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

[LOFIN]

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

Sure. I'm just arguing the point that "this doesn't help the Ducks". Is a lower cap in general a good thing in the NHL? Yes, unless you were the Arizona Coyotes who struggled to get to the cap floor.

 

[Siludin]

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.

Counterpoint: if he was on the same pace this year, he would be making much more on this next deal

 

[Empoleon8771]

Sure. I'm just arguing the point that "this doesn't help the Ducks". Is a lower cap in general a good thing in the NHL? Yes, unless you were the Arizona Coyotes who struggled to get to the cap floor.

Again, this isn't a lowered cap hit. Vatrano signed for 3 years at $4.57 million, but Anaheim is holding onto $1.57 million each year in the deal. That money will later be paid to Vatrano in the form of $9 million over 10 years.

That $4.57 million is converted into $9 million when you take into account the value of the money plus an interest rate that equals roughly 5.5%. They're setting aside $4.57 million today and will pay him out $900k over 10 years from 2035-2045, but $4.43 million of that $9 million is interest accrued over the next 20 years.

 

[ToDavid]

This actually makes me wonder how those values are calculated. Turning $1.57 million a year for 3 years into $9 million in 10 years seems like an aggressive conversion that I'm assuming the NHL has a say on.

Just using a rough calculation, investing $1.57 million at the start of a year for 3 years with a 6% return rate ends up with a value of about $5.30 million after 3 years. Add on another 7 years of no contributions but that same 6% return rate has the final value at about $7.97 million.

It's not really $9 million in 10 years, that's just when the deferred payments start. My understanding is that he'll then receive $900k for the next 10 years after that. So it's more like an average period of 15 years.

I believe the rate they're using is about 5.5% right now. That's part of the reason we're seeing these contracts. Rates are still super high post-pandemic. You're effectively locking in a high, near riskless rate of return, while interest rates will likely be on the downswing over the next while.

 

[WarriorofTime]

I’d rather just have the money now, pay the taxes and invest it. But I guess for some people the steady income in deferment and less tax at that time is preferable.

 

[LOFIN]

Again, this isn't a lowered cap hit. Vatrano signed for 3 years at $4.57 million, but Anaheim is holding onto $1.57 million each year in the deal. That money will later be paid to Vatrano in the form of $9 million over 10 years.

False, Vatrano didn't sign for 3 years at 4.57M. He signed for 3 years at 18M. In a normal contract, the AAV would be 6M a year, but because of the deffered salary and CBA calculations, it's only 13.17 over 3 years so 4.57.

 

[Crazy8oooo]

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.

For one, Franks value is much more than just points so you’re not appreciating him for what he is as a player. He’s a middle 6 guy who brings tons of energy, leadership, and isn’t afraid to hit. (And can play up and down the lineup as needed). He’s great for the young players to learn from. And if you understand the contract, the Ducks aren’t paying him $18 million. They’re paying $4.57 per year and deferring 1.57/year of that which earns money along the way. That’s perfectly fine money for a player like him, whether he’s scoring 37 goals or 20+ goals. He’d get that on the open market, without question.

 

[Empoleon8771]

False, Vatrano didn't sign for 3 years at 4.57M. He signed for 3 years at 18M. In a normal contract, the AAV would be 6M a year, but because of the deffered salary and CBA calculations, it's only 13.17 over 3 years so 4.57.

That is a factually incorrect statement.

The contract he signed is 3 years at $3 million a year, plus $9 million to be paid out over 10 years from 2035-2045. The value of "$9 million to be paid out over 10 years from 2035-2045" is an added $1.57 million AAV to the contract.

The reason that the $9 million isn't just added to the contract is because $9 million over 10 years from 2035-2045 is worth less than $9 million in a contract signed today.

 

[190Octane]

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.

If you aren’t taking into account taxes, maybe you’re right.

Take the $1.5m each year and and multiply it by 88% to account for the state taxes he would pay and it all of a sudden becomes $1.32m per year over 3 years versus $900k for 10 years in 10 years from now.

Something else people aren’t taking into account… in 2015, anything over $466k was taxed at 40% federally. In 2024 the rates were 37% on anything over $578k.

If he takes that money now all $1.5m is in the very top bracket and gets hit at 37% + the 12% in California so now the take home is about $750k instead of $1.5m. In 10 years from now, if the federal tax brackets go up another $100k and he’s not paying state taxes, he’s probably paying an effective rate of 25-30% on $900k. It then becomes a question of whether you would take home $750k for 3 years now, or $650k per year for 10 years in 10 years from now.

 

[sansabri]

i hate this shit

 

[LOFIN]

That is a factually incorrect statement.

The contract he signed is 3 years at $3 million a year, plus $9 million to be paid out over 10 years from 2035-2045. The value of "$9 million to be paid out over 10 years from 2035-2045" is an added $1.57 million AAV to the contract.

If that would be a normally structured contract where the money would be paid in the years he's playing, the value would be 3 years at 18M.

 

[Vipers31]

False, Vatrano didn't sign for 3 years at 4.57M. He signed for 3 years at 18M.

No, this is just the oversimplified version of what the deferred payments amount to. It is infinitely further away from describing the money actually involved relevant to the cap than the $4.57M number.

 

[tny760]

it's wild the lengths NHL GMs will go to in order to kick cans down the road for the next guy to deal with

 

[Empoleon8771]

If that would be a normally structured contract where the money would be paid in the years he's playing, the value would be 3 years at 18M.

