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Around the NHL: Part III – Oilers Fire Chiarelli [Update: Still Suck]

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Not sure if this breakdown was posted already, but Matthews has a nice lockout insurance built in to this:

51218141_1933789553414565_6704740744181055488_n.jpg
 
In most circumstances, in the U.S. anyway, bonuses are supplemental income and are generally taxed at a higher rate than your regular pay. Does that impact deals that are structured like that? Bonuses here that are >$1M are generally taxed at like 40%. Same for commissions (not that crazy rate, but a rate different than regular wages). I'm sure the professional leagues have it all figured out and everything but it seems crazy to me.
 
Profet said:
So is it structured this way to purely hedge a lockout?

Does the team gain any benefit?
Click to expand...

nyr2k2 said:
In most circumstances, in the U.S. anyway, bonuses are supplemental income and are generally taxed at a higher rate than your regular pay. Does that impact deals that are structured like that? Bonuses here that are >$1M are generally taxed at like 40%. Same for commissions (not that crazy rate, but a rate different than regular wages). I'm sure the professional leagues have it all figured out and everything but it seems crazy to me.
Click to expand...

Signing bonus is guaranteed in the event of a lockout, base salary isn't. That's the biggest reason for this structure. Tax isn't the reason but it would be interesting with smaller contracts to figure out the actual numbers.
 
Signing bonuses are also outside of escrow.

I mean they may effect escrow in his 700- 750K salary but the bonus itself I think would be paid in full.
 
Profet said:
So is it structured this way to purely hedge a lockout?

Does the team gain any benefit?
Click to expand...

Amazing Kreiderman said:
Signing bonus is guaranteed in the event of a lockout, base salary isn't. That's the biggest reason for this structure. Tax isn't the reason but it would be interesting with smaller contracts to figure out the actual numbers.
Click to expand...

This also makes the contract buyout-proof, unless I'm mistaken. Signing bonuses are unaffected during a buyout. Not that there's much to worry about as far as Matthews' play deteriorating to the point of buyout, but it adds yet another layer of protection for the player, however unlikely.

Edit: My point in bringing up the buyout-proof aspect is not with regards to Auston Matthews, but for pending UFAs. Karlsson is going to get a massive contract this summer, and it wouldn't surprise me one bit for it to be structured the same way. In his case, with all the miles he's racked up, having a buyout-proof contract is something that could factor heavily into where he decides to land.
 
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What Door said:
This also makes the contract buyout-proof, unless I'm mistaken. Signing bonuses are unaffected during a buyout. Not that there's much to worry about as far as Matthews' play deteriorating to the point of buyout, but it adds yet another layer of protection for the player, however unlikely.
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Yeah, I don't think a player like Matthews, or Price in Montreal, are doing this for buy-out protection. It's just in case of a lockout. Drew Doughty was so proud he "negotiated himself" but got a bad contract for him in case of a lockout, with only 22% being signing bonuses.

Matthews (93%) and Price (83%) have much more financial security.
 
nyr2k2 said:
In most circumstances, in the U.S. anyway, bonuses are supplemental income and are generally taxed at a higher rate than your regular pay. Does that impact deals that are structured like that? Bonuses here that are >$1M are generally taxed at like 40%. Same for commissions (not that crazy rate, but a rate different than regular wages). I'm sure the professional leagues have it all figured out and everything but it seems crazy to me.
Click to expand...

Apparently if true, there is a tax treaty.

 
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Amazing Kreiderman said:
Signing bonus is guaranteed in the event of a lockout, base salary isn't. That's the biggest reason for this structure. Tax isn't the reason but it would be interesting with smaller contracts to figure out the actual numbers.
Click to expand...
Yeah I get the lockout aspect of it, I read an article on the lockout/buyout-proof nature of the deal. Was just wondering about the potential tax implications, since in "the real world," having such huge bonuses and such low salary could affect the overall value. Of course CEOs and other high-earners have ways around a lot of that, and I assume athletes do as well, it's just a curiosity to me (I am in HR, haha).
 
Amazing Kreiderman said:
Yeah, I don't think a player like Matthews, or Price in Montreal, are doing this for buy-out protection. It's just in case of a lockout. Drew Doughty was so proud he "negotiated himself" but got a bad contract for him in case of a lockout, with only 22% being signing bonuses.

Matthews (93%) and Price (83%) have much more financial security.
Click to expand...
These contracts are going to become the new normal (for the elite class of the NHL) until there's another lockout. Just like front-loading and back-loading of contracts has been severely curtailed, it wouldn't surprise me if percentage limit on bonuses is imposed. This only currently impacts the highest paid players in the league, so I can't imagine the rest of the rank and file NHLPA membership will make bonuses the hill they die on.
 
nyr2k2 said:
Bingo, that's exactly what I'm talking about. He'd get killed in taxes on that deal in the U.S. Thanks for finding this info--explains a lot!
Click to expand...


Yeah between that tax rate on the bonuses, bonuses which I believe would also be paid in full outside of escrow, up front every season, and having the contract only buy one UFA year, I too am starting to see how this contract looks better and better for Matthews. Yet on the flip side the more of those contracts of that type which are signed, the more escrow the other salaried players are going to be facing should revenue come up short.
 
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nyr2k2 said:
Bingo, that's exactly what I'm talking about. He'd get killed in taxes on that deal in the U.S. Thanks for finding this info--explains a lot!
Click to expand...


After looking into that tweet more closely, it's not quite what it seems. My bad for not doing so before posting it. It seems more like that 15% is only for withholding purposes. The US will still likely tax his bonuses at some rate well beyond that 15%.

Which is still an advantage, bird in the hand sort of thing, but not a total deduction of taxes to the 15% rate.
 
I'm thinking we should easily get firsts for Zuccy and Hayes based on that return. Boyle is a good player, but the aforementioned are difference makers whereas Boyle is more of a secondary piece
 
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I Eat Crow said:
This is why I think that Marner is the one that gets traded this summer, not Nylander. Been thinking it even before Nylander signed.

I hope he enjoys Edmonton.
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Unlike Nylander, Marner is the guy I'd throw the kitchen sink to Toronto for. Send over Andersson + a 1st in 2020 for starters
 
OK. we are 2/3s thru the season, and we currently sit in a draft position that is not a single-digit number.

Time to make the rest of the moves....
 
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