Photo by Mark Williams
Lots of discussion about the Dylan Holloway/Philip Broberg offer sheets, as Holloway has revealed a few things about the negotiations. Some blame Holloway, some blame Jeff Jackson, I blame the organization’s policy of squeezing young talent to the point they are vulnerable to an offer sheet.
Ethan Bear, Ryan McLeod and myriad others signed late late late because of the price point and the organization kept on rolling, secure in the knowledge no offer sheet was coming.
Now I’m all for giving hell to management on this, but let’s be clear: The time to sign the two men on or shortly after July 1, 2023. There’s no incentive to sign afterward for the player, and once an offer sheet is on the table the player becomes less valuable to the Oilers due to increased AAV.
Edmonton incorrectly estimated the two contracts coming in just past $2 million total. That’s bad budgeting and that’s on management on or shortly after July 1, 2023.
This is a chance to change policy. Be fair. Don’t blow a hole in your salary cap, manage your money so that if Matt Savoie or Beau Akey spike in the next few years a reasonable salary trajectory can be attained. This is especially important in the case of Evan Bouchard, who needs to go long and have at least two RFA seasons included with at least four UFA seasons.
PUCKPEDIA
Kudos to Hart from PuckPedia, who took about five seconds to put together a new tool that allows the user to ‘Carolina Hurricane’ any contract. Eric Tulsky is an innovator, as is Tyler Dellow, so it’s no surprise to me this is the organization that gave us a new phrase (“deferred compensation”) and another rabbit hole we can spend thousands of hours fiddling about with over these next few years. I’m sure Gary will find a way to crush it in the next negotiation, but for now, fill your hat.
New for The Athletic: What the Edmonton Oilers can expect from Troy Stecher.
https://www.nytimes.com/athletic/5737807/2024/09/02/edmonton-oilers-troy-stecher-roster/
$787,500 X 2 got for a 30 year old with 500 games that always seems to find a way to player higher than anticipated on his team – that was a zero risk but solid value contract.
I think he “should be” the starting 7D because this team is a contender. The 7D likely plays 50 plus games. Right now, he’s in the opening lineup, potentially playing 2nd pairing comp. I think he can “tread water” but that’s not an ideal scenario.
It’s too bad he wasn’t healthy last spring as I’ve always seen him as a downhill competent player. I do hope they platoon him among other players at the 3-4 or 5-6 spot as I think it’s his durability that’s the question mark for me.
Its tough to imagine him holding up physically through 82 games plus, more importantly, a 2 month playoff grind – in particular if he’s being asked to play 18-20 minutes per game.
Well, that Carolina cowboy did alright, and they’re about the same size. I think that’s a fair comparison, on a value contract
Plus, they have Josh Brown on the standby.
Him and Emberson. The latter is physical and fairly tall, but if he’s still 193 that’s skinny. 3 injuries last season (one bad luck in a laceration) 30 games. Which was also Neimeleinen’s problem in trying to be a freight train, he was the one that ended up hurt
Is this the Jason Smith trade we’ve been dreaming about for so many eons. Obviously Coach K.K knows him as he was a star for him in the A.H.L, then the Rangers never give him a opportunity but fetch a 41st overall D-man plus 2 second round picks over the next few years. What happened to him in Arizona as he hit the ground running in San Jose until his injury. I don’t even know how accurate my own assessment is because I’ve seen such a small paper trail for his career.
Who knows, but I feel that they have improved the quality of player over Ceci Des even if imperfect
As someone said they saw Ceci as having lost a step, I have described him as not playing fast enough, pace too slow, which doesn’t fit the style or forward mix
Des is a great guy (Ceci as well) and how can you not respect his drive. Still, he’s an awkward slower uneven player, and the biggest problem for him was being an Oiler, and getting called when using his reach in playoffs. Because Oilers
The skating and gapping tighter is improved, so much easier to defend when you don’t give up loads of uncontested entries, puck movement from what we can tell, and both players play with more edge, which the team needs more of. Gator though is a big set of skates to fill. He was also a big guy which these two aren’t
I am cheering hard for Max. Love that player type in D, not surprisingly being an Oiler fan and having had so many hard ass do anything D over the years. Mean, big, can skate, no deficiencies other than not having Bouch skills. He could be the new Gator, with more offensive upside
I have read about the date on his skating in the small sample size (NHL edge data) not lining up with the good scouting reports on the same. I guess we’ll start to see for ourselves in 3 weeks.
