Edmonton Oilers Use Deferred Payment Contract with...............

The Seth Jarvis deal in Carolina could be something the Edmonton Oilers look at with Leon Draisaitl and Connor McDavid.

Seth Jarvis signed a long-term contract extension with the Carolina Hurricanes on Saturday, but the agreement is special because it includes a ninth year on an eight-year contract. Over the course of the eight years of his new contract, Jarvis’ cap hit will be reduced by $400K per season thanks to the deferred payment in the ninth year. When the contract ends, it will cost the Hurricanes a significant sum of money.

As @frank_seravalli notes, NHL contracts are permitted to include compensation that is deferred past the playing term of the contract. If that case, the deferred compensation is discounted to the present value of the payment as of the year in which the compensation was earned https://t.co/0QAqgmZwQZ

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?

If the Oilers were to employ a deferred payment arrangement, Draisaitl would be their first chance to do so. Draisaitl is expected to sign an eight-year contract with a salary of approximately $14 million each season. Frank Seravalli of Daily Faceoff provided a good illustration of how this may proceed if Draisaitl and the Oilers choose to spread out payment terms over a 40-year period.

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.