Kukla's Korner

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The Signing Bonus

from Travis Yost of TSN,

There are probably a multitude of reasons Tavares chose the Maple Leafs, but one item on that list is the actual structuring of his contract. Tavares’ contract is laced with signing bonus money, which has become a very popular stipulation for players under the latest collective bargaining agreement.

Almost $71 million – or 92 per cent of Tavares’ contract – will come by way of signing bonus, which offers myriad benefits to the player. Chiefly: he will pay at a substantially lower tax rate and his contract effectively becomes buyout proof. Under the current CBA, buyouts are calculated by taking two-thirds of remaining salaries, exclusive of signing bonuses, then spread over twice the remaining contract length. Thus, signing bonuses effectively take buyouts off the table, since the teams don’t enjoy any real cap relief. It all but guarantees a player will be paid for what his contract was actually signed for and not a stipulated lesser amount. They’ve also become fabled lockout protection. Signing bonuses, unlike straight salary, must be paid if the league decides to shut its doors....

As a brief aside, the NHL isn’t far away from another “lockout watch” – owners can officially opt out of the current CBA on Sept. 1, 2019. There have been myriad complaints about the structuring of escrow, among others. I believe signing bonuses are a major issue, and reports indicate that the league has either informally or formally pled with teams to stop handing them out.

Still, the power teams don’t seem to be listening. It’s hard to blame them, since procuring and preserving talent in any major sports league is a challenge in and of itself. But it has created an interesting “have” versus “have not” dichotomy – one that still highlights spending disparities in a league that prides itself in a hard cap structure and intensive revenue sharing program.

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Filed in: NHL Teams, NHL Talk, | KK Hockey | Permalink
 

Comments

dougie's avatar

An excellent article!, Thanks, Paul.

Posted by dougie on 08/08/18 at 08:41 AM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

From breaking news to in-depth stories around the league, KK Hockey is updated with fresh stories all day long and will bring you the latest news as quickly as possible.

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