As far as the other substantive attributes mentioned such as gapping up and defending zone entries, well, lets not forget that Ceci was was playing 20 minutes per game and against some really strong quality of competition.
The data and reports on Emberson in that area is great but he doesn’t have the history of doing that against nearly the level of comp that Ceci has over the last three years.
Maybe he is indeed “better” than Ceci, and I’m hopeful, but I don’t think we are there yet, right?
I was a huge fan of Stetcher’s game earlier in his career, but haven’t followed him much lately.
FWIW:
@2MuttsHockeyPod
We are hearing that Leon Draisaitl could sign as early as tomorrow, there’s a possibility it could come in around 8 years/$14M AAV.
Originally we thought it could be around $13.5M AAV as we know things change & everything we are hearing is that this deal should get done this week.
Let’s see how this all plays out.
That would be a full-boat AAV on an 8-year term that takes him to 38 years old (he would turn 37 in October of the last year).
Lets sign it up and move on but that is not a discount at all.
I was thinking more like 14.25M AAV . Cap is artificially low. Annual revenue is since ‘18-‘19 is up 26% while the cap is only up 11% over the same period. It will be a very high percent of cap for a few seasons. Unfortunately, peak window for Edmonton.
On the plus side this has also hamstrung the Leafs.
I’m just starting at the top instead of commenting on early threads.
Broberg had one major flaw that held him back on this particular team. He is meek. And they needed ruggedness, still do.
Broberg is like a 5-pin standing in front of the net. His speed did not make up for it, but he was young and coming on now. I think he opened up eyes in the playoffs but not enough to get priority status. Mistake yes, but I still don’t think they saw him as a second pair defence man. If they did, action would have been swift, but they dallied.
Lavoie also did not show what was needed.
Holloway was buried in the depth, very few opportunities with skill. Yet he has speed and dogged determination, something the team needed. He easily has 20 goals a season in him once he plays with a good center. Or 15 goals as a third line center. He will make it.
I don’t understand how Holloway was buried and had very few opportunities with skill.
Holloway was given chances in the top 6 numerous times over the last couple of years but was never able to hold a spot in the top 6 because he couldn’t stack good games upon good games (consistency issue) and continued to make fairly egregious mistakes.
The later (mistakes) did seem to improve over this past season but damn if he couldn’t find a way to positively impact the game consistently in the top 6.
He was “buried” a bit with Arvidsson and Skinner brought in but, at the same time, my expectation for him this season was to kind of rotate a bit with Arvidsson in the top 6. I see both players as being able to play 3rd line with Henrique as well as in the top 6 with Drai.
OP enjoyed your CoH piece. Not sure if you can or want to edit, but a sturdy build is spelled ‘stocky’
I didn’t read it yet but I will now. Good job mister OP
Thanks all.
I do need to say that I did NOT choose the by-line for the piece and would not have gone with what was chosen.
A by-line is the author’s name.
Who did you prefer to be?
Probably for the by-line to read the author’s name, instead of David Staples. Are you even trying to be accurate?
I didn’t notice that it has Staples as the author – that’s a mistake.
I was indeed talking about the headline – that’s not me and, in fact, I don’t think its accurate of substance of the article. The article did note that Rodrigue has a better save percentage over the last few years but, given age, that’s not tracking better and they aren’t the same tier as prospect.
Titles of articles are often authored by an editor. The title is focused on getting people to read it. In case of this subject matter, and I haven’t read it, the editor probably knows (as do I) that the lowest number of reads possible for an Oilers article comes from having a goalie as the subject.
I don’t know why, but it’s true. Oilers fans fade reading about goaltenders.
Congrats, OP! That’s an impressive gig.
OP congrats on the gig!
The numbers for Rodrigue are solid and show good progression. However, is the chance of a waiver claim really ‘low’ as you state? Oilers have already lost two players for peanuts when they thought the chance of an offer sheet was low. Can this team afford to lose this player for nothing after all the time invested in development?
If the Oilers waive Perry they can afford to include Rodrigue and Savoie (bonus cap hit issue) on the opening night roster. Waive Savoie the next day as he is waiver eligible, but keep Rodrigue for a few days until the other teams get their goalie positions set.
