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

[alphahelix]

Flames would ask for something ridiculous like Savoie + 1st for Andersson or Weegar.

Worth it. This team has a giant hole and if it could be patched with such a legitimate upgrade it would set us up for real success.

 

[ottawah]

Here is my concern in how this Seth Jarvis type of contract can play out.



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 8x13 , with 1M salary and 12M deferred signing bonus, (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 return of say 4% for 9 years (may very well be some companies willing to do this, its just a backwards annuity really). They know that will be worth 132M in year 9, so the offer becomes 1M a year plus a 16.5M per year signing bonus (132/8), deferred to year 9. Leon gets an extra 4.5M a year to defer, but it costs the team nothing as they only pay the 12M signing bonus a year, not 16.%, 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.

 

[Fourier]

Here is my concern in how this Seth Jarvis type of contract can play out.



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 8x13 , with 1M salary and 12M deferred signing bonus, (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 return of say 4% for 9 years (may very well be some companies willing to do this, its just a backwards annuity really). They know that will be worth 132M in year 9, so the offer becomes 1M a year plus a 16.5M per year signing bonus (132/8), deferred to year 9. Leon gets an extra 4.5M a year to defer, but it costs the team nothing as they only pay the 12M signing bonus a year, not 16.%, 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.

In your scenario the cap hit would be $13M so there would be no saving for the team on the cap.

 

[The Nuge]

Worth it. This team has a giant hole and if it could be patched with such a legitimate upgrade it would set us up for real success.

Especially for Weegar who is signed long term at a reasonable caphit

 

[Soundwave]

Here is my concern in how this Seth Jarvis type of contract can play out.



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 8x13 , with 1M salary and 12M deferred signing bonus, (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 return of say 4% for 9 years (may very well be some companies willing to do this, its just a backwards annuity really). They know that will be worth 132M in year 9, so the offer becomes 1M a year plus a 16.5M per year signing bonus (132/8), deferred to year 9. Leon gets an extra 4.5M a year to defer, but it costs the team nothing as they only pay the 12M signing bonus a year, not 16.%, 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.

Interesting idea. I don't think they would be allowed to that.

What you could do I suppose is the player goes and borrows against his future earnings, I'm not very well versed on that but apparently ultra rich people do that all the time (ie: instead of selling their stocks they borrow against the value of their wealth).

 

[McJadeddog]

Interesting idea. I don't think they would be allowed to that.

What you could do I suppose is the player goes and borrows against his future earnings, I'm not very well versed on that but apparently ultra rich people do that all the time (ie: instead of selling their stocks they borrow against the value of their wealth).

There are some pretty interesting life insurance things you can do as ultra high worth, but you need to be incorporated, so I don’t think it would apply to hockey players.

 

[McAsuno]

Well then.

 

[Fourier]

Interesting idea. I don't think they would be allowed to that.

What you could do I suppose is the player goes and borrows against his future earnings, I'm not very well versed on that but apparently ultra rich people do that all the time (ie: instead of selling their stocks they borrow against the value of their wealth).

In essence this scenario is what they do in these deferred situations already. That is precisely what the present value calculation addresses. The issue though is that the cap hit would be $13M not the $1M that @ottawah claims. Now if it was done underground without notifying the league then yes they could do this. Of course that would be such obvious cap circumvention that the League would give the Flames every first round pick the Oiler have from now until 2297. And my guess is that if the Oilers tried to register a deal paying Leon $1M per year someone in the League would get their hackles up.

 

[Soundwave]

There are some pretty interesting life insurance things you can do as ultra high worth, but you need to be incorporated, so I don’t think it would apply to hockey players.

I'm sure an ultrawealthy person like Daryl Katz has his accountants and investment advisors that could "point" a player like Leon Draisaitl on a way to secure a loan.

I wonder if actually Ohtani is doing exactly that too.

 

[Fourier]

There are some pretty interesting life insurance things you can do as ultra high worth, but you need to be incorporated, so I don’t think it would apply to hockey players.

