Confirmed with Link: Sabres re-sign Dahlin 8 years $88 million ($11 million AAV)

[SwordsgoneWild]

Awesome. Got our franchise D locked up for likely the rest of his career here ( give or take a few years maybe) Ecstatic.

 

[HogtownSabresfan]

No matter how much money is fronted, Dahlin’s caphit will always be $11M per year. Marner and Matthews both only got paid $900K for the year on their contract. The Leafs still got hit with a huge AAV because the cap isn’t based on salary, but years of it.

You really don't understand the argument or the time value of money. Many don't. That's okay. Essentially, paying more upfront front means the same $88 million contract can be achieved without paying as much and lowering the average cap hit. Not by a ton but at the margins it can be done. Just to repeat, not unhappy and I get why it wasn't done and how cash flow is a big deal.

Any salary variance in adjacent years now cannot exceed 25% of the salary in the first contract year and the lowest salary year cannot be less than 60% of the highest salary year.

So what you think he would have signed for an 8x82 if you structured it, which is basically the limit of front loading since the variance is 61%

Season	2024-25	2025-26	2026-27	2027-28	2028-29	2029-30	2030-31	2031-32
Contract Year	1	2	3	4	5	6	7	8
Salary (in $M)	$ 13,000,000.000	$ 13,000,000.000	$ 13,000,000.000	$ 11,000,000.000	$ 8,000,000.000	$ 8,000,000.000	$ 8,000,000.000	$ 8,000,000.000
Contract Length	8
First Half Term	4
Sum of First Half Salaries	$ 50,000,000.00
First Half Averaged Amt	$ 12,500,000.00
AAV	$ 10,250,000.00

Good information. I would say do the math and base it on a 5% rate and see how different the real dollar is. I might take a stab at it later. But someone else. Feel free. Maybe it lowers cap by $100 K $250 K, $350 K. Honestly. I haven't done the math but it does allow cap to go down. Again, it's an expensive game for any ownership group. I also don't know tax consequences for player or owner.

 

[old kummelweck]

the time value of money.

Pegula's relationship to when and how he likes to spend cash is one of the murkiest and least understood parts of his ownership. There is lots of criticism and speculation, but no one really has a handle on this other than his execs.

 

[Sabresfansince1980]

You really don't understand the argument or the time value of money. Many don't. That's okay. Essentially, paying more upfront front means the same $88 million contract can be achieved without paying as much and lowering the average cap hit. Not by a ton but at the margins it can be done. Just to repeat, not unhappy and I get why it wasn't done and how cash flow is a big deal.

I think everyone understands that money now has more value than money later (if used properly). I don't think many of us believe that angle comes into play very much when teams and agents negotiate a contract.

 

[HogtownSabresfan]

I think everyone understands that money now has more value than money later (if used properly). I don't think many of us believe that angle comes into play very much when teams and agents negotiate a contract.

That's just naive and ridiculous. Anyone with any level of sophistication — like management and agents — gets this for sure. Austin Matthews's contract is a case study. Even getting a bonus on July 1 -- all of your money upfront is more money. If you don't think it comes into play, then you don't really understand how interest works. A risk-free return is 5%+ plus in Canada today.

 

[Doug Prishpreed]

That's just naive and ridiculous. Anyone with any level of sophistication — like management and agents — gets this for sure. Austin Matthews's contract is a case study. Even getting a bonus on July 1 -- all of your money upfront is more money. If you don't think it comes into play, then you don't really understand how interest works. A risk-free return is 5%+ plus in Canada today.

Maybe you should go post on another site with more sophisticated posters -- I'm sure your opinions will be more appreciated there.

 

[brian_griffin]

Not arguing, but I think you're being a little imprecise (maybe confusing to some) with language and perhaps also not recognizing some basic generalities.

Personally, I'm not dumping on the contract. I'm extremely happy it got gone. Pags reached into his pocket a bit and paid some upfront money — and I really doubted he would. The cap hit could have been reduced with more upfront money (you don't understand the concept of money if anyone cannot see that), but I accept it is an enormous lift to max that out and really impacts cash flow for a small market team.

