Rumor: Rumors & Proposals Thread | Broberg, Holloway and Ceci are Gone, Do We Add Another D Before Camp?

[Fourier]

You would sure think so. Especially for the type of guys we’re currently targeting who have money, but want a cup. Whether Skinner’s got 87 or 90 million isn’t changing a thing about his life this year. You can afford to take the payout later on when you already have generational wealth

For Skinner to defer $3M for one year would not save the Oilers much. The savings would be about $150K. The OiIers would still have a cap hit of about $2.85M.

 

[Soundwave]

For Skinner to defer $3M for one year would not save the Oilers much. The savings would be about $150K. The OiIers would still have a cap hit of about $2.85M.

Is there a rule that says you have to defer to the year immediately after the contract ends?

What if you defer like 5 years out?

 

[Fourier]

Is there a rule that says you have to defer to the year immediately after the contract ends?

What if you defer like 5 years out?

I honestly don't know. But I suspect you could do that. In that case you save about $650K. But it's not clear any player would do this on a $3M deal.

 

[Soundwave]

I honestly don't know. But I suspect you could do that. In that case you save about $650K. But it's not clear any player would do this on a $3M deal.

I'm still kinda sketchy on the math, maybe you can help out.

Lets say Leon had a deal like this

16/16/16/14/12/12/11/8

Lets say the Oilers defer salary on the first 4 years.

I'm assuming you're using a 5.3% (0.053) per year "devaluation" of the money?

So 16 million in the first year could be valued at 16 x 0.053 x 8 (years) - 16 (original number)? Or am I totally off on that? And then the second year would be the same but multipled by 7 (years).

Sorry if that makes no sense, I'm just trying to understand how these things are calculated.

 

[Fourier]

I'm still kinda sketchy on the math, maybe you can help out.

Lets say Leon had a deal like this

16/16/16/14/12/12/11/8

Lets say the Oilers defer salary on the first 4 years.

I'm assuming you're using a 5.3% (0.053) per year "devaluation" of the money?

So 16 million in the first year could be valued at 16 x 0.053 x 8 (years) - 16 (original number)? Or am I totally off on that? And then the second year would be the same but multipled by 7 (years).

Sorry if that makes no sense, I'm just trying to understand how these things are calculated.

There is a simple formula that tells you the present value of a dollar n years down the line. It is

PV=1/(1+D)^n

where D is the discount rate. In this case if the discount rate is 5.3% and n is 8 years you end up with

PV=1(1+.053)^8 = .66156.

That is to have 1 dollar 8 years from now you would have to invest $.66 today for 8 years with a compounding interest rate of 5.3%

This means that every $1M deferred for 8 years requires the team to set aside $661.56K. Hence that is the cap hit they would be charged. So if the entire $16M was deferred (very unlikely), Draisaitl would receive $16M on year 9 and the Oilers would be on the hook for

PV=16(1+.053)^8= $10.59M

which over 8 years would save them (16-10.59)/8=$677K off the cap.

For year two, assuming the money was paid out again in year 9 we would have

PV=16(1+.053)^7 =$11.15M

This deferral would save them an additional (16-11.15)/8=$608K off the cap.

Year 3 the savings would be $533K and year 4, they would be $398K for a total of $2.22M reducing the cap hit to $10.9M from $13.125M

As you can see the savings from this are not so great even with all the money in the first four years deferred until year 9. And of course he will never do that.

But there are ways to make this work that he might go for. Take that same money and defer $6M for each of the first four years but pay them in years 9, 10, 11, 12, then defer $4M from the last 4 years again with an 8 year delay. That would save you about $1.7M on the cap which is significant. Repeat this with McDavid to get say $2M in savings and all of a sudden you are in much better shape.

Leon would get

10 10 10 8 8 8 7 4 6 6 6 6 4 4 4 4 (no cap hit to the Oilers in years 9-16)

Would he bite? I have no idea. To make it more palatable for Leon you have almost all of the money in the form of a signing bonus paid on July 1 of the given year. That allows him to not only up the value by investing his money for longer but since signing bonuses are paid where the player lives there are potential tax savings as well if he established an off season residence in a low tax domain for tax purposes even during the first 8 years.

