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

[Canadienna]

The Coyotes, yes, the COYOTES, did it with Doan.

https://x.com/i/web/status/1829870193201525068

Yeah but the Coyotes did it to avoid paying the money out in the short term. Fits the bill tbh.

 

[hamzarocks]

His ceiling is a sam reinhart/willy nylander (pre 94 and 98 pt years)/dylan larkin etc

8 years hes likely worth around 8.5M-9M

Getting at 7.5M should be a very good surplus contract for the next 8 years.

 

[RCGP2]

Leave it to the smartest GM in the league to find a way to manipulate the numbers. Even better that he apparently already snuck the same kind of deal in the Slavin contract and waited to see if anyone would raise a fuss.

Zito didn't manipulate numbers

 

[TheNewEra]

Oh ffs Sens are about to lose another pick

 

[Legion34]

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.

 

[tmg]

They would have had the 11th OA pick, but instead picked 30th OA in 2014. From my perspective there is no cap circumvention because the league did not approve the contract. So the NJD did not benefit in any way from the original contract. Normally you punish someone for gaining an edge, like with ARZ doing private testing on draft prospects.

And to put faces and numbers on the difference, that’s the difference between Kevin Fiala and 428 career points to date, and John Quenneville and 5.

 

[Eegs]

A steal of a contract as soon as next year if not already. This kid does EVERYTHING on the ice and is adored by Rod. Love it for Jarvis' long term financial security, but fabulous deal for the Canes as well imo.

 

[Smif]

I bet you wouldn't be saying the same thing if the Leafs were doing it

I'm pissed we haven't yet.

I'm also not believing that this is actually going to work tho.

 

[bucks_oil]

From July 1st:

https://x.com/i/web/status/1807752015067447769

Hmmm... thanks for sharing McKenzie's comments from July 1.

Although he doesn't think he understands it, he actually describes how the "circumvention" works.

Essentially the year 9 (or later) deferred income is discounted back to its present-day value... anyone who works in finance is familiar with an Net Present Value calculation...

So let's say there is 10M signing bonus that is "earned" on signing, but "deferred" until year 9... that 10M would be discounted back to today by whatever the NHL thinks a fair interest rate is... let's say 5%, so the $10M future payment is discounted back by 5% 8 times to achieve today's value... which if my math is right, is $6.77M against today's cap.

You could also run the numbers the other way... $10M is earned today and counts against the cap, but it isn't paid until year 9 and it accrues 5% interest along the way, so by the time it is paid out, it's not $10M, it's $14.77M... but only 10M of the $14.77M counted against the cap.

Essentially, the interest on the money is not included in cap calculations.

If it's legal under the CBA, this is a very smart way to structure contracts... and if it has been in there as an option all these years and never been used, the old-boys need to wake up and hire more MBA's as Asst. GMs!!!

 

[BLNY]

Wonder who signs the first Bonilla contract? Hasn't played a game since 2001, from 2011 to 2035 gets $1.19 million on July 1.

 

[Caps8112]

The deferred payments still carry a cap hit after the contract is done, so I'm not sure how many teams want to carry a constant cap hit, even if it's small like 800k for a decade.

Even at a smaller 400k, it's still cap you can't use

Management of today probably has a zero% chance of that being their problem after the deal. Might not even be the same team owner by then

 

[Smif]

The NHL has had a salary cap since 2005. How in the world did it take GMs 19 years to figure out this loophole?? Something seems off here.

That's why I'm having a very hard time believing this.

 

[HockeyScotty]

The more and more of this crap we get, the more and more I hate the salary cap.

When it was a set of rules for valuing players and constraining team building, with a goal for cost certainty and fairness between big and small market teams, it was actually pretty fun. It put GM's in the driver's seats of their team's competitiveness, which is a downside to an actual ice hockey league, but it was fun from a fan perspective for those of us who enjoy team-building.

But the longer it goes on, the more it becomes about having teams of lawyers pouring over the CBA to find and exploit loopholes until the NHL decides to pounce, the less fun it is. I like the NHL because I want to watch hockey teams, not GM's having a scheme-off like it's Spy vs Spy.

Close the freaking loopholes and enforce the spirit of the cap, not just the law. Having a Byzantine tax code of a salary cap is no fun for fans because we cannot follow it, doesn't even deliver the cost certainty that is the fundamental premise of the salary cap from the owner's perspective, and is ultimately unfair because the NHL will always be subjective in who they punish for transgressions.

The Tanev contract is bogus. Mark Stone going on LTIR every year until the playoffs is bogus. These deferred payments are bogus. End them. But instead the league is just going to shrug and then have a lockout in five years when they realize these deferred payments have completely screwed up the Hockey Related Revenue calculations for the salary cap and that it led to an immediate inflation of contracts.

As an accountant I get both sides; it is professionally challenging to find legal ways (avoidance) to avoid taxes and therefore the same applies to the CBA-Salary Cap in much the same way.

As a hockey fan, I'd almost rather just see a minimum salary for every player and then a "winner take all" pot of money for each game based on paid attendance that gets shared by the players how they see fit.

I expect the league will rule deferred payments still need to meet the rules about how large the variance can be from year to year in contracts, making these huge hypothetical deferrals illegal.

I also expect a change in the CBA to make that deferred payment count against the year 9 cap. I can’t see the league continuing to allow compensation outside the cap. They will find a way to capture it on a teams payroll.

Still a smart move by Carolina to gain some space over the next 8 years at the expense of a potential year 9 cap hit with a rule change.

Yes, it also begs the question how does it affect players share of HRR. One would also think they would use the "buyout" rule for how long the deferred comp can extend into the future.

 

[bucks_oil]

It’s just going to be math around the NPV of money etc. It really can only be mega abused if the signing bonus doesn’t have to follow current contract structures in the CBA.