The Sabres did right on this deal. Nothing is perfect, but this is a way better outcome than I had hoped for with Dahlin.

The point you're making, which most of us likely understand, is that a dollar today is worth more in terms of purchasing than the same dollar in the future due to inflation. Plus, there is the added potential for that dollar today to be invested for a future return.
I think it would be more exact to say the total contract cost can likely be reduced with a front-loaded annual actual salary. That the AAV cap hit would be reduced follows from such an approach. But, strictly speaking, the cap hit itself is independent of the schedule of annual payments, both the annual dollar amounts and the split between salary and bonus.

The cap percentage is obviously a key factor, but I'm really surprised how few people seem to get how important it is as to how the contract is paid out (ie: front-loaded), and the impact it has on total value in real dollars. The cap hit can be brought down on the edges by front-loading a deal more because you get to the same dollar value at then once you consider you are getting the money up front.

I realize you are both discussing something else but feel this is a key point.

Above there is again a mixture of imprecise terms.
Cap Hit = AAV = total contract cost divided by number of years.
total value in real dollars = some estimate of the cumulative or integrated value of the annual payments with some adjustment for inflation and investment return, YMMV
dollar value = total contract cost at time of signing

No matter how much money is fronted, Dahlin’s caphit will always be $11M per year. Marner and Matthews both only got paid $900K for the year on their contract. The Leafs still got hit with a huge AAV because the cap isn’t based on salary, but years of it.

Right.

You really don't understand the argument or the time value of money. Many don't. That's okay. Essentially, paying more upfront front means the same $88 million contract can be achieved without paying as much and lowering the average cap hit. Not by a ton but at the margins it can be done. Just to repeat, not unhappy and I get why it wasn't done and how cash flow is a big deal.



Good information. I would say do the math and base it on a 5% rate and see how different the real dollar is. I might take a stab at it later. But someone else. Feel free. Maybe it lowers cap by $100 K $250 K, $350 K. Honestly. I haven't done the math but it does allow cap to go down. Again, it's an expensive game for any ownership group. I also don't know tax consequences for player or owner.

I know you get it.
The actual data suggests a mixed bag. Some anecdotes...

Artemi Panarin has a front-loaded deal which declines in annual actual payment. It's also a flat $1M per year salary with the rest in signing bonus. That means a lump sum paid months earlier than the "weekly" small paychecks in season.

Dahlin is somewhat front-loaded, and all in-season-salary with the exception of a signing bonus in the first year (i.e., next season).

Cale Makar annual salary rises, peaks, then drops, kind of like a hump or hill. All of it is in in-season salary, no bonus.

Tage Thompson is level-annual salary, and all in-season salary with exception of this first season which has a modest signing bonus and reduced in-season salary.

Dylan Cozens contract matches/copies Tage Thompson.

Jeff Skinner is a mixture. Actual salary drops in the last 2 years of the deal. The remaining years are a mixture of in-season-salary-only and bonus-plus-in-season-salary.

I think we'd agree Panarin's deal is the smartest.

IIRC, it used to be annual payment schedules for high-total dollar (or high-AAV) contracts could be influenced by several factors:
1. Individual player tax situation (in terms of loss carry-forwards, etc.) for certain years.
2. Signing Bonus payment and reduced in-season-salary in the year (July) following the expiration of the CBA.
3. Concerns about players share of escrow, etc.
But, in the end, those factors remain somewhat minor in terms of actual annual payment schedule.
I suspect the time-value of money is a similar minor influence. Maybe it will grow in importance now that the world, and in particular, USA/Canada are in a high-inflation economy.

I think everyone understands that money now has more value than money later (if used properly). I don't think many of us believe that angle comes into play very much when teams and agents negotiate a contract.

IMO, the time-value of money certainly shouldn't dominate total contract cost. The total contract cost and therefore the AAV should be dominated by: player comparables, percentage of cap, number of UFA years purchased, and movement restriction clauses.