It benefits Jarvis to delay compensation as the current escrow rate is 6% so he may get a savings there. But there’s a pretty good chance his tax rate will increase over the course of his contract. So while clever use by Carolina. I think as the player I would rather get paid now.
There’s a reason it’s not used much, not like team’s cap people aren’t aware of it
I could see it used for players at the end of career when your earnings go to very little
I don’t see why a player looking for another 8 year Free agent contract would be interested in this
Apparently they aren’t
With respect, I don’t fully agree.
Reasonable expectation would have these guys coming in a $2.5MM combined, max, on two-year deals.
Its not just the Oilers that would have had that expectation, but league wide. Dylan Holloway has 18 career points and is coming off his ELC – kudos to him for getting overpaid!!
OP, the Oilers were vulnerable as they often are. Slow playing contracts for young players can work out badly. Darnell Nurse is an example. I understand going long has danger (Oscar Klefbom) but that’s a bet I would rather make.
As for Holloway’s talent level, the worry was always offence. Edmonton should most certainly be certain before proceeding, but the lack of young talent coming through the system also put them in a tight spot.
The point of today’s article is that the Oilers can reset. Short-term deals on long-term talents are madness. They absolutely ruin a team’s salary-cap room.
Perhaps Holloway and Broberg weren’t long term talents. The Oilers didn’t get a chance to find out.
Respectfully, I think that’s a loss.
Not a total loss. Now we can see if Podkolzin & Emberson can fit in and be long term talents at a cost the team can afford.
The Oilers could have had all four players.
I agree losing the asset is a loss – have never stated otherwise.
At the same time, although I looked forward to both players making increased impacts as the years went on, a large part of their current value to the org (and over the next couple of years) was playing on value contracts and that was lost.
Of course, they left themselves vulnerable – sure. I would suggest that if you go look at the last decade there are many many situations where teams were just as vulnerable but, yet, two signed offer sheets in that period, two. Now four.
My main point is that reasonable compensation expectations was around $2.5MM aggregate, per season – that was widely suggest on here and all over Oilers social media. There was almost zero push back on that suggestion.
All of a sudden, one Tuesday morning, and some look back and start suggestion that the Oilers should have signed these players to what they would have considered big overpays prior to the offer sheets.
Thanks for the reminder on the timeline for RFA renewal and the July 1st start date LT. Somehow in this article we got stuck in the 2023 Time Machine.
Dylan Holloway had 11 goals (and 16 points) in 63 total games last season.
That is like a 15 goal regular season season pace with NO power play time. That is worth more than $1 million.
St. Louis is NOT overpaying for the upside optionality of Holloway.
Can Holloway stay healthy at such a young age? He disappeared for long stretches without Leon breast feeding him. Holloway got what he wanted money and opportunity but with that comes pressure especially if he doesn’t produce out of the gate. Podkolzin doesn’t even have a job in the N.H.L but I’ll still take him out scoring Mr.Hollywood on his 2 year contract he abandoned ship for.
A small detail that I think is also forgotten is that Holloway was a lifelong Flames fan.
IIRC he admitted after he was drafted that it would be weird switching sides in the BOA.
I truly wonder whether that was a factor in his accepting the offer sheet from STL and his loyalty, or lack thereof, to the Oilers.
Even Conroy wouldn’t dare offer sheet for Holloway knowing he’ll be subject in a few years to pay back. Someone needs to clip Armstrong’s wing and I hope it starts with driving the price up on Neighbours.
Tulsky does seem to be an innovator (although I believe I read this was used a few other times, Shane Doan comes to mind, and the Knights also wanted to use with With Jonathan M. this past off-season, he balked and signed with Nashville).
At the same time, trying to be the smartest man in the room sometimes backfires as it did with the Jesper K. overpay and then the second overpay that they are currently dealing with.
I agree, sometimes you can be too cute for school
The proof is in the pudding. Carolina has under achieved post season based on regular season results. No team known as a stats first team has won the cup. Dubas makes mistakes with the cap, and his teams also can’t do playoffs, Carolina has made a few blunders as you mentioned
The teams that win are the ones who build balanced teams that can handle the playoffs. Every team is using analytics now, some were early adopters and had a short advantage. The Avs did a few smart moves like Toews and won, but to me it was more about what they built. The big kicker to me was adding Manson as they needed the snarl, but since they haven’t done as well
The Knights seem like they are good at managing the cap and not being sentimental, know what they want. The Bolts had very specific ideas about what players they wanted and a great coach, as did the Panthers – team building and getting everyone on the same page. The Blues caught lightning in a bottle
My hope for our team is using analytics to find and assess players like Stecher and Emberson, and a clear vision on what they want in players, the ability to get them, manage the cap firmly. So far so good for me
Once Tulsky discovers the metric, “psychopathy per 60,” he’ll get his cup.
