The Carolina Hurricanes have just signed RFA Seth Jarvis to an eight-year extension worth $63.2 million. What makes this deal particularly interesting is its structure, which includes $30 million in signing bonus payments, with one payment deferred to a ninth year.
This approach lowers the Average Annual Value (AAV) of the contract and is drawing attention across the league, particularly among teams looking to manage their salary cap more effectively. While Mitch Marner’s future in Toronto remains clouded, this particular trade could be a learning example for the Leafs.
NHL Insider Chris Johnston confirmed the details of the Jarvis deal on X, noting that deferred payments have been permitted under the NHL’s Collective Bargaining Agreement (CBA) since 2005. However, they have been seldom used.
Johnston mentioned that one of the rare previous instances where this mechanism was deployed was in a contract for Shane Doan with the Arizona Coyotes.
The concept behind deferred payments is quite simple. By deferring a portion of the salary to a future date, the present value of that money decreases due to inflation and other economic factors. This reduction in present value effectively lowers the cap hit for the team. In Jarvis’s case, the money he receives in 2033 won’t be worth as much as it would be today, reducing the overall AAV of his contract.
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Johnston further mentioned that multiple teams have explored using this mechanism during contract negotiations this summer. For instance, the Vegas Golden Knights reportedly offered Jonathan Marchessault a deal with deferred payments before he hit free agency, though it didn’t come to fruition. The Hurricanes, however, successfully executed this strategy with Jarvis, and it’s likely they won’t be the last to do so.
This development raises an interesting possibility: Could the Toronto Maple Leafs use a similar structure in a potential contract extension for Mitch Marner?
With the Leafs always looking to maximize their cap flexibility, employing deferred payments could be a viable strategy. This would lower Marner’s AAV (of the potential next contract of course), allowing the team to better manage its salary cap.
To put this strategy into perspective, Johnston pointed to an extreme example from Major League Baseball’s Shohei Ohtani’s deal with the LA Dodgers. Ohtani’s contract, originally valued at $700 million, saw him defer $680 million, reducing his AAV from $70 million to approximately $46 million. While this is a more dramatic case, it illustrates how powerful deferred payments can be in managing a team’s cap hit.
Now, of course, there is little decided on Marner’s next stint in the league after his current contract runs out by the end of the 2024-25 season. While there are many factors that will decide his future and if the Leafs will even consider offering him an extension, managing salary cap should not come as one with the deferred payment strategy.