Quote:
Originally Posted by FlamesAddiction
This is confusing to me. Is he getting a guaranteed payout of $18 million to play hockey for 3 years or not?
I don't see why the cap shouldn't be be calculated using the same method of total $$$ divided by years of service. I didn't like it when the Canes did it with Jarvis either, even though his deferred payment comes in the day after his contract expires and only saves them ~$500k per year.
My other question is if he is being taxed on $3 million in earnings each year, or is the team paying him $4.57 million on paper and then deducting the $1.57 million and putting it aside? I think that is what is being implied, but is that in fact what is happening?
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He is getting $3M each of 3 years and being taxed on that amount. He is getting $3M deferred for each of those 3 years, until 10 years down the road.
But since he is getting the deferred money do much later, it's not worth as much as $3M today. It's worth $1.57M So, that's the cap hit, the present day calue of the deferred money plus the $3M each year.
There is no cap circumvention. It will cost the team about $4.57M per season.