He’ll be running the Hare Psychopathy checklist at the draft combine.
I hope Bowman likes the agro , JJ seems to. Nice guys have their troubles when the hockey becomes not nice
Was that trying to be smartest man in the room or strictly retaliatory?
Or was it being the smartest man in the room? I’m asking because I don’t know
The Canes have a lot of good prospect because they don’t trade picks and draft with math. Perhaps they hit back with Kotkanemi to deter other teams from offer sheeting their players.
I mean, they clearly thought they were getting a player who’d be worth the cap hit they gave him.
Even if deterrence also factored into the decision, they certainly weren’t offer sheeting a player to a contract they expected would be a long term overpay (acknowledging the. contract has 6 years remaining to determine that).
May I ask, respectfully, if this is a bit of revisionist history?
I mean three weeks ago, the presumption was these guys would both sign apx 1 year at $1MM (or less) or 2 years and $1.25MM (thereabouts).
They were both getting ground a bit but they were both non-established prospects coming off ELCs with no arb rights – not only does the organization have a history of using the CBA leverage (and they lose that leverage for the next 15 years of the players’ careers) but pretty much the entire league does the same thing.
If Bowman had signed Broberg to 2 X $1.8MM three weeks ago, I suspect most would have cited that as a legit overpay.
That was your presumption which was obviously wrong.
Do you have an example of other organizations that grind their top defensive prospects to dust while limiting their opportunities since you mentioned pretty much the entire league does the same thing?
Obviously, considering Broberg had previously requested a trade, the player and agent were not happy with the situation.
STL is taking a bit of a risk here, but if they turn Broberg into a competent 2LD, it’s a massive win in return for a second round pick.
All they have to do is pay him and they obviously are in a position to do it. The Blues are an example of what other organizations do. Its dog eat dog apparently.
All it took was a trade to convert the worst draft pick the Oilers ever wasted into the biggest blunder they ever made letting him leave.
Without missing a beat.
Nail Yakupov says hi.
Jason Bonsignore.
Not even close to the worst draft pick – lets be reasonable, right?
This is dependant on one’s opinion of Broberg. $1.8M for a 2RD is more than reasonable, even given his lack of experience. It might even be reasonable for a 3LD. Clearly the Oilers aren’t sold on Broberg’s future or they grossly misjudged the situation.
I said from the start that (your) $2M for both players was unreasonable, that Broberg would not sign for less that the $1.7M AAV contract he just had.
Justin Barron, probably one of Broberg’s closest comps, signed for 2x$1.125MM.
$1.8MM would have been an overpay, and there would have been (metaphorical) riots if Bowman inked that deal.
Broberg was Hollands draft pick and now he’s making $4.58M for the next two years with the Blues. Now that’s what I call unreasonable.
but Philp Broberg wasn’t/isn’t an established 2RD.
Can he be that? Sure, maybe.
Is he established at that? Not at all.
When Ryan McLeod signed coming off his ELC, he had promise to be a 3C – didn’t get paid as one.
When Yamo came off his ELC, he had promise as a 2RW – didn’t get paid as one.
There is a very valid argument that Broberg was not given the opportunities and his development was poor – I’ve been citing that for two seasons. I can understand why he’d be miffed but, at the end of the day, he’s established what he’s established and that is what teams compare too.
Holloway should have zero qualms about development – he was given every opportunity – his lack of establishment is on himself (including injury) and the org.
He’s coming off his ELC with 18 points is career – 9G and 9A. Podkolzin outperformed Holloway’s career in his rookie season and is signed to 2 X $1MM.
Great work Holloway and his agent to get paid, including given he has an injury that will effect his ceiling even if he says “its fine for hockey”.
At the same time, I have zero qualms with how the Oilers negotiated contracts with these two.
I do have qualms, many, with how they handled Broberg’s deployment and development over the years – which I’ve stated consistently over the years.
Holloway had 11 goals int 63 total games last season. No power play time.