There are of course many many combinations to consider. And while the specific calculations for any scenario are simple the number of options makes this a very complex discussion. So even if the Oilers and Leon had settled on a number, if deferrals come into play it could be a while before we get the deal done.

 

[The Nuge]

For Skinner to defer $3M for one year would not save the Oilers much. The savings would be about $150K. The OiIers would still have a cap hit of about $2.85M.

Yes and no. If I’m understanding this, and you pay every single player league minimum with the rest deferred as a signing bonus the following year, you would have over 70 million that gets the discount, which would give you an extra 3.75 million in capspace assuming every player was willing to do it. Even a couple players doing it could result in millions of extra cap accrued at the deadline.

Assuming my math is correct, if you offered Leon 15 per, paid out as 750k per for years 1-8, and a 14.25 signing bonus for years 9-16 (where he moves to say Monaco after he retires), you would drop his caphit to 10.17.

If you offered Leon 20 per, paid out 750k per for years 1-8, and 9.625 per for years 9-24, you would still only come in at a caphit of 11.08.

 

[soothsayer]

Tyson Barrie's house is way nicer If you have an extra 2.4 million lying around.

I thought he was just renting that place. Anyways, that house is a blight on Mill Creek Ravine and should never been allowed to have been built.

 

[Fourier]

Yes and no. If I’m understanding this, and you pay every single player league minimum with the rest deferred as a signing bonus the following year, you would have over 70 million that gets the discount, which would give you an extra 3.75 million in capspace assuming every player was willing to do it. Even a couple players doing it could result in millions of extra cap accrued at the deadline.

Assuming my math is correct, if you offered Leon 15 per, paid out as 750k per for years 1-8, and a 14.25 signing bonus for years 9-16 (where he moves to say Monaco after he retires), you would drop his caphit to 10.17.

If you offered Leon 20 per, paid out 750k per for years 1-8, and 9.625 per for years 9-24, you would still only come in at a caphit of 11.08.

I don't think we will see a lot of this. There are implications that go beyond the cap hit. In particular it could play havoc with escrow calculations that would be a problem at times for both the players and the owners.

It is however a tool that could pay dividends in situations like the Oilers are facing.

 

[Jimmi McJenkins]

There is a simple formula that tells you the present value of a dollar n years down the line. It is

PV=1/(1+D)^n

where D is the discount rate. In this case if the discount rate is 5.3% and n is 8 years you end up with

PV=1(1+.053)^8 = .66156.

That is to have 1 dollar 8 years from now you would have to invest $.66 today for 8 years with a compounding interest rate of 5.3%

This means that every $1M deferred for 8 years requires the team to set aside $661.56K. Hence that is the cap hit they would be charged. So if the entire $16M was deferred (very unlikely), Draisaitl would receive $16M on year 9 and the Oilers would be on the hook for

PV=16(1+.053)^8= $10.59M

which over 8 years would save them (16-10.59)/8=$677K off the cap.

For year two, assuming the money was paid out again in year 9 we would have

PV=16(1+.053)^7 =$11.15M

This deferral would save them an additional (16-11.15)/8=$608K off the cap.

Year 3 the savings would be $533K and year 4, they would be $398K for a total of $2.22M reducing the cap hit to $10.9M from $13.125M

As you can see the savings from this are not so great even with all the money in the first four years deferred until year 9. And of course he will never do that.

But there are ways to make this work that he might go for. Take that same money and defer $6M for each of the first four years but pay them in years 9, 10, 11, 12, then defer $4M from the last 4 years again with an 8 year delay. That would save you about $1.7M on the cap which is significant. Repeat this with McDavid to get say $2M in savings and all of a sudden you are in much better shape.

