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

[slappipappi]

When the nhl inevitably bans these deals, they better punish every team that took part on them after the fact.

Vancouver and Chicago got screwed over for signing Luongo and Keith to extremely long but completely legal deals and then the NHL threw a hissy fit after the fact.

These deals are specifically allowed under the CBA because there is no cap circumvention. No reason to ban them.

 

[LOFIN]

It’s not like he had a choice to take the $18M over 3 years. Assume he could have taken $14M over 3 years, or this deal.

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

 

[190Octane]

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

That’s apples to oranges.

What people aren’t understanding here is that the deferral doesn’t really benefit the Ducks all that much, all it does is help Vatrano not pay 12.3% on a portion of his money for the next few years in CA state taxes and have an extremely low risk investment as part of his portfolio for the next 20 years.

 

[Korpse]

It’s not like he had a choice to take the $18M over 3 years. Assume he could have taken $14M over 3 years, or this deal.

I’ve acknowledged that much, still deferring the amount he did and over the time frame is a poor choice in my opinion. Sure he is getting a modest return on his deferred salary and potentially saving on taxes. I understand the stability and certainty is of value as well. Just over a 20 year period doesn’t seem worthy.

 

[MMC]

it’s basically 3 years at 13.5m with 4.5m of the 13.5m deferred.

Hes only getting 3M per year the 3 years of the contract though, 9 million is deferred

 

[stats1]

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

 

[HockeyVirus]

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

 

[190Octane]

Hes only getting 3M per year the 3 years of the contract though, 9 million is deferred

It’s not really 9 million deferred, according to the NHL it’s the present value of $1.57m over the next 3 years that’s deferred with a value of $9m over 10 years from now.

I know that seems pedantic but it explains why it’s not circumventing the cap.

 

[LOFIN]

That’s apples to oranges.

What people aren’t understanding here is that the deferral doesn’t really benefit the Ducks all that much, all it does is help Vatrano not pay 12.3% on a portion of his money for the next few years in CA state taxes and have an extremely low risk investment as part of his portfolio for the next 20 years.

Lower cap hit in the immediate is usually preferred. The Ducks are not really in need of that capspace so sure, but even that 1.5M would be a life saver for a team like Colorado.

 

[Korpse]

Lower cap hit in the immediate is usually preferred. The Ducks are not really in need of that capspace so sure, but even that 1.5M would be a life saver for a team like Colorado.

It increases his trade value as well. Haven’t seen any trade protection mentioned.

 

[Chainshot]

Seems like massive cap circumvention that they tried to put a stop to previously.

 

[190Octane]

Lower cap hit in the immediate is usually preferred. The Ducks are not really in need of that capspace so sure, but even that 1.5M would be a life saver for a team like Colorado.

The only way this can be considered a lower cap hit is that they might have to pay him around 10% more to make up for the taxes.

 

[LOFIN]

Seems like massive cap circumvention that they tried to put a stop to previously.

It really isn't a big deal, because 99% of the players are not interested in this.

 

[Curufinwe]

Yikes

Sadly for Frank, he won’t be able to live in a place where $900K is worth nearly as much as it is worth in 2025. Ten years of inflation is going to be a lot of purchasing power lost.

 

[LOFIN]

The only way this can be considered a lower cap hit is that they might have to pay him around 10% more to make up for the taxes.

Last time I checked, 4.57M is less than 6M. It really is that simple.

 

[Curufinwe]

For income over $721k, California's tax rate is 12.3%, which is high, but I still don't think this makes much sense.

The average annual inflation rate since 2000 is 2.7%, so $900k in 2035 will be worth about 70% as much as it is today. His last payment will be about 30%. He'll end up with about 50% less due to inflation to save 13% in taxes up front.

And that's assuming there aren't any major political or economic changes over the next 10 years that drives inflation significantly higher than that average.

Yes, like an administration hell bent on massive tax cuts and pressuring the Fed to lower rates. Hypothetical, of course.

 

[MMC]

Last time I checked, 4.57M is less than 6M. It really is that simple.

It’s more than the 3M he’s actually getting paid tho

 

[EXTRAS]

Lmfao turning one good year into an $18 million deal.

Its' even more bizarre because he came back down to his career norms this year, so they're still giving him a huge deal despite his regression back to normal.

Funny thing is, it isn't 18m worth of value for him. It doesn't really make sense. He should have just taken 4.57m per year now. The 4.71m extra he would get now is almost certainly worth a good amount more than the 9m he will get in that period 10-20 years from now.

The contract is more like 11-12m in real dollars.

 

[190Octane]

Last time I checked, 4.57M is less than 6M. It really is that simple.

It really isn’t.

Let’s exclude taxes for this example, but if you win the lottery and the amount they advertise is $250m, do you think they’d just hand you a check for $250m?

It’s the same principle.

 

[LOFIN]

It really isn’t.

Let’s exclude taxes for this example, but if you win the lottery and the amount they advertise is $250m, do you think they’d just hand you a check for $250m?

It’s the same principle.

Obviously not, but we're talking about the cap hit here. Is 4.57M less than 6M, answer that. Taxes are totally irrelevant in this discussion.

 

[Empoleon8771]

Last time I checked, 4.57M is less than 6M. It really is that simple.

Again, the cap hit is less because $9 million spread out from 2035-2045 is worth less than $9 million today.

Here's another way to describe his contract. He signed for 3 years at $13.71 million, where Anaheim is retaining $4.71 million of his deal and converting it into $9 million over 10 years from 2035-2045.

 

[LOFIN]

It’s more than the 3M he’s actually getting paid tho

Irrelevant when talking about the cap.

 

[KevinRedkey]

URL: Understanding deferred contracts

 

[EXTRAS]

Sadly for Frank, he won’t be able to live in a place where $900K is worth nearly as much as it is worth in 2025. Ten years of inflation is going to be a lot of purchasing power lost.

Not to mention if he got just 4.57m x 3 years now it's worth way more once invested than having 6m x 3 years with 9 million deferred.

 

[Fourier]

How is this legal?

Edit: so will he be on the cap for those 10 years too then?

The cap hit is based on the actual cost to the team. Lets say that the deferred interest rate is 5%. If I offer to give you $1 ten year from now I can do so by taking $.61 C today and investing it for you at 5%. In reality I am only spending 61 cents but you get a dollar. Hence I am only charged for 61 cents on the cap because that is all I am really paying.