That is basically a 15-goal pace over a regular season. That is worth more than $1 million. That is typical Foegele production.
Holloway has 9G and 9A in his NHL career stats coming off his ELC.
solid playoff arrow but his stats are what they are.
Lots to unpack here OP.
Teams pay for future performance, not past performance. This has been a consistent theme here for years. Of course we don’t ignore comparables and whatnot, but $1.8M for 2RD on a SC calibre team, even with his limited experience, would be value, and far less $ than Ceci or Kulak. $1.2M would have been a steal. Did the Oilers see Broberg as 2RD? We don’t know.
You say there are reasons for Broberg to be miffed at his development. You’ve also stated numerous times that when Broberg was in the line-up he established quality results. If the numbers show that Broberg has played well when played and there’s a perception that he was jerked around wrt NHL playing time, then he wasn’t taking a pay cut, especially with the Oilers.
Your posts on this speak from the Oilers point of view. Let’s spin this a little, why do you feel Broberg would sign a $1.2M extension with the Oilers? Is it only because the Oilers had leverage?
Teams certainly do pay for past performance – UFA contracts are often based on past performance as much as future.
Of course, future performance is taken in to account but you seems to be posting as if Broberg is a legit established 2RD in the league which, of course, he is not.
He played that for 6-8 playoff games (ice time and deployment was below Ceci in most SCF games) and he looked good the eye but this “math blog” would not he got caved in most metrics.
I have little doubt he’d outperform the context I suggest was the reasonable expectation but that was the reasonable expectation for a player that spend 80% of the season in draft +5 in the AHL even with a handful of heartening playoff games.
Broberg would sign the extension because that’s what the market has established and this is the one and only time he’d be a free agent where the team had the leverage.
Teams use that leverage as they don’t hold it for long.
The only leverage Broberg had was the offer sheet which has historically been all but a non-factor.
Broberg got quite lucky on the timing of how everything played out. Good for him and I wish him well.
Haven’t we always been warned about small sample size alerts?
Some of us said in the middle of the playoffs that there was legit offersheet risk. Some of us were NOT presuming that.
To me by end of regular season it was too late. They had nothing to lose at that point knowing that the exposure could be potentially huge, and their agents would be making calls
How much, if any, did the Kostin trade factor into this? Psychologically at least, fulfilling the need to recoup value that was lost.
This was widely touted as the one trade Holland won.
Oilers fans rubbed this in all over the Internet.
The musings of NPCs on the Internet likely factor to exactly 0% in how teams conduct business. Or at least, they should.
Holland won more than one trade.
Holland slaughtered Yzerman on the Kostin trade.
Kostin was looking for $2MM per season, more than the Oilers were willing to, and more they were able to, pay. With the arb risk, he was going to be unqualified and a UFA.
Holland got Yzerman to pay to take on Yamamoto’s negative value contract (which he bought out immediately) in order to get Kostin’s UFA rights (and then he overpaid and over-termed Kostin).
That was fantastic work by Holland in the circumstances.
That deferred salary calculator is gold, Jerry. Gold!
It would take a huge amount of deferred salary to bring down the AAV in any meaningful way. I would define meaningful as enough to account for a contract that can be buried in the AHL with no cap penalty. So at least $1.15MM, which will increase over the term of the contract). With that in mind, meaningful would pragmatically land at about $1.25MM.
With that in mind, something in the range of $40MM would have to be deferred beyond the term of an eight year extension assumed to be in the range of a $13.5MM AAV.
That’s a big ask.
Yes, sir, and I think that fact is what is being lost on the masses that think this is a gold-mine to reduce the cap hit. The deferred money doesn’t just “go away” dollar for dollar on the cap hit calcuation.
The most reasonable model I could come up with for Draisaitl would be $15M X 8yrs ($120M total). Defer $6.25M per year for years 9-16 which drops the cap hit to approximately $12.83M. A player Draisaitl’s age might consider it because he would start receiving his deferred money at 37 years old which would be a nice retirement pension for 8 years.
Does anyone know what happens to deferred money if you trade in year 6 of the 8-year deal as an example? Does using the deferral make the contract untradeable?
The contract is the contract.
Why would Leon retire at age 37? He’s precisely the kind of player who likely plays until 39-40.
I don’t know if Draisaitl would play that long. He has been very banged up in the last two playoff runs playing through some serious injuries.
