The Carolina Hurricanes signed Seth Jarvis to a long-term contract extension on Saturday but the deal is unique in that it includes a ninth year on an eight-year deal. That ninth year is a deferred payment that will bring Jarvis’ cap hit down $400K each season over the eight years of his new contract. It will cost the Hurricanes a chunk of money after the deal expires.
Related: Seth Jarvis’ Contract with Hurricanes Could Set New NHL Precedent
While it’s not clear exactly how much is being deferred — there is a time value of money discount calculation the NHL does in that ninth year that means it’s hard to know what that payment will be today — but the deal gives the Hurricanes more room on their cap during his contract.
Could the Oilers Follow the Hurricanes’ Lead?
What if the Edmonton Oilers were willing to do this with Leon Draisaitl, and even Connor McDavid?
Draisaitl would be the first opportunity for the Oilers to try a deferred payment if they felt with was a mechanism they wanted to use. The expectation is that Draisaitl will sign an eight-year deal worth around $14 million per season. Frank Seravalli of Daily Faceoff effectively offered up an example of how this might work if the Oilers and Draisaitl agreed to defer payments over 40 years.
He writes:
What if Draisaitl was hypothetically willing to defer $33.6 million of that contract to be paid out over the 40 years after the deal expires? That would be approximately $840,000 per year from 2033 until 2073, and yes, we’re talking a Bobby Bonilla-type contract. That would pay Draisaitl $80 million over the first eight years of the deal, hypothetically making for a cap hit in the neighborhood of $10 million per year – or a discount of $4.2 million per year of the deal.
It means Draisaitl would have to be willing to forego a huge chunk of change over the next eight seasons and the Oilers would need to be willing to pay a player for almost 50 years, but Draisaitl has made a lot of money already and the Oilers are highly profitable. Their respective situations seem to lend towards this at least being a conversation.
The bonus for the Oilers is that Draisaitl would then come in at a $10 million cap hit instead of the $14.2 Seravalli projected. What the Oilers could do with that $4.2 million per season as a savings on their cap hit could mean the difference between putting a Stanley Cup-caliber team around Draisaitl or not being able to afford one.
If that works, the Oilers could do the same with Connor McDavid.
As per Puck Pedia, there is no max in terms of what teams and players are allowed to defer.
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