Leon would get

10 10 10 8 8 8 7 4 6 6 6 6 4 4 4 4 (no cap hit to the Oilers in years 9-16)

Would he bite? I have no idea. To make it more palatable for Leon you have almost all of the money in the form of a signing bonus paid on July 1 of the given year. That allows him to take not only up the value by investing his money for longer but since signing bonuses are paid where the player lives there are potential tax savings as well if he established an off season residence in a low tax domain for tax purposes even during the first 8 years.

There are of course many many combinations to consider. And while the specific calculations for any scenario are simple the number of options makes this a very complex discussion. So even if the Oilers and Leon had settled on a number, if deferrals come into play it could be a while before we get the deal done.

Damn sir, that's a lot of math on a long weekend Sunday morning lol. Well illustrated and I hope you're right. I know teams don't want to pay Bobby Bonilla types for years after they retire, but guy like Connor and Leon make all the sense in the world

 

[Soundwave]

There is a simple formula that tells you the present value of a dollar n years down the line. It is

PV=1/(1+D)^n

where D is the discount rate. In this case if the discount rate is 5.3% and n is 8 years you end up with

PV=1(1+.053)^8 = .66156.

That is to have 1 dollar 8 years from now you would have to invest $.66 today for 8 years with a compounding interest rate of 5.3%

This means that every $1M deferred for 8 years requires the team to set aside $661.56K. Hence that is the cap hit they would be charged. So if the entire $16M was deferred (very unlikely), Draisaitl would receive $16M on year 9 and the Oilers would be on the hook for

PV=16(1+.053)^8= $10.59M

which over 8 years would save them (16-10.59)/8=$677K off the cap.

For year two, assuming the money was paid out again in year 9 we would have

PV=16(1+.053)^7 =$11.15M

This deferral would save them an additional (16-11.15)/8=$608K off the cap.

Year 3 the savings would be $533K and year 4, they would be $398K for a total of $2.22M reducing the cap hit to $10.9M from $13.125M

As you can see the savings from this are not so great even with all the money in the first four years deferred until year 9. And of course he will never do that.

But there are ways to make this work that he might go for. Take that same money and defer $6M for each of the first four years but pay them in years 9, 10, 11, 12, then defer $4M from the last 4 years again with an 8 year delay. That would save you about $1.7M on the cap which is significant. Repeat this with McDavid to get say $2M in savings and all of a sudden you are in much better shape.

Leon would get

10 10 10 8 8 8 7 4 6 6 6 6 4 4 4 4 (no cap hit to the Oilers in years 9-16)

Would he bite? I have no idea. To make it more palatable for Leon you have almost all of the money in the form of a signing bonus paid on July 1 of the given year. That allows him to take not only up the value by investing his money for longer but since signing bonuses are paid where the player lives there are potential tax savings as well if he established an off season residence in a low tax domain for tax purposes even during the first 8 years.

There are of course many many combinations to consider. And while the specific calculations for any scenario are simple the number of options makes this a very complex discussion. So even if the Oilers and Leon had settled on a number, if deferrals come into play it could be a while before we get the deal done.

Is there a reason you have to spread the deferred money up between years like that?

Because in the Seth Jarvis case, they deferred money from 3 different years (year 1, 2, and 7 of his contract) but it all gets paid out it looks like in one lump sum in what would normally be the 9th year.

 

[TopShelfGloveSide]

There is a simple formula that tells you the present value of a dollar n years down the line. It is

PV=1/(1+D)^n

where D is the discount rate. In this case if the discount rate is 5.3% and n is 8 years you end up with

PV=1(1+.053)^8 = .66156.

That is to have 1 dollar 8 years from now you would have to invest $.66 today for 8 years with a compounding interest rate of 5.3%

This means that every $1M deferred for 8 years requires the team to set aside $661.56K. Hence that is the cap hit they would be charged. So if the entire $16M was deferred (very unlikely), Draisaitl would receive $16M on year 9 and the Oilers would be on the hook for

PV=16(1+.053)^8= $10.59M

which over 8 years would save them (16-10.59)/8=$677K off the cap.