Hockey players can incorporate, in particular if they have endorsement income. They just can't take their salaries as business income.

 

[foshizzle]

Well then.

It’s the hockey writers, they are as legit as the Yeti

 

[Soundwave]

In essence this scenario is what they do in these deferred situations already. That is precisely what the present value calculation addresses. The issue though is that the cap hit would be $13M not the $1M that @ottawah claims. Now if it was done underground without notifying the league then yes they could do this. Of course that would be such obvious cap circumvention that the League would give the Flames every first round pick the Oiler have from now until 2297. And my guess is that if the Oilers tried to register a deal paying Leon $1M per year someone in the League would get their hackles up.

The league has no jurisdiction on that I don't think. If a player wants to turn around and use their NHL contract and existing millions as a way to secure a temporary loan, that's all good.

I mean the entire hedge investment concept is basically based around this.

 

[Fourier]

The league has no jurisdiction on that I don't think. If a player wants to turn around and use their NHL contract and existing millions as a way to secure a temporary loan, that's all good.

I mean the entire hedge investment concept is basically based around this.

That's not the scenario that @ottawah outlined though. In that scenario the Team X invests money to fund the amount to be paid later to the player. That is perfectly legal but every dollar they invest counts against the cap.

If the player wants to hedge future income without team participation that is perfectly legal. But what ever money the player eventually receives from the team has to be accounted for somehow. If it is paid during the initial contract period it counts fully. If it is deferred the team takes the hit on the present value of the deferment.

 

[Soundwave]

That's not the scenario that @ottawah outlined though. In that scenario the Team X invests money to fund the amount to be paid later to the player. That is perfectly legal but every dollar they invest counts against the cap.

If the player wants to hedge future income without team participation that is perfectly legal. But what ever money the player eventually receives from the team has to be accounted for somehow. If it is paid during the initial contract period it counts fully. If it is deferred the team takes the hit on the present value of the deferment.

Obviously I'm going to assume Daryl Katz can't lend the player the money at a very low interest rate. Although I suppose there's nothing wrong with him "pointing" the player to a lender that would.

 

[Fourier]

Obviously I'm going to assume Daryl Katz can't lend the player the money at a very low interest rate. Although I suppose there's nothing wrong with him "pointing" the player to a lender that would.

Sure. But where is the money to pay off the loan coming from? If it is from the team then the team takes the hit and there is no cap savings other than via the difference between the amount paid and the present value of the payment. If it is just the player investing his own money then again there is no cap savings.

 

[Soundwave]

Sure. But where is the money to pay off the loan coming from? If it is from the team then the team takes the hit and there is no cap savings other than via the difference between the amount paid and the present value of the payment. If it is just the player investing his own money then again there is no cap savings.

It wouldn't come from the team obviously. Katz may not be the greatest hockey mind, but I'm sure he is a wizard in all things being ultra-wealthy.

Borrowing against assets is something a lot of very rich people employ. Like when a ultra rich person buys a private jet or a mansion, people often assume they cash out their stock or dig into their huge piggy bank to pay for it directly ... quite often those people don't do that and simply borrow against the huge money they already have to avoid having to liquidate any asset holdings.

Now I'm sure other people probably know a lot more about this, including Katz, but if you could put that to use here, it could get really interesting.

 

[On The Prowl]

Calgary will watch the world burn before they give us Andersson or Weeger.

 

[Fourier]

It wouldn't come from the team obviously. Katz may not be the greatest hockey mind, but I'm sure he is a wizard in all things being ultra-wealthy.

Borrowing against assets is something a lot of very rich people employ. Like when a ultra rich person buys a private jet or a mansion, people often assume they cash out their stock or dig into their huge piggy bank to pay for it directly ... quite often those people don't do that and simply borrow against the huge money they already have to avoid having to liquidate any asset holdings.

Now I'm sure other people probably know a lot more about this, including Katz, but if you could put that to use here, it could get really interesting.

