Backloaded Deals Might Be A Trend This Offseason

(Photo Credit: SinBin.vegas Photographer Brandon Andreasen)

If there’s one thing we’re starting to learn to count on it’s that there will never be a shortage of comments from NHL agent Allan Walsh. While he’s seemingly done discussing his client Marc-Andre Fleury’s future (for now), Walsh explained a way a team like Vegas could entice a high-end free agent by paying them more later than now. It would allow a front office to go out big game hunting, potentially attracting a veteran free agent like Alex Pietrangelo.

I’ve never seen this kind of activity. The only time that compares to what’s happening right now was in 2005 when we were opening free agency after losing a whole season to the lockout… In 2005, teams had the ability to use two compliance buyouts and take money out of the system and that doesn’t exist right now. There’s a lot of teams right now that are bumping up against the top of the upper limit and still have a number of their own players to sign. Let alone look at the free agent market and see who they can be in on to bring on board and into their city. -Allan Walsh, NHL agent

The Golden Knights are one of those teams up against the cap but unlike other clubs, it won’t stop them from adding players they desire. Vegas is desperately trying to move certain players to free up cap space but the organization can get creative when talking about real salaries as their owner is never afraid to spend to make his team better, something many other owners are not.

While the hunt can’t begin until officially until tomorrow, Vegas has probably been sniffing out their competition. Sources have told SinBin.vegas that the Golden Knights intend on making a real effort to sign Pietrangelo. With the uncertainty of the cap, their internal budget, and the players’ demands, Walsh explained how a club like Vegas can entice an attractive UFA to ditch their old club for Sin City.

There’s an escrow cap this coming season in 2020-21 of twenty percent. There’s a ten percent deferral that will be deferred until three, four and five years from the coming season. If you can defer money, and by that I mean put the money into the outer three years of let’s say a six-year deal, the escrow cap in those years is six percent. That means you will get your negotiated face value of the contract up to six percent that you could lose to escrow. That’s a huge difference. -Walsh

That type of salary structure would be more attractive to an established player like Pietrangelo, who already has money in the bank. Vegas’ willingness to defer would make this an even more attractive place to a free agent than it already is. There’s already the tax benefits, but pushing money to the back end of the contract would mean even more money for the player over the course of the term by skirting the high escrow year.

If the Golden Knights intend on making a significant offer to Pietrangelo, a backloaded deal might set them apart from other suitors. Sure, there’s the fear of a buyout down the road, but the hope would be that never comes into the picture. With an estimated $48M career earnings, Pietrangelo would absolutely be happy to push the money towards the end of the contract to avoid escrow. It’s smart business for both, especially if they can win multiple Cups together.

A player might decide to throw as much cash as they can into the outer years of the deal and take advantage of the six percent escrow. I think we might see very creative structures going forward atleast this year and potentially next year where we see contracts heavily backloaded. -Walsh

The trick here is that all of this is in real dollars and cents, not cap space. Whether Pietrangelo was to take 90% of his contract in the final year or space it out equally over the term, the cap hit would be identical. This is simply a tactic to lure him to pick Vegas over anywhere else. If it works, it would then be up to Kelly McCrimmon, George McPhee, and Andrew Lugerner to figure out how to make it work against the cap. Unfortunately, there aren’t as many creative loopholes there.