It may have surprised some when Toronto Maple Leafs signed forward Cali Garnrock on a four-year, $8.4 million deal. It wasn’t that the club didn’t need a brave striker who could play anywhere from the second streak to the last six. The four-year commitment to a player who loses a year by their standards, split between the Seattle Kraken and Calgary Flames, made the move potentially problematic.
It was, of course, until the details of the Garencrock deal emerged when they started to make sense. according to PuckPedia.comThe maximum Jarnkrok deal allowed will be paid out in signing bonuses.
Before the COVID-19 pandemic decimated the NHL’s salary cap, Maple Leafs offered signing bonuses to just about anyone. In 2019, I wrote about how to make a file Papers were the leading by a large margin On what other club and how they used their cash advance strategy to attract free agents.
How Signing Bonuses Work In The NHL
There is no limit – outside the NHL minimum salary under a collective bargaining agreement – to the amount of the average annual value of a player that can be paid in a signing bonus. In most cases, players can earn the majority (if not most) of their annual wage as a lump sum up front. It still counts toward a player’s average annual worth versus the maximum salary.
Why players love it
There are many advantages here. Having most of your money up front allows the player to put that money to work right away right away. Whether it is for major purchases or major investments, there is more value to a player having money up front than paying them over the course of a year.
It’s a simple economic principle about the time value of money: a dollar today is worth more than a dollar tomorrow. In today’s scene of massive inflation, this couldn’t be more true!
Another benefit to the player is possession protection. Under the Anti-Corruption Act, a player age 26 or older can be subject to a refund of two-thirds of the remaining balance due. Signing bonuses are exempted from this account, allowing the player to guarantee more of their money if things go wrong.
Why do you love maple leaves
There has been a lot of talk that Canadian teams are at a disadvantage due to higher taxes compared to many destinations in the United States. While states like Florida, Texas, and Washington cannot use income tax as a means of enlistment, Maple Leafs do not have this advantage.
While there are several mechanisms in place that alleviate those bloating. Bonus signing is also subject to different “salary” taxes thanks to the US-Canada Tax Treaty as set out over here.
How Leafs do it differently
Teams in the league usually have no problem handing out signing bonuses to first-timers who are already making a lot of money. He is the depth player where the Maple Leafs have shown the most flexibility.
In 2019, the Maple Leafs signed forwards Andreas Johnsson and Kasperi Kapanen for deals not unlike Jarnkrok where most dollars were paid outside the NHL’s minimum salary in signing bonus.
“In some cases, players feel that they can get a larger average annual amount elsewhere, so some of it has to do with the current value of the money and their willingness to part with some of the average if the bonus structure is broken down into different ways,” said the general manager of the company. Maple Leafs Kyle Dupas after signing those deals. “We get the taxes used against us a lot, if you play somewhere else you play in a lower tax bracket. Other teams use that, so we are lucky here because of our fan base, because of our coverage and because of our partners in the corporate structure. For us, using the tax argument against us. To not use any of our advantages would be foolish on our part.”
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Added flexibility for sheets
Maple Leafs can use the bonuses paid as an incentive for budget-conscious teams looking to get players at a lower cost, or as a way to hit the NHL’s coveted salary cap.
There are several examples of this:
After Johnson signed a four-year $13.6 million contract that paid $8.8 million in bonuses in 2019, The Leafs swapped him with the New Jersey Devils for striker Joey Anderson later in the season. Although Johnsson only played one season of the deal for Toronto, the bounty-packed, bounty-rich nature of the deal meant the Leafs paid $5.3 million for just one year of service.
Johnson does not appear to be surprised by the move.
“I thought I’d be staying in Toronto longer but it’s about hockey, that’s business and the way it can be,” he told reporters after the deal. “I think I was prepared for that could happen so I wasn’t too shocked.”
There are many examples, almost too many to list.
Kapanen found himself trading back to the Pittsburgh Penguins after Maple Leafs paid a $1 million signing bonus. In 2017, former Maple Leafs Conor Brown and Nikita Zaitsev were transferred to the Ottawa Senators after paying a combined signing bonus of $3.5 million just before the deal was completed. On July 1, 2019, Nazim Qadri received a $2 million signing bonus before the Leafs orchestrated a business deal with the Colorado Avalanche that brought in Tyson Barry and Alex Kervot in return.
When the uncertainty came with the COVID-19 pandemic in March 2020, the reward-signing strategy stalled. A new CBA was drafted that year which saw a locked amount of security on a decreasing scale. For a short period of time, it made sense for players to defer the funds to the following seasons as the lower warranty was guaranteed. But in the coming years, the guarantee will begin to stabilize. And with the NHL reporting better-than-expected returns, it looks like players are on the cusp of paying the money owed during the pandemic and the cap could start to increase sooner than expected.
That is, at least, what foliage counts on.
Jarnkrok’s deal wasn’t the only one filled with a signing bonus. The Leafs have signed striker Nicolas Aube-Kubel to a one-year deal worth $1 million with a $250,000 bonus.
Toronto is betting that Jarnkrok fought another year and would bounce back to the player who was with the Nashville Predators as his on-ice PDO (save percentage + hit percentage) consistently crossed the 100 mark.
But if appropriate doesn’t work, or in case they need to move money. With the current strategy outlined, Leafs demonstrated that the decade is highly mobile in the coming years.