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

[Drumman44]

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 I’m with you on the second part. A dollar today is worth more than a dollar in a year.

This may “get around” California taxes today but you put yourself at the whim of state legislatures who may have an updated “deferred jock tax” in the future

 

[Akrapovince]

Some thoughts on this:

I’m surprised this is seen as player friendly. Is the taxes in California so high that it’s worth losing out on years of investment and potential inflation? I understand that the salary cap going up won’t affect him as he will be retired, but unless they gave him a surplus for doing this, I don’t see how it benefits him.

Maybe it’s a situation where he’s getting paid a surplus for doing this in the long run which negates that.

Maybe he’s only a 5.5m/year player but ends up at 6m/year when it’s all said and done but spread out.

 

[Gaylord Q Tinkledink]

Players have to agree too, not every player is going to be down to do this

Vatrano wanted to stay in Anaheim and was prob willing to work with Anaheim to maximize his money+ help the team w/ cap hit.

Players have to be willing to not get their money right away. Not everyone is set up that way.

Yeah, true, but star players might, but you can go and get yourself the middle 6 players.

If teams are offering let's 4 mill a year for 4 years. You know a solid player, but someone you want to save some pennies on.

You come in and offer that player 6 mill a year for 4 years, but defer 2.5, so the player gets more money in the long run. That 500k a year (the difference from the teams paying 4 x 4) isn't that much, plus he gets more later when he's retired, the team saves 500k.

Now, this is definitely something rich teams can take advantage of as in 5 years the cap will be up over 100 million, so you could have teams paying 110, 120 mill because they did that deferred money.

Vatrano at 6 mill isn't the best, but at 4.6 is a little bit better for the team.

Should be able to find some of those players in the middle where you can get yourself some nice depth.

Or those vets that have clearly lost a step, but they're still a pretty good player.

I have to imagine this happens more often, even starting as soon as this July 1st.

 

[WhatTheDuck]

Interesting to see the unique contract structure.

Definitely some out to lunch takes here. Vatrano has been a useful middle six scorer (who also brings energy and finishes hits) throughout his three years in Anaheim. This cap hit is absolutely fine, even if he only ends up a third liner as the team develops.

 

[Zegs2sendhelp]

Yeah, true, but star players might, but you can go and get yourself the middle 6 players.

If teams are offering let's 4 mill a year for 4 years. You know a solid player, but someone you want to save some pennies on.

You come in and offer that player 6 mill a year for 4 years, but defer 2.5, so the player gets more money in the long run. That 500k a year (the difference from the teams paying 4 x 4) isn't that much, plus he gets more later when he's retired, the team saves 500k.

Now, this is definitely something rich teams can take advantage of as in 5 years the cap will be up over 100 million, so you could have teams paying 110, 120 mill because they did that deferred money.

Vatrano at 6 mill isn't the best, but at 4.6 is a little bit better for the team.

Should be able to find some of those players in the middle where you can get yourself some nice depth.

Or those vets that have clearly lost a step, but they're still a pretty good player.

I have to imagine this happens more often, even starting as soon as this July 1st.

Oh ya curious about bigger name players like rantanen/marner

 

[tmg]

I, for one, am greatly looking forward to the NHL tolerating increasing versions of this until one day they decide to punish the most recent team to do it because they went too far.

 

[LuGBuG]

4.75 is a great cap hit for Vatrano and just 3 years let’s go!!!! Good for his future too!

 

[Korpse]

The full salary (or something much closer to this) wouldn't have been on the table if not for this structure, though. They clearly worked this out together.

I agree, he would have been leaving value on the table by taking the entire salary over the term on the deal but he’s also deferring current value here. He is more than a $3,000,000 AAV player. The loss of potential investment value here just seems so large that it likely more than negates the extra value and tax savings. He won’t receive the entire value of the contract until 2044.

 

[Nfumass]

I love this kind of deal for Vatrano just because of how smart he's being for taking $900k a year from age 41 to 51. Really sets himself up to be in a very stable financial position even if he washes out in a few years.

In the context of this deal being a 3 year, $4.5 million deal, I actually think that's pretty fair. But Vatrano just deferred a bunch of it to increase the future payouts but not increase the total value of the deal.

Super smart because he can get out of California crazy taxes as well. Wouldn’t suprise me to see this become a normal thing for players playing in blue states with crazy taxes

 

[bland]

So PayPals "pay in four" gets a commission on these deals?

 

[LOFIN]

So, when he's collecting his 900k there's no cap hit then for the Ducks ?

If so, teams need to do this with every contract signed.

Lower cap hit and no consequences.

Guess what? The majority of the players are not that stupid and accept this. Inflation is a thing.

 

[190Octane]

Sure it is. It's like buying player contracts on credit rather than cash.

But it’s not… there’s a reason the cap hit is $4.57m and not $6m.

