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

[BKarchitect]

So a $6M cap hit turns into a $4.58M cap hit cause of Deferral shenanigans?

How is this Legal?

Oh don’t answer that. It’s Legal cause the NHL is a clown League too lazy and incompetent to write good rules.

The NFL has way more convoluted cap rules and contracts that teams openly manipulate year after year with no consequences. Not sure many would consider the Goliath of North American pro sports a “clown league”. Hell in baseball, Ohtani has like over half a billion deferred over a decade. This Vatrano “breach of good ethics” or “bad league contract policy” or whatever gatekeeping people want to prescribe to it is nothing.

For the record, not disagreeing that teams are trying to do things to get around “the rules”…but that’s just big money pro sports. Let’s not act like the Ducks just invented the wheel here.

 

[Jared Dunn]

100% chance we see banning or at least limitations on deferred salary in the next CBA right?

 

[Crazy8oooo]

PV/FV is an easy calculation. The agents know how to do it. The teams know how to do it. $6m per year was never actually on the table. $4.5m was. You calculate what those future payments need to be based on the interest rate. It ends up at $18 non-discounted. There’s nothing tricky or cap-circumventing about it.

Agreed. Problem is, some are thinking that Anaheim is paying out $18 million total and not being held responsible for it being against the cap when they’re actually only paying out $4.57*3 which is what’s held against the cap as it should be. They’re not understanding that the “extra money” is what’s earned in interest from the deferred money.

 

[theVladiator]

I mean the total value of the money Vatrano is getting paid is 18M. There's nothing misleading about his tweet.

As others pointed out, 18M is as relevant as 13 year total duration of the agreement. I am stunned you claim it's not misleading. What would you call something that's "technically" correct, but creates a wrong impression at the first (and for some, the second etc) glance? This thread is riddled by posts from people clearly confused about what this number actually means.

NHL uses a well known formula to obtain the equivalent value of the future (deferred) payments over the 3 years the services are supposed to be performed, and that's what gives AAV value. This puts all contracts and cap hits on the same scale.

 

[CoopersFalls]

Great deal for the player but that is 100% cap circumvention and will be fixed next CBA

 

[vildurson]

Is whole league now gonna do deferred salaries with bigger contracts? I wonder how players like this in general.

 

[LOFIN]

Is whole league now gonna do deferred salaries with bigger contracts? I wonder how players like this in general.

No, because the majority of players don't want to do this.

 

[GordonGraham]

I guess he cant manage his money so he made sure to get paid for 10 years after he retires

 

[Pablo El Perro]

I guess he cant manage his money so he made sure to get paid for 10 years after he retires

It's kind of like a retirement plan. The team holds a determined portion of his salary and sets it aside to pay with interest at a later time, in this case, 10 years after the contract ends. Professional athletes have done much stupider things with money.

 

[Crazy8oooo]

Great deal for the player but that is 100% cap circumvention and will be fixed next CBA

Explain how its cap circumvention when the cap amount equals the amount the Ducks are paying to the player.

 

[Pablo El Perro]

Explain how its cap circumvention when the cap amount equals the amount the Ducks are paying to the player.

Most people have trouble understanding that the reason why 4.57x3 doesn't equal 18 million is due to interest accruing in the deferral. Agree, It's far from cap circumvention.

 

[Crazy8oooo]

Most people have trouble understanding that the reason why 4.57x3 doesn't equal 18 million is due to interest accruing in the deferral. Agree, It's far from cap circumvention.

Exactly. Which is why it’s funny that some are saying how wrong it is when they don’t even understand it.

 

[Pablo El Perro]

Exactly. Which is why it’s funny that some are saying how wrong it is when they don’t even understand it.

Then you have people calling the athletes dumb, when, honestly, its a decent return for such a short investment.

 

[Static]

 

[Crazy8oooo]

Then you have people calling the athletes dumb, when, honestly, its a decent return for such a short investment.

Yeah, maybe he doesn’t already invest on the regular and figures it’s easier to have it done for him and is making some decent profits on it this way. Personally, I’d take the money now and invest in crypto/stocks but that’s only because I’ve already been doing that for years now.

 

[Pablo El Perro]

Yeah, maybe he doesn’t already invest on the regular and figures it’s easier to have it done for him and is making some decent profits on it this way. Personally, I’d take the money now and invest in crypto/stocks but that’s only because I’ve already been doing that for years now.

Investing 4.5 million over 3 years, I'd take the safe bet. Of course, I think most of our present economy is vaporware, so take that as you will.

 

[Korpse]

Then you have people calling the athletes dumb, when, honestly, its a decent return for such a short investment.

It’s a pretty poor return for the amount of money involved and considering he won’t get the full value until 2044. Could definitely do worse things with it but I don’t know if I would call it a decent return.

 

[tucker3434]

It’s a pretty poor return for the amount of money involved and considering he won’t get the full value until 2044. Could definitely do worse things with it but I don’t know if I would call it a decent return.

It’s roughly 4.3%, basically the risk free rate. It’s not an investment, just a true deferral.

 

[Jumptheshark]

I can see a rather large problem with the deferalls at some point in time biting teams in the ass. If I understand correctly. Team X does this a player to get paid like 10 years down the road for say 10 mill or whatever. It is the team that owes him that money. But if the team gets sold in the meantime it will be the new owner on the hook for the money

 

[Pablo El Perro]

It’s a pretty poor return for the amount of money involved and considering he won’t get the full value until 2044. Could definitely do worse things with it but I don’t know if I would call it a decent return.

It's not an index fund, but if you factor in not paying state taxes in California, it's a pretty safe move. And I doubt Frankie is hurting for cash.

 

[dirtydanglez]

this isn't to circumvent the cap its to circumvent the irs

 

[Crazy8oooo]

It’s a pretty poor return for the amount of money involved and considering he won’t get the full value until 2044. Could definitely do worse things with it but I don’t know if I would call it a decent return.

I’d agree there are better ways to invest. Maybe he’s not savy with investing and figures this sets him up for the future without worrying about it. It’s like how you can take a 25 year payout for winning the lotto instead of a lump sum. Some may just like the long term security of having a steady income for the future.

this isn't to circumvent the cap its to circumvent the irs

He’ll still be paying taxes on it when he actually collects the money.

 

[Coffee]

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.

Advice for investing ?

 

[dirtydanglez]

He’ll still be paying taxes on it when he actually collects the money.

like the tweet in the op says it wont be taxed at the same rate.

 

[bernmeister]

Liked him as a player, pissed Rs did not extend,
He likes playing for ANA
Am happy for him and them as a fit