Anaheim Ducks have made headlines by signing Frank Vatrano to an innovative three-year, $18 million contract that includes $9 million in deferred payments. This strategy allows the Ducks to effectively manage their salary cap while Vatrano benefits from avoiding California taxes. Although this approach is gaining traction, player agents express concerns about the risks and uncertainties of deferred payments, particularly given the different tax implications in Canada. Other players like Jake McCabe and Carolina’s Seth Jarvis have also utilized deferred contracts.
Can the Anaheim Ducks Teach Canadian Teams a Lesson in Signing Big Names Despite Tax Challenges?
The Anaheim Ducks have recently made headlines by signing forward Frank Vatrano to a groundbreaking contract. This three-year extension is valued at $18 million; however, a significant portion—$9 million—will be deferred, to be paid out over a decade starting in 2035.
This innovative approach allows the Ducks to manage their salary cap more effectively, as Vatrano’s annual cap hit is reduced to just $4.57 million. Meanwhile, Vatrano stands to benefit by sidestepping California’s taxing regulations, since he plans to reside outside the state when he begins receiving those deferred payments ($900,000 annually for ten years).
Ducks’ general manager Pat Verbeek drew inspiration from Japanese baseball sensation Shohei Ohtani’s recent agreement with the Los Angeles Dodgers, where a staggering $680 million of his $700 million deal was deferred at the conclusion of his contract.
Is This a New Trend in the NHL?
While this method is relatively novel within the NHL, the Ducks have not breached any collective bargaining agreements. The concept of “deferred compensation” has been a part of the NHL framework since 2005.
Though still in its infancy in terms of application, other players, such as Jake McCabe of the Maple Leafs and Carolina Hurricanes players Seth Jarvis and Jaccob Slavin, have also opted for deferred payments in their recent contract extensions.
This begs the question: could the Ducks’ strategy provide Canadian teams with a blueprint for attracting free agents by navigating the country’s tax laws?
Challenges of Deferred Payments
However, the reality is more complex, and few NHL players have agreed to defer their payments according to three player agents who chose to remain anonymous. During a recent mid-season recap, Kent Hughes, general manager of the Canadiens, stated he would “consider” deferred payments, noting that Canadian tax laws differ significantly from those in the U.S.—a crucial distinction.
Industry insiders suggest that while this method may hold potential, it is not without its complications. One agent remarked, “There are not many agents who would agree to this due to the substantial tax risks. Vatrano will receive his payments in 10 years, leaving ample time for tax laws to evolve.”
Another agent echoed these concerns, highlighting the financial uncertainties that accompany such agreements. “What if the Ducks face bankruptcy? What if labor disputes arise? Will the NHL Players’ Association defend a player as vigorously after the fact? These scenarios may be extreme, but as agents, we must assess all potential outcomes to protect our clients.”
Many agents are aware of the option to defer payments but often opt against it due to the limited benefits for players. A recurring theme in our discussions was the time value of money.
“If you invest wisely, you could potentially earn returns of 10% to 15% annually. Teams have pitched similar proposals, but for us to agree, the compensation would have to exceed the player’s fair market value, which is rarely the case,” another agent explained.
A third agent acknowledged that while this arrangement may not generally favor players, it could work for some. “Certain players are financially responsible, while others may live beyond their means. Vatrano might be one of those who thinks, ‘I’m not worried. I’ll be receiving payments until 2045.’” Furthermore, there are whispers that the NHL may move to eliminate this practice in the upcoming collective bargaining discussions slated for September 2026.
Noteworthy Instances of Deferred Payment Contracts
Seth Jarvis
The Carolina Hurricanes employed creative strategies in Seth Jarvis’s contract, which totals $63.2 million over eight years. Jarvis will receive almost $15 million in signing bonuses at the end of the contract, thus minimizing the salary cap impact, reducing it from $7.9 million to just over $7.4 million.
Jaccob Slavin
Following Jarvis, the Hurricanes used a similar strategy for their star defenseman, Jaccob Slavin. He will receive $4.55 million in signing bonuses, leading to a minimal salary cap hit reduction from $6.461 million to $6.396 million.
Jake McCabe
Like Slavin, Jake McCabe has agreed to receive $5.5 million in signing bonuses at the end of his contract, decreasing his salary cap impact from $4.7 million to $4.51 million.