Carolina defers part of Jarvis salary, are the flood gates open?

[tom webster]

Carolina deferred part of Seth Jarvis salary to the ninth year saving $400K per year on the salary cap.

They actually done this with Slavin earlier but the effect was minimal and no one noticed.

Will Vegas and Toronto, amongst others, go crazy with this? Will the NHL step in? Stay tuned.

Edited August 31, 2024 by tom webster

[LGR4GM]

this is the model for Quinn and Jjp and Benson. 

 

[JohnC]

  On 8/31/2024 at 1:14 PM, tom webster said:

Carolina deferred part of Seth Jarvis salary to the ninth year saving $400K per year on the salary cap.

They actually done this with Slavin earlier but the effect was minimal and no one noticed.

Will Vegas and Toronto, amongst others, go crazy with this? Will the NHL step in? Stay tuned.

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What's wrong with deferring money to limit the cap hit. The organization is being creative while still working within the cap rules. Both the player and the organization agreed to the terms of the contract. It isn't so much that this deferring of salary wasn't noticed before as it was acceptable within the negotiated terms between management and players. Carolina should be saluted. 

[shrader]

  On 8/31/2024 at 2:50 PM, JohnC said:

What's wrong with deferring money to limit the cap hit. The organization is being creative while still working within the cap rules. Both the player and the organization agreed to the terms of the contract. It isn't so much that this deferring of salary wasn't noticed before as it was acceptable within the negotiated terms between management and players. Carolina should be saluted. 

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What wasn’t clear to me from reading the link is whether or not that deferred money ever hits the cap in the future. If it doesn’t, this loophole will get closed pretty quickly. Deferring is fine, but they’ll change the cap calculation to include it. 

[JohnC]

  On 8/31/2024 at 2:54 PM, shrader said:

What wasn’t clear to me from reading the link is whether or not that deferred money ever hits the cap in the future. If it doesn’t, this loophole will get closed pretty quickly. Deferring is fine, but they’ll change the cap calculation to include it. 

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Under the current rules it is legal. As far as changing how the cap is calculated it won't be as simple as you believe it to be. I assume it will have to be negotiated between the league and PA. In this particular contract both the player and the organization are fine with how it was structured. 

[tom webster]

  On 8/31/2024 at 3:08 PM, JohnC said:

Under the current rules it is legal. As far as changing how the cap is calculated it won't be as simple as you believe it to be. I assume it will have to be negotiated between the league and PA. In this particular contract both the player and the organization are fine with how it was structured. 

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The NHL has broad powers to limit purposeful cap circumvention. This is peanuts but what if someone pulls a Dodger contract and defers $60M into a ninth year? I think the NHL steps in and I’m not sure the PA is strong enough to object. 

[Thorner]

Apparently after this move, and once Boston finalizes Swayman and co, Sabres will be solidly bottom 5 in payroll again and bottom 3 for actual dollars spent 

[steveoath]

  On 8/31/2024 at 3:13 PM, Thorny said:

Apparently after this move, and once Boston finalizes Swayman and co, Sabres will be solidly bottom 5 in payroll again and bottom 3 for actual dollars spent 

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[mjd1001]

So my question is...does the team have the deferred part of the contract hit their cap AFTER the contract is done?

If a deal is signed where 5 million is deferred to AFTER the contract is done, so it doesn't hit the cap during the contract, does that $5m count against the cap when it is paid out?

[Weave]

  On 8/31/2024 at 3:13 PM, Thorny said:

Apparently after this move, and once Boston finalizes Swayman and co, Sabres will be solidly bottom 5 in payroll again and bottom 3 for actual dollars spent 

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Why must you give me a sad on a Saturday?

[JohnC]

  On 8/31/2024 at 3:13 PM, tom webster said:

The NHL has broad powers to limit purposeful cap circumvention. This is peanuts but what if someone pulls a Dodger contract and defers $60M into a ninth year? I think the NHL steps in and I’m not sure the PA is strong enough to object. 

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When a contract is signed between a player and franchise it doesn't become official until it is reviewed by the league office so that it is in accord with the labor agreement between the league and PA. 

The baseball business model is completely different. It doesn't have a hard salary cap but does have a luxury tax clause for teams that go over it. The Dodgers are in a unique financial position where $$$ directed towards salaries isn't a major consideration. 

[PerreaultForever]

I'm not a capologist but I thought they already got rid of shenanigans in this way and all cap hits were based on the total contract value divided by the term. Is that not right?

[Taro T]

Seems much ado about nothing.

He'll get a payment of about $3.2MM in year 9 but per the CBA the value of that, in the year it is earned (NOT the year it is paid), is included in the players' share of earnings.  Had a beeyotch of a time trying to find the 1 year LIBOR rate (seems that LIBOR has been getting phased out) but it seems to be ~5.35%.  And in present day $'s, presuming he earns that deferred payment this season, would be ~$1.92MM presuming he earns it this season.

Puckpedia is showing his contract's total value as $60MM over 8 years.  It's being reported that the contract is actually $63.2MM over 9 years.  But personally don't believe he's actually getting $63.2MM.  Expect he's actually going to get ~$61.28MM over the 9 years as the $3.2MM to be paid in the 9th year is supposed to be getting funded with $1.92MM of the $7.5MM he's due to earn this season.