If he team is basically taking $1.57m for the next 3 years and putting it into a deferred annuity guaranteed to pay out $9m over 10 years in 10 years from now.

For all the people saying this is stupid and Vatrano is missing out by not just investing the money now don’t understand the tax ramifications of this. If he takes that $1.57m in salary over the next 3 years, he’s going to pay over $450k in state taxes on that alone so he’s really investing $4m instead of $4.71m. The rule of 72 says that he would have to earn around 8% to double that money in the next 10 years.

With this contract he’s essentially earning over 8% on 1/3rd of his salary for the next 10 years and not having to pay state taxes on it depending on where he lives when he starts drawing on it. It’s a great idea to provide financial stability down the line and avoid losing 10% of your salary now to taxes.

 

[Empoleon8771]

The big reason I don't want/see the NHL going after this is because this is an easy way to shut up some of the complaining from these high tax states/provinces about how it's more difficult to get players to sign with them. The deferred salary benefit is only really a benefit for states/provinces with a high income tax rate, but it's a point that can help negate out some of the benefits that income tax free states have. This can be a benefit for Canadian teams as a whole as well, especially with a weak Canadian dollar.

 

[wetcoast]

Half the salary deferred for 7+ years just seems like poor financial advice for the player.

This assumes that he would have received all of that money in the current term...which is unlikely to say the least.

 

[Vipers31]

I agree, he would have been leaving value on the table by taking the entire salary over the term on the deal but he’s also deferring current value here. He is more than a $3,000,000 AAV player. The loss of potential investment value here just seems so large that it likely more than negates the extra value and tax savings. He won’t receive the entire value of the contract until 2044.

Yeah, I can see how one would feel that way - the remaining disconnect would have to be considered a bit of a hometown discount, as he has been very vocal about staying with the Ducks and this was the way to make it happen.

Good to see the Ducks expecting to be a cap team sometime soon again, too.

 

[LOFIN]

Super smart because he can get out of California crazy taxes as well. Wouldn’t suprise me to see this become a normal thing for players playing in blue states with crazy taxes

The tax difference matters f*** all, inflation will take care of that difference. It's 10 years from now when that deferred money starts to trickle in. Unless he plans to move to a literal tax haven, then it might be worth it.

 

[Ducks DVM]

Half the salary deferred for 7+ years just seems like poor financial advice for the player.

If he wasn’t going to get that money non-deferred, and wants to keep his young family in a stable situation with an organization he likes, then it’s still more money than he’d get otherwise. Especially if he moves somewhere with no state income tax when the deferred salary comes due.

 

[Empoleon8771]

The tax difference matters f*** all, inflation will take care of that difference. It's 10 years from now when that deferred money starts to trickle in. Unless he plans to move to a literal tax haven, then it might be worth it.

The "inflation" is baked into him getting $18 million rather than the $13.5 million he would have gotten had he signed today.

He wouldn't have gotten $18 million if he was signing for today's money.

 

[BringBackTheIceman]

Can't believe Frank didn't check in with the HFboards financial advisors before agreeing to the deferrals

 

[Raccoon Jesus]

Andrew Freidman in his office watching local teams reading his playbook

AEG immediately vetoing Rob Blake's power to do so so that they don't have to pay PLD 5 million a year in 2070

 

[Cynick]

Gotta think some veterans chasing a Cup in their twilight years will leverage this approach more in the future, so as to give their teams more flexibility to add more key pieces.

 

[Static]

We don't know the exact amount but it will absolutely be less. That's what inflation is.

But it’s not… there’s a reason the cap hit is $4.57m and not $6m.

If he team is basically taking $1.57m for the next 3 years and putting it into a deferred annuity guaranteed to pay out $9m over 10 years in 10 years from now.

For all the people saying this is stupid and Vatrano is missing out by not just investing the money now don’t understand the tax ramifications of this. If he takes that $1.57m in salary over the next 3 years, he’s going to pay over $450k in state taxes on that alone so he’s really investing $4m instead of $4.71m. The rule of 72 says that he would have to earn around 8% to double that money in the next 10 years.

With this contract he’s essentially earning over 8% on 1/3rd of his salary for the next 10 years and not having to pay state taxes on it depending on where he lives when he starts drawing on it. It’s a great idea to provide financial stability down the line and avoid losing 10% of your salary now to taxes.

Ok, I see now that what you and that other person are saying is financially over my head.

Not the inflation part, but the way it is being paid out later.

 

[McDanglez]

So does the deferred money count towards their cap during the deferred years?

 

[Machinehead]

You can do this??????????

I need to speak to the Rangers about the last *checks notes* 20 years.

 

[TGWL]

The most bizarre part is they needed deffered salary to get him at that cap for 3 years.

So does the deferred money count towards their cap during the deferred years?

No.