Don't get me wrong, I'd LOVE if the Oilers used it to reduce long term contracts for our core players. But realistically, it's a tall ask of the player. Still, the Oilers would be negligent not to try for it. Here's hoping.
I don't see it's a tall ask for the player... they can use it to drive up their total compensation significantly AND reduce their tax burden.
In Bouchard's case, round numbers, he's saving the team $1M x 8 years on the cap, but he will eventually pocket $2M x 8 = 16... so he's getting 8M extra that the team could not otherwise afford and he'll be taxed less on that $16M deferred salary than he would if he earned it upfront.
It's a proverbial win-win.
For the guys in the $3M range and American players playing in Canada, it's an even bigger proportional win... Let's say I'm going to make $3M over a ten year career... but I defer $1M each year...
If I don't defer, then I'll be taxed 48% of every dollar past $362/year. So I'll pay 48% x ($3M - $362K) = $1.27M of those dollars after $362K. Plus the blended tax rate on the $362K (let's say for argument it is 40%)... so total tax is about $1.41M/year x 10 = $14.1M of my total career earnings of $30M.
In the end I earned $15.9M
But if I defer, it's an even bigger win...
* I still pay 40% of $362 x 10 years = $144.8 x 10
* but now I pay 48% on only ($2M - 362), or $655K x 10
* and then later I earn 1M x 10 years, but that is taxed in the USA at:
* a blended rate of about 30% on the first $240K or $72K/year x 10years
* a rate of 35% on the amount above ($1M - 240K) or $760 x 35% = $266K x 10 years
The total is: ($144.8 + $655 + $72 + $266) x 10 = $11.38M in taxes.
I earned $18.6M, plus arguably I got more in the negotiation in the first place by reducing the team's cap hit.
The Oilers are going to be in a world of hurt if Bouchard is signing for 10M and on top of that 2M deferred? lol
Whoosh!!!
C'mon Canovin. You know I was just using simple math for the sake of things. Maybe I should have done $8+2M instead. That probably works out to a cap hit similar to Nurse.