For year two, assuming the money was paid out again in year 9 we would have

PV=16(1+.053)^7 =$11.15M

This deferral would save them an additional (16-11.15)/8=$608K off the cap.

Year 3 the savings would be $533K and year 4, they would be $398K for a total of $2.22M reducing the cap hit to $10.9M from $13.125M

As you can see the savings from this are not so great even with all the money in the first four years deferred until year 9. And of course he will never do that.

But there are ways to make this work that he might go for. Take that same money and defer $6M for each of the first four years but pay them in years 9, 10, 11, 12, then defer $4M from the last 4 years again with an 8 year delay. That would save you about $1.7M on the cap which is significant. Repeat this with McDavid to get say $2M in savings and all of a sudden you are in much better shape.

Leon would get

10 10 10 8 8 8 7 4 6 6 6 6 4 4 4 4 (no cap hit to the Oilers in years 9-16)

Would he bite? I have no idea. To make it more palatable for Leon you have almost all of the money in the form of a signing bonus paid on July 1 of the given year. That allows him to take not only up the value by investing his money for longer but since signing bonuses are paid where the player lives there are potential tax savings as well if he established an off season residence in a low tax domain for tax purposes even during the first 8 years.

There are of course many many combinations to consider. And while the specific calculations for any scenario are simple the number of options makes this a very complex discussion. So even if the Oilers and Leon had settled on a number, if deferrals come into play it could be a while before we get the deal done.

 

[brentashton]

Tyson Barrie's house is way nicer If you have an extra 2.4 million lying around.

I’m putting an offer in on the new one Taylor Hall built.

 

[Soundwave]

The deferral thing can work but I think it's highly dependant on where the player plans to live after they retire or at least where they are living for the year they get their deferred salary.

Granted most Canadian players don't end up living in Canada. Ryan Smyth? Lives in Nashville. Jarome Iginla? Lives in Boston. European players are even more likely to move back to Europe or be elsewhere.

 

[McTonyBrar]

https://x.com/i/web/status/1830281240261611692

Wow. How ungrateful. Did Holloway know that the team was in cap trouble and that they couldn’t give him special attention?

 

[McDrai]

https://x.com/i/web/status/1830281240261611692

Wow. How ungrateful. Did Holloway know that the team was in cap trouble and that they couldn’t give him special attention?

This tidbit was interesting. Based on what Holloway is saying about his wrist, I don’t see how he would be able to get a decent shot off without some discomfort. Even a hard pass or dump in could be a bit painful.

 

[Bryanbryoil]

https://x.com/i/web/status/1830281240261611692

Wow. How ungrateful. Did Holloway know that the team was in cap trouble and that they couldn’t give him special attention?

Liked the player but f*** him for trying to hold the team hostage and then crying because his plan backfired.

 

[Bryanbryoil]

There is a simple formula that tells you the present value of a dollar n years down the line. It is

PV=1/(1+D)^n

where D is the discount rate. In this case if the discount rate is 5.3% and n is 8 years you end up with

PV=1(1+.053)^8 = .66156.

That is to have 1 dollar 8 years from now you would have to invest $.66 today for 8 years with a compounding interest rate of 5.3%

This means that every $1M deferred for 8 years requires the team to set aside $661.56K. Hence that is the cap hit they would be charged. So if the entire $16M was deferred (very unlikely), Draisaitl would receive $16M on year 9 and the Oilers would be on the hook for

PV=16(1+.053)^8= $10.59M

which over 8 years would save them (16-10.59)/8=$677K off the cap.

For year two, assuming the money was paid out again in year 9 we would have

PV=16(1+.053)^7 =$11.15M

This deferral would save them an additional (16-11.15)/8=$608K off the cap.

Year 3 the savings would be $533K and year 4, they would be $398K for a total of $2.22M reducing the cap hit to $10.9M from $13.125M

As you can see the savings from this are not so great even with all the money in the first four years deferred until year 9. And of course he will never do that.

