Before everyone starts congratulating the Canes for finding a new loophole, and fans start trying to figure out how their team can circumvent this new loophole, take a step back and ask yourself why teams don’t do more deferred contracts?
This is nothing new. Teams know all about them.
There’s probably 20-30 of them currently. The problem is, the higher the salary, the least likely a player would accept deferred bonuses.
There’s going to be some upset agents with Jarvis’ agent. Namely Lucas Raymond’s agent, because now Detroit may try pushing deferred payments in their negotiations, since Jarvis and Raymond have been watching each other’s negotiations all summer.
There’s 2 major reasons we don’t have more deferred contracts.
First…. Players/agents don’t want to wait for their money, AND secondly, the cap or AAV savings, isn’t as much as people are thinking it can be. It’s only triggered when there’s an annual deferred bonus, and that’s then divided by the term of any deal.
So for all those Edmonton fans trying to figure out how they can sign Leon and add another $5 million dman, don’t get your hopes up. Even if Leon took half of $14 million in deferred payments, you still only save $875k on his AAV.
Most players don’t want anything to do with “deferred money.” In fact, that’s why they want signing bonuses up front, and every July 1.
That really is the main reason.
The second big reason is, the team can only save a relatively small % of AAV because a player would never agree to massive amounts being deferred. No different than you or I. We all wanna get paid for working. I’m not sticking around if my boss keeps wanting to pay me next January, for working in August.
The AAV only effects the team, not the player. Players may say they care (so fans think they’re really good guys lol) but they don’t care in the grand scheme of things. They wanna get paid.
Lucas Raymond’s agent for example, is likely NOT happy with the Jarvis contract. Because it makes it look like Jarvis settled for deferred payment. Raymond’s agent would much rather have a $7.9 AAV with any bonus money starting the day the contract is signed. Where Detroit might now be saying, look, we’ll give you $8 million per so it’s more than Jarvis, but with a $5 million per year deferred payment. Which would make his AAV $7.375 rather than $8 million.
From what I understand about deferred payments, and give me somewhat of a pass, as it’s been at least 15 years since I was briefed on this.. That 9th year only comes into play when there’s an annual deferred payment built into the contract. I also believe, there’s a capped percentage for those payments. Whether that’s 40% or 50%, I’m pretty certain that’s the case. I’ll have to confirm that with people who would know.
Regardless, the better the player, the more he can demand contract terms, and getting his money later, isn’t high on his list.
In this Raymond example, I used over 50% of his deal. In the Jarvis deal, it’s 40%.
It also can’t be lump sums either. For example, you can’t pay someone $1 a year for 8 years, and then $49,999,992 in the 9th year of a $50 Million contract. Obviously the player wouldn’t agree to it either.
Let’s say that player would agree to a $5 million deferred bonus each year though. That final $5 million payment would then be divided by 8 ($625k) and that number would then be deducted from his yearly AAV. So instead of having a $6.25 AAV, it would be $5.625 million.
Once again though, if I remember correctly, there’s a cap on the percentage. But still, even pretending the player is only taking $1.25 million per season and the rest in deferred money, you’re STILL only saving $625k on the AAV.
No player that’s being offered a $50 million deal, is gonna agree to that.
So if you tried doing it with Draisaitl let’s say. If you had him defer $5 million per year of a $14 million contract, his AAV would still be $13.375 million. Let’s say he did the same 40% Jarvis did. It would only take his AAV down to $13.3 million.
Once again, I believe there’s a cap on the percentage of money you can defer, but even if Draisaitl deferred half of his pay, his AAV would STILL only go down to $13.125 million AAV.
So even if one of the Top players in the league took half of his pay in deferred bonuses, his AAV doesn’t even drop $1 million.
That’s why we don’t see it much. Players just aren’t willing to accept deferred payments and it doesn’t help teams, as much as people think it could, because to trigger that 9th year of payments, he has to have a yearly deferred bonus in the contract, and that’s what they get to use, divided by the contract’s term.
At the end of the day, we probably won’t get an answer to why Jarvis agreed to 40% of his salary being deferred. I guarantee his agent’s text messages blew up from other agents with one word. “Why?”
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.
One thing’s for certain. You’re not gonna start seeing more deferred payments now. Maybe you will in Carolina as they keep trying to keep high-end players more than previously, but overall? Players around the league aren’t gonna do it.
It’ll be interesting to see Raymond’s new deal though, because people have had these two contracts connected all summer. So if Raymond wants the $7.9, will Detroit give it to him but with deferred money, to match Jarvis? We’ll see.
