Trades and Free Agency Discussion - The Dog Days of Summer

[Clark4Ever]

They both would have taken 8

Maybe, but their AAVs were already too high based on the term they both agreed on. Imagine what their AAVs would have been had they been given 8 year terms.

 

[Dekes For Days]

Did they?
Speculation repeated enough times takes on an air of fact.

They didn't. They were reportedly open to a number of different terms, but 5-6 years was mutually agreed upon because the team needed to fit everybody in and the players knew that the cap was about to skyrocket. And it wasn't just the Leafs. There wasn't a single high-end player coming of their ELC that signed an 8 year contract in 2018 or 2019.

Unfortunately, there's a fake rumour started by an HFboard user about an offer that never existed and was never even reported floating around, and some are believing it to be fact.

 

[Sypher04]

It's unfortunate that fans keep bringing up this tax point. It is simply false. My God, these guys all have tax lawyers in both countries who ensure that their taxes are reduced or deferred by the maximum amount possible. I know - I have lawyers in my office who act for many US, Canadian and international professional athletes, musicians, actors, etc. I promise you that Dallas and Florida have no greater advantage from a tax perspective than Winnipeg or Ottawa. A $10 million contract in Florida has the same net value as a $10 million contract with any other team.

I think it’s naive to assume it works out equally, but it may be overstated. We’ve had quotes from player agents over the years, like back when Stamkos tested free agency but ultimately re-signed with Tampa , confirming as much that there is a taxation difference for players and that no state tax teams sell the angle hard. Going to be a bigger deal for teams that cannot afford to load up on signing bonuses like we can.

 

[ACC1224]

Maybe, but their AAVs were already too high based on the term they both agreed on. Imagine what their AAVs would have been had they been given 8 year terms.

I don’t fault the player because the GM is a poor negotiator

 

[Dekes For Days]

I think it’s naive to assume it works out equally, but it may be overstated

It's definitely not equal to places like Florida. It's overstated by some, but the real issue is that it's overstated because of mechanisms the Leafs utilize to close the gap a bit, like signing bonuses and front-loading, but then the people who want to dismiss the tax impacts are usually the first to demand AAV's being discounted for those things that are already being used to lessen the tax impacts.

 

[ACC1224]

Did they?

Speculation repeated enough times takes on an air of fact.

I'm not disagreeing but, heck I don't believe much of anything anymore.

It’s always up to the individual to believe what they like. I know and believe what I know.

 

[LeafSteel]

There is still a disadvantage to players with US residency that get signing bonuses, because there are costs - both financial and otherwise - to qualify for US residency when that's not where your home team is.

It actually says pretty much nothing, while achieving the objective of sounding like it's saying something.

He was referring to the post, not describing any of your posts. Try to keep up!

The article clearly points out Marner and Matthews have previously and are rumoured to be pushing for contracts and terms beyond what any other team’s superstar have previously and currently accepted, and are outliers. Why does this fact elude your understanding, unless you are deliberately being obtuse.

Again, anything you disagree with is summarily dismissed without any substance.

You honestly can read and internalize what outliers Marner and Matthews contracts are compared to how the rest of the league and other stars work. Now they are rumored to be looking to do more of the same, having proven nothing, and this is fine with you?

Laughable.

 

[Sypher04]

I don’t fault the player because the GM is a poor negotiator

Not only that, but I’d still argue Matthews’ deal was largely fine. We don’t have a hard figure for what an 8 year would have looked like, but let’s say it was McDavid type AAV. Something like 12.5M. At the time Auston signed, equivalent deal to McDavid would have been 13.8M. So that’s significantly lower. Eichel deal would have been 11.063M and he had imo separated himself from Jack a bit. About 1.3M down from McDavid and about 1.5M up from Eichel - I’m not sure a valuation around there was out of line (if that was roughly the 8 year ask)

Cut 3 years off the deal, drop a mil roughly in AAV. That deal more or less adds up to me. I don’t see a strong argument for this deal being an outlier, even if it gave some people some sticker shock

I’ve never run the Marner numbers. I love Mitch but given he’s a small play-making winger, my gut feel is that it’s more likely his is out of alignment with his comparables

 

[aingefan]

With potential lineups of 11-7, 10-8, and 9-9 under Keefe, we could see Domi in net potentially, or even LHD if Gio needs a night off.