In consecutive seasons, he has been hanging on by a thread.
That gets worse with age.
very surprising take coming from you ;)…
Why would Leon retire at age 37? He’s precisely the kind of player who likely plays until 39-40.
What makes you think that? I’m not really arguing against that but just not sure what you see that makes him “that type of player”
Presuming he’s won at least one cup during the coming 8 year contract, depending on where his decline is at and where his body is at (he takes a vicious beating in the playoffs), I’m not positive he’ll sign another deal but, of course, so many variables between now and 9 seasons from now.
Sorry, missed the quote above and too late to edit.
I wouldn’t say the team incorrectly estimated coming in at just over $2M total for the two youngsters. That was just the exact amount that was required to fit them in within the team’s salary structure. Both players must have been aware of this and apparently so were the St. Louis Blues. Edmonton Oilers have some big-ticket players they need to accommodate.
Replacement level players that are Rfa’s asking twice their worth I would say are not on the importance list of a organization that’s been surrounding McDavid with professional players chasing the Stanley.
Before their moments in the playoffs neither player had grabbed the bull by the horns and shown their worth more then what the Oilers were offering.
The forward having a chance to play with 2 of the best centers hockey has to offer, while the defender having a mostly goalie on a heater saving 97% of the shots face while on ice. Neither player was signing during their low points unable to grab a roster spot from an established veteran, while the organization is wise to not pay them during their procived high points this summer.
Replacement level players are a dime a dozen, always another through the next door. Most likely a forward without a bummed arm and a defender that hasn’t been a career long diva so far.
To me it’s the management of the ‘assets’ that bothers me. These are people, and I think that the NHL treats its players well these days, so I think a more analytical approach is appropriate
Managers should be looking at the players as assets and trying to maximize and grow their assets, as that increases the team’s strength and ability to be successful by keeping depth in the org. Being able to develop players with value to other teams brings talent to the team either on the roster or in trades
Some teams get it. The Oilers haven’t in a long time, we hope for change now. To me given what we know, these players should have been dealt trying for a better return. They knew what was happening, they weren’t blindsided. Maybe they were working on other avenues
I know they weren’t moveable after the sheets were signed, but I believe they were before. Holland being GM mitigated doing something earlier probably, but moving forward this shouldn’t happen again
Bro definitely had value, probably Holloway as well, I think a better overall return was possible and if the player wants something the team doesn’t, cash them in
I suppose in hindsight if there was a deal on the table with the Blues for Buchnevich involving Broberg & Holloway. They probably should have done it.
Except they couldn’t retain Buch
Just be in the drivers seat
The Blues are paying him $5.8 this season and he was extended for three more years at $8M. So, they would have had to juggle their roster differently to accommodate him.
Who knows he might have signed at a discount in Edmonton with Cup aspirations.
It’s neither here nor there,at this point.
True, but they can’t afford 8
As it is, they received a 2nd, 2 thirds and Paul Fischer in exchange for Broberg and Holloway. They may have also traded Ceci and a 3rd to San Jose for Emberson, to have the cap leverage to extract more from St Louis, though they do also still have that additional cap space, and it’s not certain that trade was solely to create that leverage.
How much more could they have gotten in a trade for the RFA signing rights to two players that had yet to secure a full time spot in an NHL line up? They were highly likely to be on the roster this coming season, no longer being waiver exempt, but only probably in the line up every night at this point, not guaranteed. Let’s remember, Broberg had come to 2 previous training camps with his name pencilled in the opening line up and he wasn’t able to stick it out for a variety of reasons.
Also, apparently many insiders would seem to have known they were at risk for offer sheets which may have affected their trade value (though any team with cap space would possibly assess that risk differently).
Yes probably not in a great negotiating position, but in their advantage was the playoff hype and a few teams interested in at least Bro. The return wasn’t horrible, and they perhaps did shop them
Wow.
it may feel better to think of it this way, but fact is the Oil should have signed them early to a reasonable contract. No other way about it.
Even with a bummed arm and career diva.
We’ve heard that their agent was instructing them to wait, not sign any offer too early… a bigger paycheque would result.
Yes, to retain control regardless of what they were thinking. They need to stop bleeding drafted players
It’s hopeful that they hired Larsson and are investing in developing young players better. Use them or deal them
Can someone please explain what the limitation on year 9 deferred payment can be? How does this effect a buyout and what are the income tax implications are? How or will this deferred income be added on to Jarvis next contract when it comes to cap hit? Is the Jarvis contract in the same vain as the Ohtani contract.
