Quote:
Originally Posted by All In Good Time
Ha ha
Why not?
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Because the present value of that $80 million still counts against the cap, as calculated for the years in which it is earned and then averaged over the life of the contract. A dollar in the future is worth less than a dollar now, and if that dollar were paid today, it could earn interest for the player over the whole term of the contract. Any payment deferred until after the contract ends is discounted at a rate that is tied to current benchmark interest rates. (It used to be LIBOR, but that no longer exists; I don't know what benchmarks they use now.)
At the moment, the NHL calculates the present value of a future payment at a discount rate of 5.4689%. (This is the rate used on the Seth Jarvis contract.)
Seth Jarvis deferred about $11 million in total on his current contract (bonuses from years 1 and 3 out of 8, so quite a long-term deferment), and this lowered the cap hit from $7.9 million to about $7.4 million. Jaccob Slavin deferred his signing bonus for year 7 until year 9, which only lowered the cap hit by about $65,000 – less than 2%.
If you pay a player $88 million over 11 years, but defer all but $1 million per year until the 9th year, the cap hit goes down to $8,928,067 – not $1 million. And the player can't touch the money in the meantime, which makes him less likely to accept the deal.
Here's the handy-dandy calculator that provided that number:
https://puckpedia.com/deferred