Keefe is a world class line-mixologist.........

That’s kinda funny, but seriously, I don’t think it’ll be rare to go 11-7 with Timmins maybe gatting sone more reps on the wing.

 

[aingefan]

Not only that, but I’d still argue Matthews’ deal was largely fine. We don’t have a hard figure for what an 8 year would have looked like, but let’s say it was McDavid type AAV. Something like 12.5M. At the time Auston signed, equivalent deal to McDavid would have been 13.8M. So that’s significantly lower. Eichel deal would have been 11.063M and he had imo separated himself from Jack a bit. So I’m not sure the valuation around there was out of line (if that was roughly 8 year ask)

Cut 3 years off the deal, drop a mil roughly in AAV. That deal more or less adds up to me. I don’t see a strong argument for this deal being an outlier, even if it gave some people some sticker shock

I’ve never run the Marner numbers. I love Mitch but given he’s a small play-making winger, I think it’s more likely his is out of alignment with his comparables

Yeah, I don’t do the comps myself, but I think it was pointed out that he’s at the very top end - and I always figured the difference putting him at the top was ‘compensating’ him for bonuses he didn’t get. But I don’t pay much attention either.

 

[Evilhomer]

It's definitely not equal to places like Florida. It's overstated by some, but the real issue is that it's overstated because of mechanisms the Leafs utilize to close the gap a bit, like signing bonuses and front-loading, but then the people who want to dismiss the tax impacts are usually the first to demand AAV's being discounted for those things that are already being used to lessen the tax impacts.

I have seen the tax planning structures for both Canadian and American NHL players, and for US and international MLB players on Toronto's teams (haven't seen structures for anyone on TFC yet, but most of those are smaller-dollar deals). Hell, I have implemented the corporate work to put the structures in place (lots of offshore companies in exciting places I never get to visit like the Cayman Islands). Tax lawyers exist for this very reason. I promise you that the professional athlete playing in a Canadian city is not suffering any material tax disadvantages relative to the player in Florida or Texas. State/provincial taxes are such a small component of the overall tax planning.

I can also tell you that the Leafs don't pay massive signing bonuses primarily for tax reasons. They do it because player agents know that it's something they can extract from wealthier teams, and it's something that wealthy teams can and should take advantage of relative to smaller-market teams.

 

[Mess]

Maybe, but their AAVs were already too high based on the term they both agreed on. Imagine what their AAVs would have been had they been given 8 year terms.

In fairness their AAV's were already too high because we had an incompetent GM that didn't understand the difference between between RFA cost controllable years by the team the expensive UFA years.

Coming out of their ELC contracts the next 4 years of their deals are at RFA rates and then only the next 2 for Marner and only 1 for Matthews was a UFA expensive rates.

Players have little to no rights nor leverage during RFA years while under team control and this is where the Leafs should have been set up for success and Cup competitiveness particularly if the majority of their contract years were at bridge RFA rates.

At $10.9 mil and $11.634 AAV Dubas must have thought he was buying all UFA years from both Leaf players at those ridiculous rates.

 

[Apex Predator]

Marner and Matthews current cap hits are what they should be signing for now. Instead Dubas skipped there second contract and gave them 3rd contract salary.

 

[Eternal Leaf]

If you recall both wanted 8 years and Dubas negotiated his way out of it.

They were asking for ridiculous numbers though.

Marner wanted 8 x 8 coming off a 69-point season and Matthews wanted 8 x 13.8. These look more acceptable now but certainly not at that time. This is of course assuming this even happened and isn't just a journalist's imagination.

 

[andora]

Marner and Matthews current cap hits are what they should be signing for now. Instead Dubas skipped there second contract and gave them 3rd contract salary.

