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

[Jimmi McJenkins]

Tulsky is such a good GM.

This would better for Draisaitl because I assume the "deferred salary" would be treated the same as a signing bonus- i.e- you pay taxes on that based on your permanent residence- in Leon's case- Germany.

To be fair you need the owner to buy in too

 

[Fourier]

Tulsky is such a good GM.

This would better for Draisaitl because I assume the "deferred salary" would be treated the same as a signing bonus- i.e- you pay taxes on that based on your permanent residence- in Leon's case- Germany.

I suspect that this is the case. The current top marginal tax rate in Germany is 45%. In Alberta it is 48%. That difference may not seem like that much but on $5M it would be $150K US. More incentive to go this route.

Let's hope that the delay is in the contract structure.

The Oilers have the financial ability to really play with the details of the contract. Large signing bonuses and front loading could add $100K's to the deal without increasing the cap.

To be fair you need the owner to buy in too

I doubt the Oilers would have much difficulty getting Katz to buy in.

 

[Soundwave]

It would be wild if the Oilers used this to get McDavid to resign at effectively a lower cap hit than his present deal, lol.

 

[Jimmi McJenkins]

Agreed on Katz, I would like to the the Oilers explore to this

 

[TheNumber4]

Agreed on Katz, I would like to the the Oilers explore to this

If Tulsky can do it, and we don’t. I’d consider that huge fail of management.

The solution to all our cap troubles is staring us right in the face. It’s be negligent not to do the differed payment bullshit.

 

[foshizzle]

delete

 

[Soundwave]

Actually just thought about this, the deferred salary could work in a crazy way, like Leon could after he retires for example, get citizenship in Switzerland and effectively pay very low taxes on his deferred salary.

Or he could for example get easy EU citizenship in a country like Romania while keeping his German citizenship and only pay 10% tax versus 45-48% tax.

Connor could do something similar too, he may not want to have Switzerland as his primary residence post retirement (or maybe yes?), but he could retire to Florida like many Canadians do, but his deferred salary would then be taxed at the lower rate in Florida.

 

[foshizzle]

If Tulsky can do it, and we don’t. I’d consider that huge fail of management.

The solution to all our cap troubles is staring us right in the face. It’s be negligent not to do the differed payment bullshit.

This is a win/win for all. Not only that- it opens up the door for signing players when the extensions do kick in, I can't underline enough why having a good management team is vital when you are against the cap. Oilers (Holland) has complained so many years of not having the money wasting away McDavid year. What does Bill Scott do again?

 

[belair]

It would be wild if the Oilers used this to get McDavid to resign at effectively a lower cap hit than his present deal, lol.

I would rather do this than the LTI BS that Vegas and Tampa used to win.

 

[Jimmi McJenkins]

If Tulsky can do it, and we don’t. I’d consider that huge fail of management.

The solution to all our cap troubles is staring us right in the face. It’s be negligent not to do the differed payment bullshit.

Totally, just depends if Katz wants to potentially pay a guy after he's out of the sport, let alone the organization.

 

[Soundwave]

The more I think about this, the more I think you could actually do some crazy shit.

You could defer like $30+ million, the player retires, gets temporary citizenship in a low tax area like Switzerland, Dubai, etc. for 3-5 years. They can still live most of the year in Germany (Leon) or Canada/USA (Connor) if they want.

The $30 million is then paid over those 3-5 years but since their reporting country would be a low tax country, they could pay theoretically even 0-10% tax on that money (depends on the country).

After that 3-5 year period, you simply say bye bye to that country being listed as your primary residence if you want.

 

[TheNumber4]

Totally, just depends if Katz wants to potentially pay a guy after he's out of the sport, let alone the organization.

I don’t see why not, Katz has never been cheap as an Owner, has a great relationship with Draisaitl, and has his sights set squarely on bringing a Cup home to Edmonton.

There’s nothing Katz could do that would increase our cup chances as much as agreeing to a deferred payment contract with Drai.

 

[jeg]

What i find shocking is that with all these "capologists", Lawyers, Gms and owners that this deferred salary loop hole is only now being used.
Seems to be showing that these teams could use a lesson on the CBA prior to signing

 

[Soundwave]

I don’t see why not, Katz has never been cheap as an Owner, has a great relationship with Draisaitl, and has his sights set squarely on bringing a Cup home to Edmonton.

There’s nothing Katz could do that would increase our cup chances as much as agreeing to a deferred payment contract with Drai.

This actually works better for Katz. Paying less now lets him pocket money and invest it, you would rather have deferred salary if you're Katz.

The downside theoretically would be for the player, but if you can mitigate your tax liability by moving to a lower tax area after you retire, then all of the sudden it could become highly beneficial to the player.

