Confirmed Signing with Link: [CAR] F Seth Jarvis signs extension with the Hurricanes (8 years, $7.420087M AAV; deferred salary in 9th year)

[GrandBison]

Agreed, the player holds that option. Thinking Doan did it pre cap era??

I do think the rich and better competative teams will be able to entice players to do this at some point.

The saved cap hit is only the difference between the future bonus money and the discounted actual money, not on the total amount.

 

[EXTRAS]

This would actually be a cool tax loophole for players who don't expect to play after current contract. Last year of bonus kicked into a 9th year where they would have an income closer to zero. Pay waaaay less taxes on that 9th year than if it's just grouped in with your 8th year salary.

 

[GrandBison]

This would actually be a cool tax loophole for players who don't expect to play after current contract. Last year of bonus kicked into a 9th year where they would have an income closer to zero. Pay waaaay less taxes on that 9th year than if it's just grouped in with your 8th year salary.

It works if the player is considered as an employee. But I honestly don't know how it works for a self-empoyed who gives his client nine years after the invoice to pay the bill.

 

[BrindAmours Army]

Do the Canes have liquidity issues? Maybe so. Maybe they can only spend a certain amount in bonus money per season, and this season is already capped out. It would be a logical thing anyway. Maybe Jarvis just thought, no bid deal, I’ll ultimately get the money anyway and he loves playing there. Who knows.

Ah yes, more unfounded conjecture about the Canes having financial issues Here I thought we had put that behind us years ago.

Jarvis has stated he wasn't chasing top dollar and wants to be in Carolina long term.

In terms of cashflow, the only way it makes sense for Jarvis is that is money that the Canes didn't want to give him at first. Heavily front end contracts are always the best for the player and I don't see how this could become a trend.

Or, Jarvis didn't care about the difference in $, and wanted to help the team be able to be more competitive. His non-deferred pay will go a long way in Raleigh.

Yes, in a vacuum, front loaded contracts are what every player will prefer. But, if deferring a portion of their pay will lower their cap hit, thus allowing their team to be more competitive, some players would be open to that. Not all, and from a financial perspective it is not great, but not everyone feels the need to max our their money as soon as possible.

You and I might, but Jarvis is guaranteed to get a few million a year either way. So deferring some of the bonuses isn't going to impact his day to day life nearly as much as deferring ~25% of your salary would impact you.

 

[BrindAmours Army]

Another major factor in "WHY" we don't see this more often is the interest rate environment.

It has only been recently (the last 18-24 months) that most indexed rates have jumped over 5% to create a big enough delta in the NPV of 8 years of deferred comp to have any significant AAV "savings".

The exact same contract for Jarvis under a 3% lower rate environment would have only netted $2 million in AAV savings over 8 years instead of the $3.2 million that it did under today's interest rate environment.

This is definitely true. Would have been much less of a benefit for teams in the past. Might be an example of Tulsky striking while the iron is hot, I'm curious if the Canes will try for more contracts like this over the next few years if rates stay high.

 

[NotOpie]

It wasn’t intended to give teams a Cap advantage though. That’s an unintended result of a poorly written LTIR rule.

Laws, rules, and contract terms are supposed to be "set in stone", but as life has shown us, they are almost always iterative processes. When somebody abuses the terms, eventually the guiding body remedies the situation.

 

[bleedgreen]

I can see Jarvis at least mildy regretting this a few years in. That's a lot of money to leave on the table for a long time, and it doesnt really help the team very much.

 

[KrisLetAngry]

Even with the deferred money I am a little surprised Jarvis went for this much.

 

[Negan4Coach]

LOL Yeah Tulsky! Stunt on them hoes!

 

[Frank Drebin]

There has to be some sort of cap savings % max that you can attain with this method I imagine

Like Jarvis has a 7.5 hit on a 7.9 aav

About a 5% savings

Could you theoretically save more? I have no idea how it’s structured but all in all it’s a pretty minuscule advantage

 

[kranuck]

It won’t be.

1. You’ve got to get players to agree to the deferred payment. Most players want more money up front, not 9 years from now.

2. The Canes had to defer over $15 million to save 500k in cap space. That’s a lot of money you’re asking the player to postpone for a relatively small payoff.

I thought it was 3.2 million ?

 

[Bubbles]

I'm sure the Canucks are going to get a draft pick taken away for all of this Jarvis business.

 

[Golden_Jet]

Ok. If all teams can do this. It’s different than the state tax advantage.

But.

If he signs his next deal. Then he makes the deferred money and the next money?

Also. This will end as soon as they try it with Marner.

