Short,Medium and Long.....A look at where contracts are heading

Discussion in 'Ottawa Senators' started by topshelf15, Feb 5, 2019.

  1. Tnuoc Alucard

    Tnuoc Alucard There's more than 1 side to any story or issue.

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    Plus, in Matthews case (yesterday) the Massive tax savings with the Bonuses (15%) vs the Base Salary (53%)
     
  2. Cosmix

    Cosmix Registered User

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    "Matthews’ new contract will be paid almost entirely in bonuses (90 percent), with $15.2 million due in each of the first two seasons, $9.7 million in the third season, and $7.2 million in the final two seasons. Matthews will earn the league minimum in salary in all five seasons."

    That "bonus" shenanigans is a problem for all teams but particularly the small market lower revenue teams. I think the league must reign in this aspect as well as the the 8 year term contract.
     
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  3. Calvin123

    Calvin123 Registered User

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    Can you explain why taxes would be lower on bonuses than on salary?
     
  4. Cosmix

    Cosmix Registered User

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    The cap is not the problem. Nor the buyout system. The bonus system needs significant changes to address the inequality in treatment between bonus and salary.
     
  5. Tnuoc Alucard

    Tnuoc Alucard There's more than 1 side to any story or issue.

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    Article XVI of the US-Canada tax treaty states that signing bonuses paid to a resident of the US by a Canadian team are taxed at 15% in Canada, and vice versa for US teams paying bonuses to Canadian residents.

    So in his first year of his contract (for example) the 15 Million signing bonus is taxed, in Canada at 15%, leaving his "Base Salary" 750K being taxed in Canada at 53%.


    I think this is what Tavares is doing also, or at least it is speculated that he is.

    John Tavares Could Save Nearly $12 Million In Taxes On His New Contract
     
    Last edited: Feb 6, 2019
  6. Icelevel

    Icelevel -+-+-*-+-*-+-=???

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    Why cause a dumbass kid gets a cheque for $15million to push a piece of rubber around? And then gets another one a year later?
     
  7. Silencio

    Silencio Registered User

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    Every time the CBA is renegotiated there's always some stupid loophole that gets massively exploited by the same 4 or 5 teams. Last time it was front loaded cap hits, now it's front loaded bonuses. God only knows what the next CBA will spawn.
     
  8. Calvin123

    Calvin123 Registered User

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    Thanks, I wasn't aware of that tax loophole. Amazing what the rich can get written into law...
     
  9. GrantLemons

    GrantLemons Church of FYOUS

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    I mean the CBA negotiated in 2004-2005 was unprecedented by NHL standards, so you would have to expect some hiccups. I would imagine with each passing CBA negotiation it will get ironed out a little more.
     
  10. Chabot84

    Chabot84 Registered User

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    So what did Matthews get? His contract was 93% all bonus money? So does that mean Stone and Duchene are going to want their contracts structured similar? and then... Chabot... are we even sure the Sens can build a hockey team in this climate?

    Look at the top 50 in the NHL though... there is a lot of players scoring at or near PPG

    NHL.com - Stats

    They cant all be worth 10 million++ now.. right lol

    Stone has 10 points less then Marner.. so if Marner gets 11 million$ what does a player like Stone get?

    Duchene scoring 48 points in 43 games.. scoring at similar pace as Marner and hes #1C

    So basically teams that locked up their stars over the last 3-4 years have a huge advantage moving forward financially for the next window. And of course the Sens are on the butt end of this.. we are always on the wrong side of things.
     
    Last edited: Feb 6, 2019
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  11. coladin

    coladin Registered User

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    That Matthews contract has more effect on my apathy for this team than almost anything Sens related. We are doomed. You can't cheer for the young guys because it will be like "what's the point, they will get moved", or you just won't have that sense of attachment as we had in the past with the likes of Alfie and Co.
     
  12. coladin

    coladin Registered User

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    Colorado has to sign Rantanen, good luck with that. And MacKinnon won't be happy, there could be some strife along the NHLPA members too. The Nylander situation has totally made the player a shell of himself. Now Marner's agent is tripping all over himself.
     
  13. BankStreetParade

    BankStreetParade Registered User

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    I could see the big CBA fight being owners wanting to cap RFA contract values. This thing is a runaway train. RFAs are getting paid like UFAs, what's the point in even having the distinction between the two except to guarantee exclusive negotiating rights? And even then, Nylander was a hold out because he didn't get what he wanted and Toronto eventually caved in.

    The whole point of the first two lockouts was cost control. Now the part of the CBA that was supposed to be the most owner friendly, RFAs, has become one of the biggest problems.
     
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  14. GrantLemons

    GrantLemons Church of FYOUS

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    I would answer that with: Why shouldn't guys like Matthews, Marner etc. be getting paid like the Tavares' and Kane's when they're putting up similar or better numbers? Besides, with the state of the league right now, paying for a guy's age 22-28 years is 100% better than paying for their 28-34 years.

    It makes no difference for teams like the Sens. They can't afford those contracts whether it's for an RFA or a UFA.

    The signing bonuses are an issue and need to be addressed. But if guys show on their ELC that they're elite, they're going to want to be compensated as such.

    If the league starts wanting to cap RFA salary solely based on age, and not performance, that's going to be lockout material.
     