 

[Soundwave]

I'll give a very basic example of how deferred salary could actual make Draisaitl much more money.

Lets just do a basic contract for Leon with no deferred salary. 14 mill cap hit x 8 years = 112 million cap.

Now say Germany is his listed primary residence, he's looking at 45% tax rate, there so on 112 million, he has pay 45% of that to tax, so he ends up with 61.6 million take home.

Now lets do a deferred salary deal where he gets the same 112 million x 8 year contract, but 30 million of the contract is defferred to lets say the 6 years after the contract expires. So this becomes effectively a 10.25 mill cap hit for the Oilers, Leon still gets his 112 million.

But lets go even further and say after his 8 year contract is done and he retires, Leon makes a low tax country like Switzerland or UAE (Dubai) his primary residence while retaining his German citizenship for a few years. He would then be taxed lets just say 10% instead of 45%.

So then his take home salary becomes this

82 mill for 8 years at 45% tax rate = 45.1 mill
Remaining 30 mill at 10% tax rate for 6 years = 27 mill
= 72 million

 

[Fourier]

What i find shocking is that with all these "capologists", Lawyers, Gms and owners that this deferred salary loop hole is only now being used.
Seems to be showing that these teams could use a lesson on the CBA prior to signing

Part of this is that we were in a low interest rate environment for years. In such a case, the savings would have been significantly less.

I'll give a very basic example of how deferred salary could actual make Draisaitl much more money.

Lets just do a basic contract for Leon with no deferred salary. 14 mill cap hit x 8 years = 112 million cap.

Now say Germany is his listed primary residence, he's looking at 45% tax rate, there so on 112 million, he has pay 45% of that to tax, so he ends up with 61.6 million take home.

Now lets do a deferred salary deal where he gets the same 112 million x 8 year contract, but 30 million of the contract is defferred to lets say the 6 years after the contract expires. So this becomes effectively a 10.25 mill cap hit for the Oilers, Leon still gets his 112 million.

But lets go even further and say after his 8 year contract is done and he retires, Leon makes a low tax country like Switzerland or UAE (Dubai) his primary residence while retaining his German citizenship for a few years. He would then be taxed lets just say 10% instead of 45%.

So then his take home salary becomes this

82 mill for 8 years at 45% tax rate = 45.1 mill
Remaining 30 mill at 10% tax rate for 6 years = 27 mill
= 72 million

As I understand the rules I don't think it works the way you have said. The $30M does not come off the books but rather the team is only responsible for the present value of the deferral. As such the cap savings would be a lot less than this. I think this article made the same error. See post #898.

This is from Bob McKenzie's article:

Sources: Hurricanes and Seth Jarvis agree to $63.2 million contract with unique deferred structure

The Carolina Hurricanes and restricted free agent Seth Jarvis have agreed to terms on a new eight-year, $63.2 million contract,...

www.dailyfaceoff.com

What if Draisaitl was hypothetically willing to defer $33.6 million of that contract to be paid out over the 40 years after the deal expires? That would be approximately $840,000 per year from 2033 until 2073, and yes, we’re talking a Bobby Bonilla-type contract. That would pay Draisaitl $80 million over the first eight years of the deal, hypothetically making for a cap hit in the neighborhood of $10 million per year – or a discount of $4.2 million per year of the deal.


That isn’t exactly how the calculation or the math works, but the numbers are round and it’s easy to grasp and understand. Draisaitl has already earned north of $70 million in his career. To bring in another $80 million over the first eight years of the next deal makes him more than financially secure for future generations of Draisaitls – and the deferred $33.6 million, which is accruing interest the entire time, is not just gravy but also idiot-proof savings.

Now I don't know if Drai would accept something that extreme, lol, but what about $112 million with $20 million deferred?

 

[Stealth1616]

I'll give a very basic example of how deferred salary could actual make Draisaitl much more money.

Lets just do a basic contract for Leon with no deferred salary. 14 mill cap hit x 8 years = 112 million cap.

Now say Germany is his listed primary residence, he's looking at 45% tax rate, there so on 112 million, he has pay 45% of that to tax, so he ends up with 61.6 million take home.

Now lets do a deferred salary deal where he gets the same 112 million x 8 year contract, but 30 million of the contract is defferred to lets say the 6 years after the contract expires. So this becomes effectively a 10.25 mill cap hit for the Oilers, Leon still gets his 112 million.

But lets go even further and say after his 8 year contract is done and he retires, Leon makes a low tax country like Switzerland or UAE (Dubai) his primary residence while retaining his German citizenship for a few years. He would then be taxed lets just say 10% instead of 45%.

So then his take home salary becomes this

82 mill for 8 years at 45% tax rate = 45.1 mill
Remaining 30 mill at 10% tax rate for 6 years = 27 mill
= 72 million

This does not account for the time value of money concept however

 

[Bobieque]

I’m wondering if it’s not the nature of hockey compared to the other major sports.