 

[brian_griffin]

That's just naive and ridiculous. Anyone with any level of sophistication — like management and agents — gets this for sure. Austin Matthews's contract is a case study. Even getting a bonus on July 1 -- all of your money upfront is more money. If you don't think it comes into play, then you don't really understand how interest works. A risk-free return is 5%+ plus in Canada today.

That same contract signed a couple years ago, or a decade ago, when money market rates for a near-risk-free return at a fraction of current MM rates would have been far less advantaged than the same level-loaded contract. In short, front-loading gets an individual more future inflation-adjusted dollars, but it's best-leveraged in times of high/increasing inflation. The comparative differences in low-inflation environments is a lot less.

There is a hidden discipline / behavioral risk to taking front-loaded money - blowing it too fast / too soon and "not having enough" in the future. Although that's a truly 1% of first-world-problem problems - and a reminder of the brilliance of Bobby Bonilla.

 

[UnleashRasmus]

I'm going to avoid posting in the free agent/trade section. There are some absolute idiotic statements. "Dahlin, isn't worth more than 7.0M", "He's completely mediocre", "He's had one great season". I'm happy my favorite player is signed long term. The cap hit is higher than I'd like, but he's deserving if this is who he is.

 

[HogtownSabresfan]

That same contract signed a couple years ago, or a decade ago, when money market rates for a near-risk-free return at a fraction of current MM rates would have been far less advantaged than the same level-loaded contract. In short, front-loading gets an individual more future inflation-adjusted dollars, but it's best-leveraged in times of high/increasing inflation. The comparative differences in low-inflation environments is a lot less.

There is a hidden discipline / behavioral risk to taking front-loaded money - blowing it too fast / too soon and "not having enough" in the future. Although that's a truly 1% of first-world-problem problems - and a reminder of the brilliance of Bobby Bonilla.

You are 100% right, but that's not where we are today in an inflationary world. The advantage for richer teams who don't care about cash flow and actual profit or tax impacts (I hope Steve Cohen is not allowed in the league) is clear.

 

[Sabresfansince1980]

That's just naive and ridiculous. Anyone with any level of sophistication — like management and agents — gets this for sure. Austin Matthews's contract is a case study. Even getting a bonus on July 1 -- all of your money upfront is more money. If you don't think it comes into play, then you don't really understand how interest works. A risk-free return is 5%+ plus in Canada today.

We ALL get it. The math is very simple, as much as you seem to want to cast yourself as a rare enlightened one on this topic. The NHL simply doesn't have many examples of contracts that are front-loaded enough to have actually reduced the cap hit in any very significant way. There are restrictions which were already hashed through earlier in the thread. You think this is a big leverage point that can be taken more advantage of, most of us just don't think so. The Matthews contract actually speaks to that. He simply negotiated a shorter term contract. He and others are getting their front loaded money by just getting a shorter term deal. That's how they're doing it.

 

[HogtownSabresfan]

We ALL get it. The math is very simple, as much as you seem to want to cast yourself as a rare enlightened one on this topic. The NHL simply doesn't have many examples of contracts that are front-loaded enough to have actually reduced the cap hit in any very significant way. There are restrictions which were already hashed through earlier in the thread. You think this is a big leverage point that can be taken more advantage of, most of us just don't think so. The Matthews contract actually speaks to that. He simply negotiated a shorter term contract. He and others are getting their front loaded money by just getting a shorter term deal. That's how they're doing it.

You don't think the Matthews contract is the different number if not front-loaded, even on a short-term deal. Even if it reduces the cap hit by $100 K or $250 K. It matters. It's hard to argue with someone who says the math is simple and then says the math doesn't matter.

We ALL get it. The math is very simple, as much as you seem to want to cast yourself as a rare enlightened one on this topic. The NHL simply doesn't have many examples of contracts that are front-loaded enough to have actually reduced the cap hit in any very significant way. There are restrictions which were already hashed through earlier in the thread. You think this is a big leverage point that can be taken more advantage of, most of us just don't think so. The Matthews contract actually speaks to that. He simply negotiated a shorter term contract. He and others are getting their front loaded money by just getting a shorter term deal. That's how they're doing it.