Year 9+ is not subject to buyout, based on what I’ve read so far.
Income tax is paid at the year of receipt (well, the next tax season) based on total income (earned/passive/portfolio).
What’s stopping a team from giving a deferred payment 10 years are plus down the road.
The time value of money; generally we prefer a dollar today than a dollar next year.
I have zip idea how the income tax regulation for the N.H.L works but what’s stopping a person when the deferred lump sum is paid out from becoming a resident of say the Cayman Islands.
That’s not a thing. The NHL doesn’t have a separate income tax regulation just for itself.
Players pay income tax based on the regulations of the jurisdiction in which they earn their income. For all the arguments about zero state income tax, that’s only half the picture. Road games are subject to the tax rates of that location. So, players in high tax rate locations get a bit of a break when they play in DAL, or FLA, for example.
As for the notion of moving to a tax haven to collect the deferred payments, there are a whole host of conditions to consider. US citizens have much different reporting requirements to the IRS than Canadians do to the CRA, for instance.
I’m not an accountant, and I don’t play one on TV, but I do believe meanashell11 was referring earlier to the idea of moving after the contract. That would only work if players are retiring at the end of that contract. So, Jarvis probably wouldn’t do this. I sure hope Leon wouldn’t be, either. He would probably have a few years left in the tank at that point.
It’s possible that state level tax on deferred income is avoided if a person moves to a state with no income tax or leaves the US (there is some debate whether Ohtani will avoid California tax on his deferred income if he moves away after he retires, California won’t give up on that cash without a fight). US Federal tax will probably get paid one way or another no matter where you move to in the world. I believe Canada has a withholding tax on this type of income if you move out the country.
And brought up elsewhere, a player can’t put their salary or bonuses into a company or corporation for tax purposes.
A close friend, who is an American citizen with a world class glass blowing company in Canada has to pay tax in both countries…much to his chagrin.
Yes. The IRS always gets a taste.
Deferred salary is almost alway not in the best interests of the employee. Not when one is wealthy and can afford good investment and tax planning professionals, who can likely do much better than the “headline” rate of return on deferred salary, which is pretty abysmal.
Who is benefitting? It is the owner who is benefitting. One is outsourcing some of one’s investment and tax planning to the owner.
If my agent and my financial advisors where agreeing to this, I would probably start looking for a better agent and financial advisors.
If we’re only talking about money why can’t we overpay Leon 3 million a year in deferred funds that won’t effect the cap hit.
One if the many reasons I hope flexibility in compensation is brought back, though I have little hope.
Players like 97 and 29 should be asking for a cut of the franchise – which would then reward great achievements and create the dynasties and ‘eras’ that bring people to the sport, as opposed to the beige sludge that is parity at all costs.
The fact it is financially impossible to surround two generational talents with a generational team is an idiotic, shortsighted waste that the NHL will regret immensely.
Their cut of the franchise has to be accounted for in their AAV, which basically negates the benefit of foregoing salary.
A handshake deal is a better work around for something like that. Connor agrees to purchase a stake to match an equity gift/loan, then DK routes that donation to a charity under, say, Lauren Kyle’s directorship, and they live off the consultancy/management fees for a long time thereafter.
Most owners seem to view their teams as assets, aren’t really about the hockey
They like Gary because he increases valuations, gets bigger deals, and brings in expansion money, expansion means even bigger deals
The purity of the game, player safety may be on the list but would be far down it. They only come into play if it potentially jeopardizes money, as we saw with the pushback on brain trauma
You make a good point here that I think people may be missing.
It’s reasonable to put the contract on a timeline, treat it was an annuity and calculate the NPV. Future earnings are always decreasing a little due to inflation (is 1.5% fair for this conversation)… What is the target ROR? Like Ohtanis, Jarvis has changed from making a paycheque to beating financial projections.
I like this contract (same as Ohtanis) for a few reasons:
1. Can structure for balloon payments/ signing bonuses. These can be invested for a longer period than weekly salaries w/potential for greater returns
2. Potential to have some control over tax jurisdiction (I may be wrong, but it’s there a limited NTC in this?). This can be a tool to degrade tax burden. I would also suggest all athletes look at a numbered corporation based in a lower tax jurisdiction (Florida, Nevada, etc ), then the athlete is paid by their corporation. Not sure if this is possible though (I e. For to union agreement).