Sure. I get all of that. But what does it have to do with the Oiler's cap??? In particular, what does this have to do with a deferred contract payment.

 

[Soundwave]

Sure. I get all of that. But what does it have to do with the Oiler's cap??? In particular, what does this have to do with a deferred contract payment.

Well what it could mean is a player could in theory defer almost their entire salary, use that contract to borrow the money in the mean time, invest that borrowed money, and then pay the loan back when they get their deferred NHL salary, in the meantime they could enjoy the same benefits of invested capital.

Then you can change your residence after you retire and cash in your NHL salary at a much lower tax rate on top of that.

 

[Fourier]

Well,

I think that you now have the picture.....

 

[McSuper]

I dont see how the Oilers are able to add a long term contract though. They won't have the cap space next year.

Next season we have 15 players signed for a total of 63.28M. If the cap goes up another 4M (92M total) that would give us 28.72M remaining.

Lets assume Draisaitl comes in around 13.5M and Bouchard is 10M, baring some crazy deferred salary shenanigans. That would give Edmonton only a 5.22M with a 17 man roster.

Skinner, Perry, Brown, Ryan and Emberson come off the books. Assuming we bring in 3 guys around 850k and another at 1M that only leaves 1.67M in cap space.

The only way we can make room for a guy like Weegar is if Evander Kane is moved somewhereAArei

Are you including Neal's cap hit coming off the books?

 

[Soundwave]

I said this in the other thread, but here's a concept ... pay Draisaitl and Bouchard *more*.

14 mill for Drai + 5% bonus (750,000 extra) = 14.75 m

11 mill for Bouchard + 5% bonus (550,000 extra = 11.55 m

Now you may say "wait! that's crazy, it's the opposite of what we want to do, and why are we giving them a stupid 5% bonus!".

The 5% extra we're paying is effectively covering the players being able to get a line of credit. They can then borrow the money they should have and use that to invest in whatever investment they want as if they had their regular salary now.

In return, the players agree to Shohei Ohtani basically their entire salary, defer it until basically retirement. That could bring Draisaitl's contract into the 9.7 million range and Bouchard similarly for like 8.5 million.

Then post retirement they move to a lower tax residence and cash in all of their NHL earnings from this contract at a far lower tax rate than they would have been stuck with had they had a normal contract.

The player gets more money (a lot more if they move to a lower tax residence post retirement) this way and the Oilers get a ton of cap flexibility. This could also allow us to lock in Bouchard for 8 full years and not some 3-4 bridge year bullshit.

 

[fuswald]

I think the SCF showed that they're fine with one Ceci-type in the lineup. Issues start when they have both Ceci and Vinny in the lineup and need to play one of them with Nurse.

We lost the cup because of offence not defense. Florida defense was a bit too tough for us.
With even Steven d this year we should win barring injury.

 

[Fourier]

Well what it could mean is a player could in theory defer almost their entire salary, use that contract to borrow the money in the mean time, invest that borrowed money, and then pay the loan back when they get their deferred NHL salary, in the meantime they could enjoy the same benefits of invested capital.

Then you can change your residence after you retire and cash in your NHL salary at a much lower tax rate on top of that.

Again, this is perfectly reasonable, though risky. Leveraged investments can go bad of course. But it does not impact the cap hit calculation.

 

[Soundwave]

Again, this is perfectly reasonable, though risky. Leveraged investments can go bad of course. But it does not impact the cap hit calculation.

The way to do is pay them basically what they want (their top ask) and even 5% above that. The 5% then covers their interest for borrowing, basically the Oilers are giving them an interest free loan by paying them a little more.

Of course for doing all that, they have to return the favor and defer their salary so as to bring their cap hit way down, but even this is a plus for the athlete. No player wants half their salary going to taxes. Deferring the money allows them to move into a lower tax residence after retirement and then receive all of that money at a lower tax rate.

Effectively this would actually probably make Draisaitl and Bouchard a lot more money even when accounting for getting the NHL salary later.