That’s assuming Marner wants deferred money vs upfront like his current deal.

 

[Golden_Jet]

Of course it would count. They are getting a paycheck for hockey

So that means that the cap hit for year 9 is 3.2 million? (.4×8)

There is no cap hit in year 9, as has been explained in thread. It’s in included in years 1-8, due to the NPV calculation.

 

[ottawah]

While players may want the cash now, let consider this scenario.

Draistaitl wants a contract for 8 years 13M after this year. Team X decides they will do it, but wants to defer all but 1M salary a year. But rather than offering 8x1 plus 96M in year 9, they enter into an agreement with an investment company to put 12M at the start of every year with a guaranteed rate of say 4% for 9 years (may very well be some companies willing ot do this, its just a backwards annuity really). They know that will be worth 132M in year 9, so the offer becomes 1X a year plus a 16.5M signing bonus, deferred to year 9. Leon gets an extra 4.5M a year to defer, but it costs the team nothing, and they have 12M in salary cap space available.

Now that is an extreme case, but rich teams can certainly look at that in a new light.

 

[Community]

Nope, the Coyotes did it with a Shane Doan contract way back when. It's always been available for many, many years.

It doesn't happen often (and probably won't happen again anytime soon) because most players want to get paid sooner, not 9 years from now.

It doesn't matter how rich a team is. Ultimately, it comes down to the player.

Am I missing something, or can't this deal be completed over 1-5 years with higher cap savings and thr player won't have to wait 9 years.

 

[MikeyMike01]

NHL not hard to

you would think NHL could hire half decent lawyers to figure this out and prevent it. Every cap circumvention was not inventive or hard to avoid just bad working or lack of wording in CBA. Silly

Lawyers only care about lining their own pockets

 

[DisgruntledHawkFan]

There's no way this should be legal in a capped league but good on the Canes for getting in on it while the getting is good.

 

[Qwijibo]

I can't see how this isn't cap circumvention

 

[AcerComputer]

Not sure if addressed, but in the unlikely event that the Carolina franchise folds, the deferred $$ becomes unsecured. Seth would be lucky to get 10 cents on the dollar.

UtaH-HC just paid a $1.2B relocation fee. get real. The league will make sure the players are paid one way or another. There is also insurance.

 

[AcerComputer]

I can see Jarvis at least mildy regretting this a few years in. That's a lot of money to leave on the table for a long time, and it doesnt really help the team very much.

He didn't leave any money on the table. He negotiated the contract both sides were comfortable with. Had Jarvis wanted more upfront or higher AAV then there is no guarantee the team would have agreed to such terms and there would be no contract to speak of.

 

[Kingsfan1]

LA Dodgers effect baby !!!

Shohei Showtime effect!!!

 

[IslesNorway]

Uhhhh, this will be every contract from this point on for anyone who's remotely good

Agreed. Soon you will have some player who prefers to have all the money distributed over his lifetime rather than 7 or 8 years. Not bad being paid $400K for the rest of you life after you career ends. I'd happily take that.

 

[bleedgreen]

He didn't leave any money on the table. He negotiated the contract both sides were comfortable with. Had Jarvis wanted more upfront or higher AAV then there is no guarantee the team would have agreed to such terms and there would be no contract to speak of.

He’s agreed to lump sum 9 years from now. Of course he may regret not having it sooner. Just because he’s 22 and comfortable with it now hardly means he will be comfortable with it the whole time. They were going to pay him close to what he got no matter what. It was going to be close to the Svech deal. He likely got extra in the end because he agreed to do this.

Your last sentence suggests he had no choice because they wouldn’t have given him more up front. Cmon. Of course they would’ve given him more upfront if it came down to it. I’m saying he agreed now for whatever reason he chose to, but it wouldn’t surprise me if he questions his choice in the middle.

 

[AcerComputer]

He’s agreed to lump sum 9 years from now. Of course he may regret not having it sooner. Just because he’s 22 and comfortable with it now hardly means he will be comfortable with it the whole time. They were going to pay him close to what he got no matter what. It was going to be close to the Svech deal. He likely got extra in the end because he agreed to do this.

Your last sentence suggests he had no choice because they wouldn’t have given him more up front. Cmon. Of course they would’ve given him more upfront if it came down to it. I’m saying he agreed now for whatever reason he chose to, but it wouldn’t surprise me if he questions his choice in the middle.

If he could have gotten more he would have. Again, he left no money on the table. It's likely the team was offering $7m x 8 years, and he wanted $8m x 8 years and this was the deal to meet in the middle. The deal got made.