Sadly though not based on their actual production.. their current cap hits matthews 1 million dive or take and marner 500k should have been the 8 yr deals

 

[Legion34]

It's unfortunate that fans keep bringing up this tax point. It is simply false. My God, these guys all have tax lawyers in both countries who ensure that their taxes are reduced or deferred by the maximum amount possible. I know - I have lawyers in my office who act for many US, Canadian and international professional athletes, musicians, actors, etc. I promise you that Dallas and Florida have no greater advantage from a tax perspective than Winnipeg or Ottawa. A $10 million contract in Florida has the same net value as a $10 million contract with any other team.

Well the agents players GMs completely disagree with you.

Mark methot who played in ottawa and Dallas on the same contract. Said he made 700k more per year on a 4.9 million dollar deal.

The ONLY agent who said he could make it up was Walsh. And he has his own podcast. He brought his own accountant on and asked about the RCA and the accountant politely disagreed and tried to avoid it.

They were asking for ridiculous numbers though.

Marner wanted 8 x 8 coming off a 69-point season and Matthews wanted 8 x 13.8. These look more acceptable now but certainly not at that time. This is of course assuming this even happened and isn't just a journalist's imagination.

Matthews and dubas both agreed that he wanted 8 years.
The number wasn’t confirmed by them

Friedman said it was well known that teams were preparing 15 x7 contracts for Matthews. Which would be a bout 13.1 x8.

Marner got paid too much. The only guy I heard say 8x8 was Kypreos and he is hit or miss

 

[Evilhomer]

Well the agents players GMs completely disagree with you.

Mark methot who played in ottawa and Dallas on the same contract. Said he made 700k more per year on a 4.9 million dollar deal.

The ONLY agent who said he could make it up was Walsh. And he has his own podcast. He brought his own accountant on and asked about the RCA and the accountant politely disagreed and tried to avoid it.

If Mark Methot was actually losing money relative to the two jurisdictions, then my guess is that he wasn't doing much in the way of tax planning. God bless whatever agents, players or GMs say - maybe they are doing it for effect or, in a player's case, they simply haven't done the appropriate planning. Again, I do this for a living. We have an entire department of tax lawyers who deal with tax structuring for high net worth clients. Do you notice that you never hear NBA or NFL players in high-tax jurisdictions (NY, CA, etc.) complain about the tax impact on their earnings relative to players in Texas or Florida? There is a reason.

As for RCAs, they have been around for a while. You will have likely seen articles on the CRA challenging RCAs used by some former Jays players in relation to the reasonableness of their RCA contributions. There are some unique circumstances in those cases, but RCAs are pretty simple structures. Nonetheless, they can produce some good savings when used correctly.

Ultimately, taxes are not the reason athletes are choosing one jurisdiction over another.

 

[ACC1224]

They were asking for ridiculous numbers though.

Marner wanted 8 x 8 coming off a 69-point season and Matthews wanted 8 x 13.8. These look more acceptable now but certainly not at that time. This is of course assuming this even happened and isn't just a journalist's imagination.

You negotiate down from the 13.8 not give up the term.

 

[Dekes For Days]

The article clearly points out Marner and Matthews have previously and are rumoured to be pushing for contracts and terms beyond what any other team’s superstar have previously and currently accepted, and are outliers.

What it's actually showing is that in the time period that the cap has been high enough that top UFAs have been able to reach 10m+, those UFAs have chosen to sign 7 or 8 year contracts. Beyond that, there have only been 3 RFAs in recent history that were worth 10m+ at time of signing on something other than an 8 year contract. McDavid chose to sign 8 years. Matthews and Marner, on a team that had more re-signings to fit in at the same time, and signing in an offseason when no other high-end RFA signed for 8 years, signed for historically common 5-6 year terms.

Of course, the referenced tweet was trying to give the impression that there's a problem with the contracts and rile people up, not be accurate and include context.