Invert the dollars on this contract, and you get a much different final valuation.

 

[Sabresfansince1980]

You don't think the Matthews contract is the different number if not front-loaded, even on a short-term deal. Even if it reduces the cap hit by $100 K or $250 K. It matters. It's hard to argue with someone who says the math is simple and then says the math doesn't matter.



Invert the dollars on this contract, and you get a much different final valuation.

You can't possibly be sure that Matthews' cap hit would be higher if the money was less front loaded either. You're arguing over a hypothetical aspect that none of us can be sure is really a thing in negotiations. I've never heard of a GM or agent speaking of it, so why should I think it matters very much?

 

[Gras]

You don't think the Matthews contract is the different number if not front-loaded, even on a short-term deal. Even if it reduces the cap hit by $100 K or $250 K. It matters. It's hard to argue with someone who says the math is simple and then says the math doesn't matter.



Invert the dollars on this contract, and you get a much different final valuation.

Matthews contract is pretty much all signing bonus, which is not the definition of a front loaded contract and that gap between year on total salary and year 4's total salary is the maximum % allowed by the CBA, so it could not have been front loaded any more than it already has been.

 

[brian_griffin]

My memory is both a blessing (when it's working) and a curse (when it's not). Decades ago, I recall opening the Buffalo Evening News one late afternoon to read Gilbert Perreault had signed a $400,000 deal with the Sabres. I also recall that allegedly, he was for a time the highest paid player in the NHL. However, back then contract terms were not public knowledge, although some deals were disclosed if the player and team mutually agreed to disclose it. So whether Perreault was or wasn't is likely an un-answerable question.

 

[HogtownSabresfan]

Matthews contract is pretty much all signing bonus, which is not the definition of a front loaded contract and that gap between year on total salary and year 4's total salary is the maximum % allowed by the CBA, so it could not have been front loaded any more than it already has been.

That's the point. The Leafs used the maximum leverage they could under the cap. It is both smart and expensive. And I don't expect this from smaller market teams. It is a tough lift.

You can't possibly be sure that Matthews' cap hit would be higher if the money was less front loaded either. You're arguing over a hypothetical aspect that none of us can be sure is really a thing in negotiations. I've never heard of a GM or agent speaking of it, so why should I think it matters very much?

Geez, you cannot be convinced of something as simple as the time value of money. I hope you have an investment advisor handling your money. If the NHL isn't this sophisticated, that would be pretty funny.

 

[HogtownSabresfan]

My memory is both a blessing (when it's working) and a curse (when it's not). Decades ago, I recall opening the Buffalo Evening News one late afternoon to read Gilbert Perreault had signed a $400,000 deal with the Sabres. I also recall that allegedly, he was for a time the highest paid player in the NHL. However, back then contract terms were not public knowledge, although some deals were disclosed if the player and team mutually agreed to disclose it. So whether Perreault was or wasn't is likely an un-answerable question.

Eagleson ran the whole league with owners like a slush fund and Bobby Orr got screwed out of millions. I prefer transparency in life.

 

[Gras]

That's the point. The Leafs used the maximum leverage they could under the cap.



Geez, you cannot be convinced of something as simple as the time value of money. I hope you have an investment advisor handling your money. If the NHL isn't this sophisticated, that would be pretty funny.

Theres no evidence that AM's cap hit would be higher had they paid less in signing bonus and more in season salary.

 

[Sabresfansince1980]

That's the point. The Leafs used the maximum leverage they could under the cap. It is both smart and expensive. And I don't expect this from smaller market teams. It is a tough lift.



Geez, you cannot be convinced of something as simple as the time value of money. I hope you have an investment advisor handling your money. If the NHL isn't this sophisticated, that would be pretty funny.

My God man! You simply don't understand my point. I get the money/math aspect. What I don't accept is that GMs and agents negotiate contracts based on that math. I have yet to ever hear that a GM worked to lower a cap hit by front loading the money. It probably happens but it's never seemed to be a major issue in NHL contracts. I see players essentially getting more money up front by simply negotiating a shorter term contract. Can I possibly make this any clearer to you?? YOU are the one that isn't getting MY point.