But there are ways to make this work that he might go for. Take that same money and defer $6M for each of the first four years but pay them in years 9, 10, 11, 12, then defer $4M from the last 4 years again with an 8 year delay. That would save you about $1.7M on the cap which is significant. Repeat this with McDavid to get say $2M in savings and all of a sudden you are in much better shape.

Leon would get

10 10 10 8 8 8 7 4 6 6 6 6 4 4 4 4 (no cap hit to the Oilers in years 9-16)

Would he bite? I have no idea. To make it more palatable for Leon you have almost all of the money in the form of a signing bonus paid on July 1 of the given year. That allows him to take not only up the value by investing his money for longer but since signing bonuses are paid where the player lives there are potential tax savings as well if he established an off season residence in a low tax domain for tax purposes even during the first 8 years.

There are of course many many combinations to consider. And while the specific calculations for any scenario are simple the number of options makes this a very complex discussion. So even if the Oilers and Leon had settled on a number, if deferrals come into play it could be a while before we get the deal done.

"Simple", I just got ptsd from highschool math 25+ years ago!

 

[LTIR]

Liked the player but f*** him for trying to hold the team hostage and then crying because his plan backfired.

I don't think anything backfired for him. He got his money and a pretty healthy QO after this deal is up.

 

[Soundwave]

View attachment 904477

This tidbit was interesting. Based on what Holloway is saying about his wrist, I don’t see how he would be able to get a decent shot off without some discomfort. Even a hard pass or dump in could be a bit painful.

Having a wrist that's so "mangled" that you can't even do push ups at like age 22 is a serious red flag.

 

[Oilhawks]

View attachment 904477

This tidbit was interesting. Based on what Holloway is saying about his wrist, I don’t see how he would be able to get a decent shot off without some discomfort. Even a hard pass or dump in could be a bit painful.

Interesting. “For hockey it’s fine” could easily change in a year or so

Can’t do push ups and can’t bend it back but can play hockey doesn’t really inspire confidence

 

[Bryanbryoil]

I don't think anything backfired for him. He got his money and a pretty healthy QO after this deal is up.

Then why the salt?

 

[TopShelfGloveSide]

I don't think anything backfired for him. He got his money and a pretty healthy QO after this deal is up.

Short term I agree but long term it could back fire. He wont get his healthy QO if he doesn’t play up to his current contract. With no playoff boost like he would get here and probably worse line mates it’s very possible. Not to mention it would be a goldmine for him if he managed to earn some time in the top 6 here within the next 2 years.

 

[Soundwave]

So I kinda did this rough example updated with all the excellent work Fourier did.

You can play around with the structure, this is just one hypothetical example

Draisaitl contract:

16/16/16/16/14/12/12/8 = 110 million, 13.75 cap hit normally

We'll defer 8 million per season on the first 4 seasons (so Drai takes home about the same as he is making now, the rest is banked for a future payout).

Under that setup I get roughly

0.676 off due to year 1
0.606 off due to year 2
0.53 off due to year 3
0.455 off due to year 4

= 2.267 million in annual cap hit savings

13.75 - 2.267 = 11.483 mill cap hit instead of 13.75 million. If I've done that wrong, let me know.

 

[Darkwinter]

Liked the player but f*** him for trying to hold the team hostage and then crying because his plan backfirering

Then why the salt?

I honestly do not think there is one person I know who would turn down a raise like that . But I agree why the salt

 

[Fourier]

Is there a reason you have to spread the deferred money up between years like that?

Because in the Seth Jarvis case, they deferred money from 3 different years (year 1, 2, and 7 of his contract) but it all gets paid out it looks like in one lump sum in what would normally be the 9th year.

Spreading it out is to the team's advantage. The longer the deferral the more discounted the cap hit. Of course from a player's perspective the less valuable the contract. The Ohtani deal is spread out over ten years. The reason a player might do that is to mitigate taxes.