The Jarvis contract. Fine until a Canadian team does it.

[FissionFire]

The annual average value of the contract would traditionally be $7.9 million, but the Hurricanes will award Jarvis a deferred-money signing bonus on July 1, 2032 - the day after the contract expires - to lower the cap hit. The max-term pact includes a total of $29.24 million in bonuses.

Am I wrong ?

Can someone explain why it took lawyers this far into a CBA to do something like this ?

This isn’t new it’s been done a few times previously in this CBA. Jarvis is just the most recent and higher profile signing so it’s getting more attention.

 

[Brookbank]

This isn’t new it’s been done a few times previously in this CBA. Jarvis is just the most recent and higher profile signing so it’s getting more attention.

Like who ? Names please

I am confused. So his 8 mill bonus is not being paid till 2030?

2032 I believe.

 

[Lunatik]

The annual average value of the contract would traditionally be $7.9 million, but the Hurricanes will award Jarvis a deferred-money signing bonus on July 1, 2032 - the day after the contract expires - to lower the cap hit. The max-term pact includes a total of $29.24 million in bonuses.

Am I wrong ?

Can someone explain why it took lawyers this far into a CBA to do something like this ?

It didn't take them this long, Shane Doan's contract had this back in the day.

This doesn't happen often because players prefer front loaded deals as they can make more by investing it themselves.

 

[Surrounded By Ahos]

Like who ? Names please

Shane Doan and Jaccob Slavin.

 

[Frank Drebin]

The Jarvis contract isn't an advantage. Jarvis would have likely been financially ahead with a traditional 8 year 59.4 m contract.

He may have chose this option because 63 sounds like more than 59. But its not going to make him a wealthier man.

 

[Akrapovince]

The Jarvis contract isn't an advantage. Jarvis would have likely been financially ahead with a traditional 8 year 59.4 m contract.

He may have chose this option because 63 sounds like more than 59. But its not going to make him a wealthier man.

Or he gets his cake and eats it too, helps the team that he just signed a long term contract to.

 

[theVladiator]

Whoever still thinks Jarvis contract is somehow a cap advantage should try reading the 1st thread on this. If you still do not understand, starting a new thread will not help.

 

[Mr Positive]

I disagree. I don't see any good reason to believe Canada is being picked on.

A lot of teams didn't do the Jarvis style contract, and it's probably because players don't want deferred salary

 

[Frank Drebin]

Or he gets his cake and eats it too, helps the team that he just signed a long term contract to.

He's deferring 10m for 7 years. That costs money. He would have been better off just signing a traditional contract.

Nobody has done a contract like this before because it isn't an advantage. Its nothing more than a gimmick but trust Carolina to do something like this.

 

[brentashton]

As in moving to some lower tax state than Carolina in 8 years, when he's 30 and probably trying to get another contract? What if he ends up in a higher tax state? He's losing even more money.

What if he doesn’t attract a gargantuan contract in age 30? Maybe he’s playing the odds. At 30 he’s also a FA so he goes where he wants and where he’s offered employment.

He's deferring 10m for 7 years. That costs money. He would have been better off just signing a traditional contract.

Nobody has done a contract like this before because it isn't an advantage. Its nothing more than a gimmick but trust Carolina to do something like this.

The deferral cost is built into the contract. He wasn’t going to get these dollars upfront undeterred obviously.

 

[Jacob]

Every third post is a Canadian complaining about how poor they are.

 

[Frank Drebin]

The deferral cost is built into the contract. He wasn’t going to get these dollars upfront undeterred obviously.

Yes. Which is why hes effectively getting paid 7.42m per year not 7.9. Which is why the whole contract is a waste of time.

Every third post is a Canadian complaining about how poor they are.

$3.79 for a loaf of bread!

 

[brentashton]

Every third post is a Canadian complaining about how poor they are.

Are they?

 

[Frank Drebin]

At 4% interest - $137,000 in 2032 has the same value as $100,000 today.
at 6% that number jumps to $161,000
At 8% (average S&P return) $189,000

Time value of money is a very real thing.

 

[AfroThunder396]

Deferred money has been around for a while, the problem is that the players (and agents) have to agree to it. And they rarely agree to it because a dollar today is always worth more than a dollar tomorrow.

If you deferred 1M in salary from 2015 to now, the 1M you receive isn't as valuable in 2024 dollars as it was in 2025. 1M today is the equivalent of ~730k in 2015 dollars. So choosing to get paid later would have lost you nearly 25-30% of the value of that money. On the other hand, in order to get the value of 1M in 2015 dollars, you would need to sign a contract today worth about 1.3M.