3. I’ve learned that I can get a better ROR on my money than my employer. Fact is that people with lots of money take a long time to change positions so that they don’t torpedo the market. In the case of a pro athlete they should have access to even more skilled people than I and should be able to manage their portfolio effectively
Great post.
To your second point, I’m all but certain the unions prevent players from incorporating. In Canada personal services assessments could also come into play, unsure about in the US.
I’d be willing to bet they could incorporate their marketing and endorsements deals, which, depending on the profile of the player involved, could be substantial.
💯
It would be great to see the Oilers apply this ‘CBA-approved’ tactic to Draisaitl and then McDavid. I am less certain that Bouchard will do this as he has not made the tens of millions that the other two already have.
Current CBA expires September 15, 2025, so there is time to get all three of these contracts done as ‘deferred’ contracts. However, my concern is that the NHL (with acquiescence of the NHLPA) will retroactively apply the deferred amounts to the teams salary cap in the year it is paid. The NHL does have a history of changing terms retroactively – remember the Luongo ‘cap recapture’ penalty that Van had to cover.
To make it absolutely onerous for the NHL / NHLPA to retroactively change terms and screw over the Oilers / Canes, the deferred monies should be a very high total and paid very soon after the contract is completed. So, Drai signs for 8 x 14 and McDavid signs for 7 x 16 with both deferring $8m per season. ALL deferred monies to be paid the day after the contracts expire (July 1, 2033).
Not how it works.
The deferred bonuses get charged at a “present value” rate, with only the interest on that present value being in play as deferred money.
i used the PuckPedia calculator mentioned in the post to calculate an 8-year, $120 million contract, with $10 million deferred each year. Player receives “only” $5 million per year. Then an $80 million nest egg at the end. All of that would reduce the cap hit to a shade under $13 million. $2 million cap “savings” though there is every chance that the nominal value would have to be higher for the player to accept such terms.
He might prefer to just take 8x $13 & do his own investing. So the club might have to negotiate upwards first to produce what passes as cap “savings”. Im not sure it’s anything more than smoke & mirrors, or as Shakespeare put it, much ado about nothing.
It is still not clear to me why that deferred money does not count against the cap of the team in year 9 of the 8 year contracts.
Because it’s extra contractual.
The maximum term of an NHL contract is eight years.
That they can agree to payment beyond the terms of that contract at all is puzzling to me.
Some paraphrasing here, but this is sort of what is going on:
The deferred payments paid beyond the playing seasons of the contract are counted against the cap, but on a present value basis. Effectively, (but not fully in a legal sense), the player is making a loan to the team for the amounts of the deferred salary. The “interest earned” on that loan is not counted against the cap, since it is paid as compensation for the loan, not for playing hockey. Ie. It is not hockey salary.
Now for tax and legal reasons, in the player contract, no interest amount is shown. The nominal value of the “loan” (the deferred amount) is shown in each season, and that is the same amount they will get paid later. The player won’t get taxed till he receives the payment and it is important to note, this is a fully unsecured obligation. For tax purposes, this only works if the player has some risk for not being paid in the future.
Even at today’s rates, earning Libor +1.25 % (or equivalent since Libor 12 is no longer published), is a poor return for an unsecured long term loan from most NHL teams.
Put another way, Seth Jarvis is being paid an average hockey salary of ~$7.5 million to play for the Carolina for 8 seasons or ~$60 million in total. Since he is deferring some of his salary, he will be compensated an incremental $3.2 million in “interest” for making a loan to Carolina. Jarvis is not being paid an AAV of $8 million unless he believes his time value of money is based on zero percent interest.
If the present value of the deferred compensation is used, then the choice of discount (interest) rate is important. If current rates are being used and if you believe rates are coming down, then the Oilers should sign their big 3 as soon as possible if they want to go down this route.
$2m in cap savings x 2 = $4m which is not insignificant – almost gets you a RNH. As I indicated, my concern is the NHL changing the rules retroactively.
About the deferred comp, say this is a retirement contract, your taxable residency can change a lot after you retire. Your tax rate could be significantly lowered if you move to a low or no tax location for the deferred years.
This could level the playing field for those playing in a low tax state currently. Goodbye advantage to Florida teams for example.