You don’t imagine the Dodgers having an issue (financially) or steadiness (length of ownership) in the Ohtani deal.

But it’s tough to apply that same level of “trust” (in my mind) with the nhl. Only a few franchises would I associate the ownership as the same long term legacy/commitment.

I guess I view other leagues team owners as either corporations or mega wealthy, but (probably erroneously) not NHL owners.

A basic 18+ year commitment to the financial tie to a player seems more risk to me if I was a player. But…I’m very risk adverse money wise as a person, so that probably reflects the opinion more so than not.

 

[SupremeTeam16]

It’s an interesting idea but let’s be honest here, if the Oilers use this legal mechanism to reduce their overall cap hit by millions a year, teams will cry and the league will step in. We’re not Vegas, the league won’t say “well it’s legal in the cba so our hands are tied until the next cba is negotiated. They’ll use their spirit of the rule line to justify shutting something down that is completely legal in the cba.

 

[bellagiobob]

If Tulsky can do it, and we don’t. I’d consider that huge fail of management.

The solution to all our cap troubles is staring us right in the face. It’s be negligent not to do the differed payment bullshit.

It’s totally up to the player though. Management may propose it, but player has to agree to it. In general players go by the sooner the better policy when it comes to getting paid, which in most cases makes sense. JJ is a smart dude, I’m sure it will be proposed.

 

[TheNumber4]

It’s totally up to the player though. Management may propose it, but player has to agree to it. In general players go by the sooner the better policy when it comes to getting paid, which in most cases makes sense. JJ is a smart dude, I’m sure it will be proposed.

It is. But we have a player here who obviously wants to find a solution that considers what’s best for the team and for himself. Otherwise he would have just got his bag as a UFA.

It’s negotiable for sure. It’s in the realm of possible outcomes for this negotiation. It’s up to JJ and Bowman to execute or not.

 

[bellagiobob]

It is. But we have a player here who obviously wants to find a solution that considers what’s best for the team and for himself. Otherwise he would have just got his bag as a UFA.

It’s negotiable for sure. It’s in the realm of possible outcomes for this negotiation. It’s up to JJ and Bowman to execute or not.

I think it’s reasonable to expect a slight cap saving via deferral, maybe up to around 800k - 1M per year, but nothing like Seravalli is proposing. I think a 40 year total deferral is pie in the sky stuff. As a player I would never agree to that. Too many uncertainties.

 

[Fourier]

It’s an interesting idea but let’s be honest here, if the Oilers use this legal mechanism to reduce their overall cap hit by millions a year, teams will cry and the league will step in. We’re not Vegas, the league won’t say “well it’s legal in the cba so our hands are tied until the next cba is negotiated. They’ll use their spirit of the rule line to justify shutting something down that is completely legal in the cba.

I don't see this being the case here. We are not talking about massive reductions. Maybe $1-1.5M for a guy like Leon or McDavid. Probably less. But three million could be huge for the team.

That said you can still do "sooner the better" at the same time using front loading and signing bonuses.

@Soundwave also gave an added incentive. Think of this as a very very lucrative RRSP.

I think it’s reasonable to expect a slight cap saving via deferral, maybe up to around 800k - 1M per year, but nothing like Seravalli is proposing. I think a 40 year total deferral is pie in the sky stuff. As a player I would never agree to that. Too many uncertainties.

He did not actually calculate this accurately either. But I agree a 40 year deferral is incredibly unrealistic.

 

[TheNumber4]

I think it’s reasonable to expect a slight cap saving via deferral, maybe up to around 800k - 1M per year, but nothing like Seravalli is proposing. I think a 40 year total deferral is pie in the sky stuff. As a player I would never agree to that. Too many uncertainties.

It probably is. Frank likes to play things up for the clicks

I would look at the Jarvis contract to gauge what can be reasonably expected with this type of deferral.

Also, Jarvis isn’t established in this League like Drai, hasn’t already made a boat load of money like Drai, and is a smaller more fragile player than Drai (higher injury risk). So you could argue Jarvis would be taking more risk on with this deferral than Drai would be.

 

[AM]

Um, flawed argument. Teams that have won championships use analytics in their coaching decisions. John Cooper, for example, says he gets analytical reports before and after every game and uses it to make coaching decisions and matchup decisions. Cassidy has been a proponent of analytics of a long time- hell, he changed the system Boston used to play and lowered shot volume in favour of shot quality and location based on his team analytics. Same with Colorado. Most winning coaches use an all encompassing methodology. Didnt KK mention something to this effect this season as well?

So, coaches used the information at hand and decide on who to utilize?

Thanks for agreeing with my argument.