Serivalli has an article about the contract at the Daily Face Off, but it doesn't seem he's read the CBA.  Because he is saying the money that has been deferred doesn't count against the cap in the year it is earned.  But the CBA clearly says it does.  

50.2.A.ii Deferred Salary; 
(A) "Deferred Salary" means any Paragraph 1 NHL Salary that is earned during the term of an SPC during which the services 
attributable to that Paragraph 1 NHL Salary are performed, but is not paid until after the expiration of such SPC. By definition, 
Deferred Salary that is earned during the term of such an SPC may not be paid until after the expiration of such SPC. Player Salary 
denominated as "Deferred" but payable within the term of the SPC shall be counted in the League Year in which the Player Salary is 
paid and shall not be treated as Deferred Salary. For purposes of calculating a Club's Upper Limit and Lower Limit, as well as the 
Players' Share, Deferred Salary shall be counted as Player Salary in  the League Year in which the Player performs the services for 
which it is earned, at the Deferred Salary's present value at 1-Year LIBOR plus one and one-quarter (1.25) percent at the time the SPC 
is registered (unless the Deferred Salary is to be paid with interest, in which case it shall be counted in the League Year in which the 
Player performs the services for which it is earned, at the Deferred Salary's stated cash amount). Other than Deferred Salary or 
Deferred Bonuses as set forth below, any other compensation must be paid in the year that it is earned.

Cap Wages doesn't have the contract listed yet.  Presumably because they're waiting on getting more details on the contract before publishing the data.

So, while it looks like this money doesn't count against the cap, that is misleading and per the CBA it DOES count against the cap.  But at only about 60% of what he'll actually get paid in year 9.  (Time value of money and all.)

[LGR4GM]

Puckpedia has the contract listed at 7.5 million per season to 2032

[Scottysabres]

  On 8/31/2024 at 3:13 PM, Thorny said:

Apparently after this move, and once Boston finalizes Swayman and co, Sabres will be solidly bottom 5 in payroll again and bottom 3 for actual dollars spent 

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More with less......

[Taro T]

  On 8/31/2024 at 9:23 PM, LGR4GM said:

Puckpedia has the contract listed at 7.5 million per season to 2032

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Yes.  Because apparently that is what the total value of the contract is with deferred money prorated back to the season in which it is earned.  (Presumably THIS season as that gives the Canes the largest discount on the cash to be paid in the 9th year.)

[LGR4GM]

  On 8/31/2024 at 9:58 PM, Taro T said:

Yes.  Because apparently that is what the total value of the contract is with deferred money prorated back to the season in which it is earned.  (Presumably THIS season as that gives the Canes the largest discount on the cash to be paid in the 9th year.)

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[LGR4GM]

 

Edited September 1, 2024 by LGR4GM

[PerreaultForever]

I think it still counts to the cap but since some of it is designated as SB in the final years they can elect to defer part of that payment to what would be year 9. 

I know that is what Boston did paying out bonus money to Krejci and Bergeron in the year after they retired and that money counted against the cap of that year. 

[Taro T]

  On 8/31/2024 at 11:05 PM, LGR4GM said:

 

 

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So, as said earlier, all the hand wringing over him getting over $60 MM nominally over 9 years was for naught. 

He doesn't even earn the originally speculated $7.5MM/yr.

[Taro T]

  On 9/1/2024 at 1:35 AM, PerreaultForever said:

I think it still counts to the cap but since some of it is designated as SB in the final years they can elect to defer part of that payment to what would be year 9. 

I know that is what Boston did paying out bonus money to Krejci and Bergeron in the year after they retired and that money counted against the cap of that year. 

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Am not looking at their contract details at 2AM, but you are likely wrong about that.

Presumably they retired while still having years remaining on their contract.  With them retiring while having a signing bonus that hadn't been fully realized against the cap, that outstanding amount would have to show up on the books that next season.

Because if they had deferred bonuses that they received after the contract ended, that money would already have hit the cap when it was earned.

And yes the deferred payments count against the cap when those payments are earned.  So, it doesn't show up against the cap nor the players total compensation when it is actually paid because it counted against both when it was earned.

Edited September 1, 2024 by Taro T

[LGR4GM]

Zach Benson is better Seth Jarvis. Remember that. 

[tom webster]

Oh God, a friend just informed me that Ecklund posed the same question as I previously did regarding an Ohtani type deal. An example of when imitation is not the sincerest form of flattery.

[Taro T]

  On 8/31/2024 at 3:13 PM, tom webster said:

The NHL has broad powers to limit purposeful cap circumvention. This is peanuts but what if someone pulls a Dodger contract and defers $60M into a ninth year? I think the NHL steps in and I’m not sure the PA is strong enough to object. 

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If somebody defers $60MM into a 9th year, there are going to be some seriously large cap hits in years 1-8 when the player actually earns that money.

Again, much ado about nothing.

And if some player wants to defer $40MM out 40 years, then he has a horrible fiscal representative.

[tom webster]

  On 9/1/2024 at 7:32 PM, Taro T said:

If somebody defers $60MM into a 9th year, there are going to be some seriously large cap hits in years 1-8 when the player actually earns that money.

Again, much ado about nothing.

And if some player wants to defer $40MM out 40 years, then he has a horrible fiscal representative.

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I’ll defer to you on this. I haven’t really played around with the numbers or talked to anyone regarding any ramifications.