But that wasn't the contract, the contract was "$9 million during the length of the contract plus $9 million deferred". The value of that $9 million deferred is not $9 million today.

I don't know why you're arguing against this when people are clearly explaining why you're wrong. This isn't a 3 year, $18 million deal. The AAV is calculated based on the amount of money you need today to be able to pay Vatrano $900k a year for 10 years from 2035-2045. With how the NHL calculates it, you need $4.71 million in money today to be able to pay Vatrano $900k a year from 2035-2045. Because of that, the NHL divides that $4.71 million by the length of the deal and adds that money to the AAV.

 

[Vipers31]

If that would be a normally structured contract where the money would be paid in the years he's playing, the value would be 3 years at 18M.

But a "normally structured" contract also doesn't guarantee players money when they're retired. It's not helpful to pretend this type of deal is something it isn't.

 

[190Octane]

If that would be a normally structured contract where the money would be paid in the years he's playing, the value would be 3 years at 18M.

No, it would be $4.57 million because they wouldn’t pay him $6 million a year.

If they were willing to pay him $6m a year this would be a 3 year deal for $27m because you would take the extra $3m per year on top of the $3m they’re paying and the $3m deferred would be $18 million in deferred money instead of the $9 million he’s getting now.

 

[LOFIN]

But that wasn't the contract, the contract was "$9 million during the length of the contract plus $9 million deferred". The value of that $9 million deferred is not $9 million today.

I don't know why you're arguing against this when people are clearly explaining why you're wrong. This isn't a 3 year, $18 million deal. The AAV is calculated based on the amount of money you need today to be able to pay Vatrano $900k a year for 10 years from 2035-2045. With how the NHL calculates it, you need $4.71 million in money today to be able to pay Vatrano $900k a year from 2035-2045. Because of that, the NHL divides that $4.71 million by the length of the deal and adds that money to the AAV.

What you are arguing is semantics, what I'm saying is the simplistic way of describing it. For all intents and purposes, this is a special way for teams to save money now and lower the cap hit.

No, it would be $4.57 million because they wouldn’t pay him $6 million a year.

So he would've gotten that money in the open market. Instead, they wanted to keep him, Vatrano wanted to stay, and this is how they made it work.

 

[190Octane]

But that wasn't the contract, the contract was "$9 million during the length of the contract plus $9 million deferred". The value of that $9 million deferred is not $9 million today.

I don't know why you're arguing against this when people are clearly explaining why you're wrong. This isn't a 3 year, $18 million deal. The AAV is calculated based on the amount of money you need today to be able to pay Vatrano $900k a year for 10 years from 2035-2045. With how the NHL calculates it, you need $4.71 million in money today to be able to pay Vatrano $900k a year from 2035-2045. Because of that, the NHL divides that $4.71 million by the length of the deal and adds that money to the AAV.

Becuz maths is hard.

 

[sabresfan129103]

I love it! Good job Ducks.

 

[KevinRedkey]

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

If they paid him 10.000 a year for 8yrs, and deferred the other 3.000 (24.000 total) to say year 9, the cap hit would be 12.386 instead of 13.000. Not a huge difference.

To get the cap hit down to 10.000 they'd need to defer that 24.000 to over 100 years away. lol

 

[LOFIN]

Becuz maths is hard.

9+9=18, is that correct? We look at the annual cap hit as the total value of the contract divided by the contract years. In a normal case, that would make the cap hit 6M per. Now, because half of that money is defered, the cap hit is only 4.57, instead of 6M.

Math is indeed not hard.

 

[190Octane]

What you are arguing is semantics, what I'm saying is the simplistic way of describing it. For all intents and purposes, this is a special way for teams to save money now and lower the cap hit.

So he would've gotten that money in the open market. Instead, they wanted to keep him, Vatrano wanted to stay, and this is how they made it work.

No, you’re not describing it the simplistic way, you’re trying to simplify a concept you clearly aren’t understanding.

If you make $45k for the next 3 years but your company takes $15k of that per year and puts it into a pension plan for you and pays you $9k a year for 10 years starting in 2035, would you tell people that you’re making $60k now?

 

[DudeWhereIsMakar]

Good for tax purposes too.

 

[190Octane]

9+9=18, is that correct?

1 + 1 =2 but that’s about as relevant to the conversation as 9+9=18 which is to say that neither are relevant to this discussion.

 

[LOFIN]

No, you’re not describing it the simplistic way, you’re trying to simplify a concept you clearly aren’t understanding.

If you make $45k for the next 3 years but your company takes $15k of that per year into a pension plan for you and pays you $9k a year for 10 years starting in 2035, would you tell people that you’re making $60k now?

No I wouldn't, but that's not the discussion anyway. WE ARE TALKING ABOUT THE CAP HIT, NOT WHAT THE PLAYER IS MAKING!

This happens with normal contracts also, the cap hit and what the player actually makes (even before taxes) fluctuates because of contract structure. But the cap hit is always the total value divided by contract length. Not in this case however.

1 + 1 =2 but that’s about as relevant to the conversation as 9+9=18 which is to say that neither are relevant to this discussion.

Is the total value of Vatrano's contract 18M dollars, yes or no? Inflation, taxes and whatnot are not relevant to this question.