Quote:
Originally Posted by The Cobra
Draisaitl wouldn’t defer that much for so long as it lessens the try’s value of his contract.
Let’s say he wants $120M for 8 years.
If The Oilers want to defer payments, he’ll say sure, as long as the NPV of the contract does not decrease. That would mean they will need to increase the amount of the contract to make up for the deferment.
The starting point is to figure out how much the player will make on an 8 year contract based on NPV. Then you can play around with deferred payments as long as the NPV does not change. The more deferment, the larger you will need to increase the ultimate payout.
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I think you’re closer here, as this is what a few people are missing.
It’s easy to look at this as a vehicle to save cap space, but it’s unlikely to be successfully used that way because teams have to pay players more to convince them to defer.
What is more likely to happen (and has happened historically) is that it will allow rich teams to “overpay” players at the same cap hit for a competitive advantage. Draisaitl isn’t going to take 2-3 million less in value just because the real dollars are more, but he might defer significantly more real dollars if the value is matched to his market price and he has some investment in being with that specific club.
The difference between a non-deferred contract and a deferred one would likely be:
- Draisaitl at 14/8 for 112M total
- Draisaitl at 14/8 for 146M total with 98M deferred
So, no cap saving, more real dollars, but for a team that wants to maximize their internal budget now and expects to be competitive for 8 years (and then have additional funds after that), a good move.