By kicking the can down the road with deferral, he's getting the same amount of nominal dollars - "1 million" - but those one million dollars are worth far less than they were when he signed the deal because of inflation.

In the same way that, like, $10 could get you 5 McDonalds burgers in the mid 2000's but it's barely enough to get 2 today. Things are more expensive, money is depressed, you're functionally leaving money on the table by getting deferred payments.

So, why would a player chose to do that?

Now Jarvis is taking a minor loss, but this deferred money is less than 5% of this deal and the term he gets is probably worth it in his mind. But when you're talking about a star player, they could be leaving potentially tens of millions of dollars on the table in value by choosing to get paid later

 

[895]

Financial literacy is so rare….


There’s no outrage because it’s not a an advantage.

Toronto super frontloading all those huge contracts is actually a huge advantage.

Backloading contracts like this is a disadvantage.

 

[Nogatco Rd]

I am aware. Where do you get that a Canadian team couldn't do it?

*crickets*

 

[Brookbank]

He's deferring 10m for 7 years. That costs money. He would have been better off just signing a traditional contract.

Nobody has done a contract like this before because it isn't an advantage. Its nothing more than a gimmick but trust Carolina to do something like this.

It isn't about the player and what he is better off with or not. Its about the team.

I guess everyone is assuming that his deferred bonus has no inflation indexing or interest adjustments ?

Are you assuming that ?

 

[Brookbank]

Financial literacy is so rare….


There’s no outrage because it’s not a an advantage.

Toronto super frontloading all those huge contracts is actually a huge advantage.

Backloading contracts like this is a disadvantage.

You're the one with the financial literacy issues evidently.

If you cant seem to tell that having a lower cap hit is an advantage for the team. That is what this is about. My house is paid for and I own the value of it in physical gold. But hey, I have no financial literacy. Yep.

 

[Brookbank]

At 4% interest - $137,000 in 2032 has the same value as $100,000 today.
at 6% that number jumps to $161,000
At 8% (average S&P return) $189,000

Time value of money is a very real thing.

Yeah no sh**. Why would the player do that.

Maybe because they found a legal loophole that allows him to recoup these interest adjusted losses.

 

[Brookbank]

It didn't take them this long, Shane Doan's contract had this back in the day.

This doesn't happen often because players prefer front loaded deals as they can make more by investing it themselves.

But you aren't denying that it is an advantage for the team. Riiiight ?

What We Learned: Deferred salary could change the NHL's cap situation​

September 2nd, 13:00

Follow EP Rinkside

The NHL may soon enter a brave new world of player compensation.
Over the weekend, Seth Jarvis agreed to his long-awaited extension with the Carolina Hurricanes: eight years and $63.2 million. Normally, that would result in a cap hit of $7.9 million, which in itself would be a bit of a steal in the same vein as the Sebastian Aho contract.

What We Learned: Deferred salary could change the NHL's cap situation

 

[Frank Drebin]

It isn't about the player and what he is better off with or not. Its about the team.

I guess everyone is assuming that his deferred bonus has no inflation indexing or interest adjustments ?

Are you assuming that ?

The 4 million difference between his 63m salary and the 59.4 which is the cap hit x8 years accounts for the time value of his deferred money

 

[Nogatco Rd]

The annual average value of the contract would traditionally be $7.9 million, but the Hurricanes will award Jarvis a deferred-money signing bonus on July 1, 2032 - the day after the contract expires - to lower the cap hit. The max-term pact includes a total of $29.24 million in bonuses.

Am I wrong ?

Can someone explain why it took lawyers this far into a CBA to do something like this ?

Can you explain the “until a Canadian team does it” part?

What’s the basis for you claiming that a Canadian team would be punished for this same contract?

 

[JPT]

You're the one with the financial literacy issues evidently.

If you cant seem to tell that having a lower cap hit is an advantage for the team. That is what this is about. My house is paid for and I own the value of it in physical gold. But hey, I have no financial literacy. Yep.

I knew it

 

[Sam de Mtl]

You're the one with the financial literacy issues evidently.

If you cant seem to tell that having a lower cap hit is an advantage for the team. That is what this is about. My house is paid for and I own the value of it in physical gold. But hey, I have no financial literacy. Yep.

Well, he is right because the team wouldn't have offered 7.9M per if they had not deferred that money so far down the road. The contract is worth 7.42M per. Because of the different value of money today vs money tomorrow (as explained by quite a few in the thread).

The only strange thing to me is that, going by this logic, a standard 8 x 8 contract should effectively carry less than a 8M cap hit because it should account for every year after the first being worth less than 8M.

However I don't think that was ever taken into account. I wonder why it does here...