Around the League Thread | Holiday Season!

[krutovsdonut]

Don't you need all players to accept those deferred payments to make it an equal playing field for tax adjusted value of money and inflation? All of our contracts in Vancouver and high tax franchises should be like that then shouldn't they if the playing field was level shouldn't they, or just random ones here and there are fine?

This way you're just giving a couple more teams a way to pay less money and get less AAV. It's not fair unless everyone is getting the same break.

every team has the option to go down that road and use these deferred payments.

but i do not like the fact that this different favourable treatment incentivizes teams to do this. you could have a situation down the road where they all do it to be competitive and force it on players to get their current cap down.

apart from forcing a tax planning strategy on players that has risk, the entire league puts itself at reputational risk if not financial risk by getting involved with this stuff on a large scale. big companies have in the past been destroyed by pension plan funding issues. as i said i do not know how they are implementing this, but no approach is risk free.

frankly, i like the luongo contract approach better. simpler and done.

 

[krutovsdonut]

i agree there's risk but it's not 'what if the team is sold and the new owner doesn't honor the old contracts?' or 'what if the team folds?' level risk. it's more like 'what if the 2008/09 financial crisis but worse'

pension funds were supposed to be bullet proof too but companies have found endless ways to mess with that. the nhl is not a blue chip owner's league. they have grifters. sod's law says if there is any way to leverage these deferred payments there will be shitty owners who do it.

 

[bossram]

How much are the Anaheim Ducks giving Frank Vatrano in total as a result of this contract? 18 million dollars, yes? so the AAV should be 6m. like, why does the AAV all of a sudden get net present value-adjusted for the deferred payment years but not for the ones in the actual contract year that are also going to be subject to interest rates?

Again, if I promise a player 10 million dollars on a one year deal, and defer 9 million to the next year, the cap hit is ~9.5m. that is stupid. it feels like they're incorporating the net present value losses as a result of not getting 9 million in one year, and to me, that does not really matter.

Yeah, this is the actual flaw in logic of deferred contracts. Some of the other things people have mentioned indicate they don't actually understand interest rates or what NPV is, or debating savings/investment vehicles which is largely irrelevant.

If you're calculating the NPV of the deferred payments and using that to recalculate the cap hit...why aren't they doing that for payments during the contract? If you sign a 3 year deal, the salary in year 3 has a lower NPV than the nominal value listed.

 

[Hodgy]

Yeah, this is the actual flaw in logic of deferred contracts. Some of the other things people have mentioned indicate they don't actually understand interest rates or what NPV is, or debating savings/investment vehicles which is largely irrelevant.

If you're calculating the NPV of the deferred payments and using that to recalculate the cap hit...why aren't they doing that for payments during the contract? If you sign a 3 year deal, the salary in year 3 has a lower NPV than the nominal value listed.

I think they aren’t doing it for simplicity sake.