And getting personal about how I handle my own money is pretty friggin low bar. It would be equally low bar of me to counter your lame jab with details, so I won't.

 

[brian_griffin]

My God man! You simply don't understand my point. I get the money/math aspect. What I don't accept is that GMs and agents negotiate contracts based on that math. I have yet to ever hear that a GM worked to lower a cap hit by front loading the money. It probably happens but it's never seemed to be a major issue in NHL contracts. I see players essentially getting more money up front by simply negotiating a shorter term contract. Can I possibly make this any clearer to you?? YOU are the one that isn't getting MY point.

And getting personal about how I handle my own money is pretty friggin low bar. It would be equally low bar of me to counter your lame jab with details, so I won't.

Moreover, there is ample evidence the front-loaded time-value of money argument DOESN'T factor into more than a very small percentage of contract negotiations, given both the absence of disproportionate bonus-to-in-season-salary ratio deals, and the sheer quantity of level-loaded actual-annual-salary deals. If anything, the trend, on shorter-term, smaller-dollar veteran contracts (think Girgensons-type players, is to a small annual increase in actual salary, vs. the opposite model.

 

[Sabresfansince1980]

Moreover, there is ample evidence the front-loaded time-value of money argument DOESN'T factor into more than a very small percentage of contract negotiations, given both the absence of disproportionate bonus-to-in-season-salary ratio deals, and the sheer quantity of level-loaded actual-annual-salary deals. If anything, the trend, on shorter-term, smaller-dollar veteran contracts (think Girgensons-type players, is to a small annual increase in actual salary, vs. the opposite model.

Who needs any in-depth discussion? Let's insult each other's investment portfolios!

 

[brian_griffin]

Who needs any in-depth discussion? Let's insult each other's investment portfolios!

Pandemic hit and I bought Southwest (LUV) in late March 2020. Great move then. Held too long. Still holding. Oh well.

Just this past month (Sept) I moved some cash savings into a money market fund to get a better return. Should have done that a year ago when the government doubled-down on printing money out of air.

Hockey season can't start soon enough... I get a good return on that investment.

 

[Gras]

Pandemic hit and I bought Southwest (LUV) in late March 2020. Great move then. Held too long. Still holding. Oh well.

Just this past month (Sept) I moved some cash savings into a money market fund to get a better return. Should have done that a year ago when the government doubled-down on printing money out of air.

Hockey season can't start soon enough... I get a good return on that investment.

My cryptos haven't done too well

 

[HogtownSabresfan]

My God man! You simply don't understand my point. I get the money/math aspect. What I don't accept is that GMs and agents negotiate contracts based on that math. I have yet to ever hear that a GM worked to lower a cap hit by front loading the money. It probably happens but it's never seemed to be a major issue in NHL contracts. I see players essentially getting more money up front by simply negotiating a shorter term contract. Can I possibly make this any clearer to you?? YOU are the one that isn't getting MY point.

And getting personal about how I handle my own money is pretty friggin low bar. It would be equally low bar of me to counter your lame jab with details, so I won't.

In everyday life, most of us don't think about these minor advantages (even though we probably should), but we are talking about $88 million. It just defies credibility that, in a sophisticated league, they are not factoring this in. It's not as major because the financial incentive was reduced dramatically. But we have teams like Toronto dropping rosters to 21 players to get $250 K more on the cap.

Do you think democracy rules over math? The majority can say whatever they want here. It doesn't change the math. Money is money, and your net amount in real dollars is a thing. The tax consideration is turning out to be an even bigger consideration. I'm not saying it's only about money. Players do want to win and some cities are less desirable than others.

But money is not as simple as the average cap hit per year but what you are left with on a net basis in real dollars matters. How much? As someone else correctly pointed out, way less in a 2% inflation environment. Today it is way more.

 

[Diaspora]

My memory is both a blessing (when it's working) and a curse (when it's not). [ . . . ]

Funny. Mine works just the opposite.