 

[Dekes For Days]

I have seen the tax planning structures for both Canadian and American NHL players, and for US and international MLB players on Toronto's teams (haven't seen structures for anyone on TFC yet, but most of those are smaller-dollar deals). Hell, I have implemented the corporate work to put the structures in place (lots of offshore companies in exciting places I never get to visit like the Cayman Islands). Tax lawyers exist for this very reason.

Tax lawyers and accountants exist to get players in different places the best tax outcome for their unique location and situation. There are still discrepancies between tax impacts that different players in different locations deal with,, that impact the bottom line.

I promise you that the professional athlete playing in a Canadian city is not suffering any material tax disadvantages relative to the player in Florida or Texas.

Yeah, they are. Thankfully, we have ways to help mitigate it.

I can also tell you that the Leafs don't pay massive signing bonuses primarily for tax reasons.

There are a number of reasons, but that is a primary reason.

 

[Legion34]

If Mark Methot was actually losing money relative to the two jurisdictions, then my guess is that he wasn't doing much in the way of tax planning. God bless whatever agents, players or GMs say - maybe they are doing it for effect or, in a player's case, they simply haven't done the appropriate planning. Again, I do this for a living. We have an entire department of tax lawyers who deal with tax structuring for high net worth clients. Do you notice that you never hear NBA or NFL players in high-tax jurisdictions (NY, CA, etc.) complain about the tax impact on their earnings relative to players in Texas or Florida? There is a reason.

As for RCAs, they have been around for a while. You will have likely seen articles on the CRA challenging RCAs used by some former Jays players in relation to the reasonableness of their RCA contributions. There are some unique circumstances in those cases, but RCAs are pretty simple structures. Nonetheless, they can produce some good savings when used correctly.

Ultimately, taxes are not the reason athletes are choosing one jurisdiction over another.

Nhl players. Agents and GMs specifically say they sign in places for salaries due to taxes.

Dadanov refused trades because of taxes. Players absolutely openly talk about it. To say taxes and take home are not a major reason as to why players choose where they go is just ignoring what players say.

Also.
I have rcas. They aren’t athlete specific. They are definitely not special, kind of a souped up rrsp. I have family with more money and investment acumen who laugh. If matthews has the same kind of banking as me. He is in trouble.

1.) rcas cause you to lock your money in
2.) you get taxed when you take it out just like you would.
3.) you have to move to a specific jurisdiction to take money out.
4.) you can still be challenged.

Say Matthews wants to invest in a gin or a bieber venture or real estate.

He can’t just cash millions in rca and not get full freight taxes.

Say he gets offered a job in NY or LA or Toronto after hockey. He can’t just cash them.

Option a: get 10 million dollars in hand today to do whatever you want

Option b: get 7 million in hand today and have to lock 3 million in an account that you can’t tough for 20 years and be forced to move despite an unknown family situation and trickle it out in monthly installments to try to avoid 54% taxes

Pretty easy to see why players choose A

 

[Evilhomer]

Nhl players. Agents and GMs specifically say they sign in places for salaries due to taxes.

Dadanov refused trades because of taxes. Players absolutely openly talk about it. To say taxes and take home are not a major reason as to why players choose where they go is just ignoring what players say.

Also.
I have rcas. They aren’t athlete specific. They are definitely not special, kind of a souped up rrsp. I have family with more money and investment acumen who laugh. If matthews has the same kind of banking as me. He is in trouble.

1.) rcas cause you to lock your money in
2.) you get taxed when you take it out just like you would.
3.) you have to move to a specific jurisdiction to take money out.
4.) you can still be challenged.

Say Matthews wants to invest in a gin or a bieber venture or real estate.

He can’t just cash millions in rca and not get full freight taxes.

Say he gets offered a job in NY or LA or Toronto after hockey. He can’t just cash them.

