Sportsnet: Frank Seravalli on Leon Draisaitl’s and Seth Jarvis’s contract extensions, the structure of their deals and how the contracts will impact future NHL contracts. Draisalt’s deal was signing bonus heavy and Jarvis had money deferred.
** NHLRumors.com transcription
Justin Cuthbert: “I mean, we’ve been talking about Leon for the better part of two months now. It took two months for this to get done. What happened in these last two months as the Oilers and Draisaitl, I mean, there was, you know, hiring of a GM, which is fairly important, but from Leon’s standpoint, and what he might have wanted to find out along the way. What happened over these two months, Frank?”
Seravalli: “I don’t know that there was a big fact-finding mission. I don’t know how much more you need to know, other than getting to game seven of the Stanley Cup final, to know that you’re as close as any team has ever been to winning a Stanley Cup and not getting the job done.
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But there’s also a really healthy contract that’s on the table too. And it’s not just about the total dollars, $112 million. It’s also about the structure. $104 million of that contract guaranteed with the stroke of a pen through signing bonus money. So the Oilers paying a significant amount of that, all but $8 million of it, $1 million per year of the eight-year deal in signing bonus.
It’s a significant, significant contract, a record-setter in terms of AAV. So really, no discount here. I think the back and forth was mainly probably on structure.
I wrote something over the weekend with the new Seth Jarvis contract on deferred salary. I know the Oilers and Draisaitl had talked about that as well throughout the process. But in this case, this one ends up being signing bonus-heavy.”
Ailish Forfar: “Yeah, I don’t want to get too far off the Leon discussion, but the Seth Jarvis of it all, obviously got a lot of people discussing, you know, not the Shohei Ohtani level to deferred money. But if this is something we might see moving forward, and why it hadn’t been utilized so much by those capologists in the past? Deferred money, is this going to be something we see a lot more of, to a higher degree in NHL?”
Seravalli: “I think we will. I think it’s going to take a departure from typical player thinking, which driven by agents, and rightfully so, because the value of $1 today isn’t necessarily $1 three years from now, is to get as much as you can, as soon as you can.
In the case of Seth Jarvis, it’s a really unique contract that pays him more over time with the time value money calculation that for him, seems to work. But as Leon Draisaitl signs his deal , as one prominent NHL executive reminded me, it takes the player on the other end of the deal to be comfortable with that as well, to defer money.
A lot of people think the sooner you can get your hands on it and invest it, you’re going to be getting way better returns than just a simple interest rate, which, in the case of Seth Jarvis, ended up being, I think, around 5%, five and a quarter. That maybe that isn’t necessarily all that appetizing, depending on how much money you’re talking about.
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The reason why I think it’s going to take a stronghold in the game is there’s going to be a ton of players out there that are in similar situations to Draisaitl. On your third contract, on a team that has a chance to win where every dollar counts. And if you have confidence in your general manager and front office staff that they can do and spend that money wisely, well, then you if you can provide them some more ammunition and have some sort of, what I would call idiot-proof savings built-in, in terms of deferred money, that I think it could end up being a win-win-win.”