  15. topshelf15

    topshelf15 Registered User

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    Yep ,by the looks of things things will always get more and more expensive....Pretty means you cant dilly dally around looking for the perfect deal to try and make a push ...You need to strike even faster ,as the time of a controlled player salaries is getting shorter every year.....
     
  16. Micklebot

    Micklebot Moderator

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    Ugh… you're not really giving the whole picture here. I’m no tax expert, but the above is really misleading due to a pretty substantial omission. Savings, yes, but not as much as one might think based on what you've posted.

    The tax treaty has bonuses taxed at 15% in Canada so that, assuming he’s still a US resident for tax purposes, he can claim the full amount as a foreign tax credit when filing his US taxes. He’ll still be on the hook for paying taxes for whatever his US filling requires, assuming it’s Arizona, that means a combined 41.54% in state and federal taxes I believe, of which 15% can be claimed as a tax credit.

    If he didn't have the bonus money, it would be taxed at 53%, and he could claim a tax credit to reduce his US taxes to 0%. So he's saving 11.46% which is still something, and Canada only gets 15% instead of 53%. This is probably oversimplified, and I'm sure somebody more familiar with international taxation laws could probably find some errors in what I've said, but it's a more complete picture of what's happening here.
     
  17. aragorn

    aragorn #Boucherout

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    Bonus money has to either be eliminated or included in the salary of the player & the average of the contract. If a player makes $80 mil over the course of 8 yrs & whether it's paid up front in bonuses or not, it should still be a $10 mil per yr average.

    Otherwise, this is just another sneaky way for rich teams to buy the best players & the poor teams to get screwed again. It's similar to when rich teams would stick some players in the minor leagues to take their salary off their cap. I believe that got changed & this should be changed as well in all fairness to every market. Of course, something also needs to be done regarding all the different tax structures in Canada & the US as well as in every state & province to try to make it as fair as possible for players, & teams & that won't be an easy fix.
     
  18. DaveMatthew

    DaveMatthew Registered User

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    I think the shift that we're seeing makes sense. It used to be that players had to wait until 27 for their payday, and if you go even further back, 31. That meant that teams were paying players for what they had done in the past, not for what they would produce during the length of the contract.

    A top-end player's prime is usually between 22 and 30 years of age. That's when they should make the most money, as it coincides with their biggest impact, and that's what we're seeing now with these RFA deals.

    It'll take some time for the adjustment to take place, but eventually, this will balance out and older UFAs will be the ones who lose out. The Matthews and Chabots will make more earlier, the Boninos and Niskanens will get much less later. That makes sense, IMO. If you pay attention to baseball, this same thing is happening in the MLB.

    Signing bonuses are a different story. I think you'll see those capped in the new CBA.
     
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  19. Sensung

    Sensung Registered User

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    The solution is increased revenue sharing, but what will it cost the small markets?

    Big Markets don’t want a 10 team league. The cap for each team would way higher without the poor revenue generators lowering the average.

    How much of their Big Market windfall profits are they willing to share, though is another matter.
     
  20. Cosmix

    Cosmix Registered User

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    Yes it is. But those who propose and approve the laws are getting supported by the rich.
     
  21. Cosmix

    Cosmix Registered User

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    Improved revenue sharing would be a good addition to the system, but not sufficient on its own.
     
  22. Cosmix

    Cosmix Registered User

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    Agree. However, I think the total compensation paid to a player in each year should be used for cap purposes, not the AAV over the contract term.
     
  23. Karl Prime

    Karl Prime Registered User

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    On average Matthews is still making $11.630, it's just front loaded for the first two years so he'll have made $31.8 milskies by the summer of '21.
     
  24. Micklebot

    Micklebot Moderator

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    I'm not sure why teams would make that fight. At the end of the season, player salaries on the whole are locked in at 50% of HRR. Sure, some teams come in above, and some below, but capping RFA deals to a lower % just means more money will go to the UFA, because at the end of the day, 50% has to be spent. If you lower one groups portion of that pie, another group has to get it, and it isn't going to be the owners. If anything, I'd rather see UFA get less, as they are typically the contracts that bite you in the ass.
     
  25. thinkwild

    thinkwild Veni Vidi Toga

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    It does seem a little ironic how we fans used to get upset at rich teams being able to get an unfair advantage by burying contracts in the minors or gaining by cap circumvention's, but then we propose that rich teams should just get to cancel contracts outright. To me that seems like a far better circumvention advantage for rich teams. Each year they can just cut all their players they think can improve on and offer the big money to small market team stars until they too seem overpaid, then they just cancel that contract, rinse, repeat.

    There is an idea that the issue with guaranteed contracts is that we in Ottawa get stuck with an overpaid Bobby Ryan we cant dump. But that was part and parcel of what was initially seen as a really attractive feature of the cap to force big markets to live with their mistakes. And really, that doesnt seem like an issue that is really hurting us anyway, hardly worth dying on a hill for.

    If we, and the Rangers, could both just cut any player whenever we wanted, im unconvinced that would be in our best interests as fans of a small market team as I think it through. Being able to sign Chabot to an 8 year contract next time could be in our advantage as well as after all, by the time that contract ends the salary cap could be getting up to $120 mil. and we’d have him at would then seem a great bargain. Guaranteed contracts can protect us too.

    I've always felt that the often expressed fan desire to eliminate guaranteed contracts was a bit fuzzy in thinking.
     

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