Option a: get 10 million dollars in hand today to do whatever you want

Option b: get 7 million in hand today and have to lock 3 million in an account that you can’t tough for 20 years and be forced to move despite an unknown family situation and trickle it out in monthly installments to try to avoid 54% taxes

Pretty easy to see why players choose A

That's why I said RCAs are simple. They can be quite useful if you don't need access to the money in the short term, but they never the only thing used.

I do find it interesting that everyone ignores the fact that this issue only seems to arise in the NHL, notwithstanding that all leagues have teams in low-tax and high-tax US states. NBA players don't seem to avoid playing for the Lakers, Warriors, Celtics, Knicks, etc. even though those teams are in high-tax states, especially since the dollars involved are so much higher than NHL salaries. All of these players, like all of the GMs and owners, mitigate their tax exposure. The impact of state taxes between jurisdictions ends up becoming nominal. Federal taxes in the US are similar to those in Canada.

Conversely, there are no doubt some material cost of living differences between jurisdictions. The sprawling mansion in Arizona or Oklahoma City is presumably less costly than its comparable in California, although I imagine all of these players are holding properties in companies or trusts.

 

[andora]

That's why I said RCAs are simple. They can be quite useful if you don't need access to the money in the short term, but they never the only thing used.

I do find it interesting that everyone ignores the fact that this issue only seems to arise in the NHL, notwithstanding that all leagues have teams in low-tax and high-tax US states. NBA players don't seem to avoid playing for the Lakers, Warriors, Celtics, Knicks, etc. even though those teams are in high-tax states, especially since the dollars involved are so much higher than NHL salaries. All of these players, like all of the GMs and owners, mitigate their tax exposure. The impact of state taxes between jurisdictions ends up becoming nominal. Federal taxes in the US are similar to those in Canada.

Conversely, there are no doubt some material cost of living differences between jurisdictions. The sprawling mansion in Arizona or Oklahoma City is presumably less costly than its comparable in California, although I imagine all of these players are holding properties in companies or trusts.

Unless you are willing to share a spreadsheet specifically showing it dont bother

 

[LeafSteel]

What it's actually showing is that in the time period that the cap has been high enough that top UFAs have been able to reach 10m+, those UFAs have chosen to sign 7 or 8 year contracts. Beyond that, there have only been 3 RFAs in recent history that were worth 10m+ at time of signing on something other than an 8 year contract. McDavid chose to sign 8 years. Matthews and Marner, on a team that had more re-signings to fit in at the same time, and signing in an offseason when no other high-end RFA signed for 8 years, signed for historically common 5-6 year terms.

Of course, the referenced tweet was trying to give the impression that there's a problem with the contracts and rile people up, not be accurate and include context.

You’ve omitted to address the current situation and chosen to speak only to the historical record.

You’ve also ignored that Marner was overpaid on his last contract and he did not sign for 8 years, which is a direct and deserved criticism of Dubas……. But we know that criticism will never happen.

 

[Legion34]

That's why I said RCAs are simple. They can be quite useful if you don't need access to the money in the short term, but they never the only thing used.

I do find it interesting that everyone ignores the fact that this issue only seems to arise in the NHL, notwithstanding that all leagues have teams in low-tax and high-tax US states. NBA players don't seem to avoid playing for the Lakers, Warriors, Celtics, Knicks, etc. even though those teams are in high-tax states, especially since the dollars involved are so much higher than NHL salaries. All of these players, like all of the GMs and owners, mitigate their tax exposure. The impact of state taxes between jurisdictions ends up becoming nominal. Federal taxes in the US are similar to those in Canada.

Conversely, there are no doubt some material cost of living differences between jurisdictions. The sprawling mansion in Arizona or Oklahoma City is presumably less costly than its comparable in California, although I imagine all of these players are holding properties in companies or trusts.

No state tax teams start with 15% ish head start.
They can also mitigate.

The idea that Florida accountants don’t also try to maximize is silly.

I can’t speak to the NBA. But they don’t have the border to deal with that would affect earnings.

Plus they can re structure etc. I don’t know the nba rules. I do know the NHL rules which in a hard cap system put high tax teams at a disadvantage

According to actual people getting paid