From my quick read the contract has to follow those rules and the savings comes from the fact the signing bonus is paid the day after the contract expires. If that’s the case then the max is already defined. Big contracts will get a bigger benefit so that could be an issue.

Yeah, it's just time value of money, but it will be interesting to see how they calculate the "value" which applies to the cap which could be quite different than the actual dollars eventually paid.

Like if it is a signing bonus, but not paid until year 9, that's 9 years worth of TVM/NPV discounting to assign a "today's value" on that signing bonus... it could be very significant depending on what NHL's accountants think is a reasonable/defendable discount rate.

Take an 8 year $10M/year contract with a $10M signing bonus achieved at day 1 but only paid at year 9.

You'd think the cap hit would be $90M/8 years or $11.25M/year AAV.

But if they apply NPV to it @5% it would be something like (8x10M) + (10M discounted back 8 years at 5% = $6.7M in today's value), so the cap hit would be $86.7M/8 = $10.84M AAV

It's not huge, but it certainly helps.

I hope the oilers do something like this for Draisaitl! C'mon Jackson, you've got an MBA don't you?

 

[tmg]

Wonder who signs the first Bonilla contract? Hasn't played a game since 2001, from 2011 to 2035 gets $1.19 million on July 1.

Not quite the same but Mike Richards and Rick DiPietro are still getting annual payouts and will be for a long time (Richards through 2031-32, DiPietro through 2028-29)

 

[HockeyScotty]

PuckPedia "Capology" section is about to implode.

 

[bucks_oil]

I am not sure I understand... The money spent never counts against the cap?

How is that possible?

1 dollar today is worth more than 1 dollar in 9 years.

Similarly 1 dollar in 9 years is worth less than 1 dollar today.

So if the rule is to calculate the total VALUE of the contract and divide it over the term to get AAV, then the dollars paid in the future would need to be discounted back to arrive at a VALUE of that money today.

The future money will still count against the cap, it just won't count as much in today's dollars when they run the numbers to calculate the cap.

 

[HockeyScotty]

I'm pissed we haven't yet.

I'm also not believing that this is actually going to work tho.

That's why I'm having a very hard time believing this.

It's been done before: Shane Doan and Jaccob Slavin.

Players have to agree to this type of structure; so we don't know how many were offered by GM's. Chris Johnston is now reporting that Vegas offered Marchessault this type of deal but he turned it down.

Generally players want as much upfront as possible.

This structure has tremendous value for the team not the player; but it could be a way of placing a "value" on taking a hometown discount or signing for less to be on a competitive team.

 

[tmg]

Did the Doan and Slavin deals have an actual cap benefit, or were those ones all about delaying actual cash payout and/or player income tax implications?

I feel like someone would have raised some kind of concern when CapFriendly was around that there were contracts where the average annual value wasn’t actually the total committed salary divided by the total number of years.

 

[Warh1ppy]

Tidy bit of business for the Canes.

This circumvention will be the new rage right up until the moment a Canadian team does it and then it will be a problem.

 

[StreetHawk]

1 dollar today is worth more than 1 dollar in 9 years.

Similarly 1 dollar in 9 years is worth less than 1 dollar today.

So if the rule is to calculate the total VALUE of the contract and divide it over the term to get AAV, then the dollars paid in the future would need to be discounted back to arrive at a VALUE of that money today.

The future money will still count against the cap, it just won't count as much in today's dollars when they run the numbers to calculate the cap.

Theoretically though, shouldn't the NHL then do that calculation for each year of the contract to determine the NPV at signing if they are doing this for the deferred salary? Seems a bit odd to do a NPV calculation for that final SB payment past June 30, 2032 (last business day of the 8th year). I mean, Ryan Johansen got an even $8 mill per season, but NPV would clearly indicate that with each passing year, that $8 mill is worth less and less compared to the day he signed the contract.

SportsNet is reporting a $7.5 mill cap hit, which would be $60 mill total. So, that final SB in year 9 must be a large amount to get a $3.2 mill discount in today's value.

 

[Whoshattenkirkshoes]

I think this is going to open a massive can of worms, and will eventually be taken out of the next CBA.



If all theyre doing is just deferring one signing bonus, this seems like a no brainer for teams to do. You could literally just defer year 8 signing bonus to year 9, and save a bunch on cap hit each year while the player is only missing out on that money for a single year, and by that point they would have already gotten 90% of their contract paid out.

Why haven’t other teams done this?

 

[Blueline Bomber]

Why haven’t other teams done this?

So many people are missing that it’s ultimately up to the PLAYER to make this happen. I can almost guarantee every GM out there knows about this clause and has likely tried to utilize it. But ultimately, they’re asking players to delay getting paid. And when the norm is for players to get paid ASAP (hence the front-loading of the contracts), you’re rarely going to see players accept this kind of deal.

So all the worry about it becoming the norm or worrying about Draisaitl or Marner or whoever getting this kind of deferred payment on their next deal, it’s very unlikely that’s going to happen.

 

[BLNY]

Not quite the same but Mike Richards and Rick DiPietro are still getting annual payouts and will be for a long time (Richards through 2031-32, DiPietro through 2028-29)

Ya, those buyouts are different.

There was earlier reference to Ohtani's deal with the Dodgers. It takes the Bonilla contract to "11" given the current dollars players make, but the premise is the same.

It's Bobby Bonilla Day! Why former Met gets $1.19M every July 1 -- and how it compares to Ohtani's deferrals

Bobby Bo hasn't been a Met since 1999, but Monday he'll receive a hefty check from his former team. Here's what to know about the deferred money.

www.espn.com

 

[MoreMogilny]

I hope the Leafs do this with Marner. Sign him to a 5 year contract and give him a boatload the year after it expires