t a financial professional because someone in that field would know you don’t give blanket advice like this without actually knowing someone’s full financial picture.

What if they already have 70% of their net worth in high risk investments? What if the savings account is paying 8%?

 

[Phion Keneuf]

That’s a steal of a contract, big win win for both parties.

 

[vipera1960]

I’m assuming you aren’t a financial professional because someone in that field would know you don’t give blanket advice like this without actually knowing someone’s full financial picture.

What if they already have 70% of their net worth in high risk investments? What if the savings account is paying 8%?

Exactly. This is like buying T-bills. It’s a low risk investment that diversifies his portfolio. Even if he doesn’t have high risk investments right now, he can be more aggressive with the remainder of his salary.
Also it’s a pretty good rate for the risk level.

 

[Korpse]

I’m assuming you aren’t a financial professional because someone in that field would know you don’t give blanket advice like this without actually knowing someone’s full financial picture.

What if they already have 70% of their net worth in high risk investments? What if the savings account is paying 8%?

Obviously was a joke.

I could be wrong but I don’t think the poster was actually looking for financial advice.

 

[Mattb124]

Obviously was a joke.

I could be wrong but I don’t think the poster was actually looking for financial advice.

Even as a joke, you don’t have to be a financial professional to understand only $250K of the $4M would be FDIC insured in a single account. Your advice is sage even if in jest.

 

[duckpuck]

The company is in CÁ. He most certainly will pay those taxes. And at this rate, it might be higher.

Not under the current law.

California’s Franchise Tax Board will tackle this before a new CBA does, if they haven’t already . Tax code already exists that won’t allow you to leave CA, establish residency in another state, and pay state income tax solely on the basis of your new state of residence (the concept is called “California-source Income” and includes wages and salaries - https://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-17951.html).

Again, the current law provides this deferred money will not be taxed in CA (assuming the player doesn't live here). CA tax hounds are seeking to change the law (which they might).

California Proposal Would Urge Congress to Block Ohtani-Type Deferred Pay | Tax Notes

Tax Notes is the first source of essential daily news, analysis, and commentary for tax professionals whose success depends on being trusted for their expertise.

www.taxnotes.com

 

[190Octane]

Even as a joke, you don’t have to be a financial professional to understand only $250K of the $4M would be FDIC insured in a single account. Your advice is sage even if in jest.

1. You don’t understand how FDIC insurance works. You can have $1.25m on a single account depending on how it’s structured.
2. Having $4m with most banks even outside of FDIC insurance is still incredibly low risk.

 

[Smif]

So, is Vatrano a $4.5M player or a $6M player? Or is it somewhere in the middle?

Also, if he was traded and 50% of his salary retained I'm assuming that would be half of $4.5M, correct?

And, if traded, who then takes on the payments to be made in 2035?

 

[Rec T]

Out of curiosity, if they deferred long enough to the point where a team had to be sold or was bankrupt, what would happen?

I'd assume that if the team went bankrupt and folded completely he'd be one of the creditors looking for some sort of payment (depending on the bankruptcy judge to divide the assets up). If the team was sold, the team's future payment obligations would in all likelihood transfer over as well, so no impact for Frank.

Essentially zero worries for him as the NHL wouldn't let the team fold completely and just go away. Some new owner would acquire the franchise and their future obligations (much as all contracts currently active don't need to be renegotiated when a team is sold).

But IANAL and I didn't stay at a Holiday Inn last night so take that for what it's worth...

 

[LuGBuG]

So, is Vatrano a $4.5M player or a $6M player? Or is it somewhere in the middle?

Also, if he was traded and 50% of his salary retained I'm assuming that would be half of $4.5M, correct?

And, if traded, who then takes on the payments to be made in 2035?

I can’t answer anything except the first question. Which he is probably in the middle but as a Ducks fan I wouldn’t have been upset with 6 million over 3 years either. He can fill mutliple roles, plays hard and seems like a great teammate/vet.

 

[Rec T]

So, is Vatrano a $4.5M player or a $6M player? Or is it somewhere in the middle?

Also, if he was traded and 50% of his salary retained I'm assuming that would be half of $4.5M, correct?

And, if traded, who then takes on the payments to be made in 2035?

$4.5, the $6million is just the future value of the money. It's costing (& the cap hit) $4.5 in today's dollars.

I'd assume so.

It probably depends on when he'd be traded. $1.5/yr is going to fund the (essentially) annuity that will pay him out starting in 2035. If he was traded, say at the end of 2026 (first year of the contract), I'd think that the Ducks would be on the hook for $300,000 starting in 2035 & the new team $600,000 (the remaining 2/3rd of the contract). But that's why we pay lawyers and accountants to sort things out...

 

[FiveTacos]

I can’t answer anything except the first question. Which he is probably in the middle but as a Ducks fan I wouldn’t have been upset with 6 million over 3 years either. He can fill mutliple roles, plays hard and seems like a great teammate/vet.

I think MAYBE someone would have offered him around 5 for 3 years to add some scoring punch. But if he's happy in SoCal and with his role on the team, this is probably a reasonable deal to take. You go somewhere else as a mercenary, there's no guarantees as to if/how you ultimately fit in.

 

[FriendlyGhost92]

Yikes

This kinda stuff makes me laugh when people scream about raising taxes and "Making the rich pay".

... Most rich people didn't get rich being stupid. And if they are stupid, they can still pay somebody smart to get around your stupid, excessive taxation.

Props to Vatrano and his agent.

 

[Mac Attack]

We have no idea what $9 million in 2035 will be worth

We have a pretty good idea that it won't be worth 9 million today. Have a look at historical inflation.

 

[pld459666]

Out of curiosity, if they deferred long enough to the point where a team had to be sold or was bankrupt, what would happen?

As an unsecured creditor, the player could expect pennies on the dollar (like $0.03-5 cents).

However, if the NHL has proven anything over the last 10 years is they they will bend every way possible to ensure that teams don't just belly up.

 

[KrisLetAngry]

Curious how next CBA negotiation will go.

Honestly good contract for the player. Makes sense.

 

[FriendlyGhost92]

We have a pretty good idea that it won't be worth 9 million today. Have a look at historical inflation.

It's not a pretty good idea, it's a guarantee, short of some sort of economic crash leading to significant deflation. (And the government would much rather inflate than deflate)

... But if he's thinking far enough ahead to sign a contract like this, he's probably making some sound investments and living beneath his means. Pretty sure he'll be fine.

 

[theguybro]

Curious to see how these negotiations took place . Was there a 3 year deal with no deferred money ? Prob would be around 4-5 million per year . Then a deferred option at 6 million per that he eventually signed . Very interesting approach either way.