Hurricanes, Seth Jarvis Agree to Unique 8-Year Deal

There were indications that Seth Jarvis and the Carolina Hurricanes were close to signing a long-term contract, per David Pagnotta of The Fourth Period. Now, it is official, as both sides have agreed to an eight-year, $63.2 million contract.

Table of Contents

1 Did Seth Jarvis do the Hurricanes A Favor by Deferring Payments?

Did Seth Jarvis do the Hurricanes A Favor by Deferring Payments?

Normally, the cap hit for such a contract would be $7.9 million, given the number of years Jarvis has committed to playing for the Hurricanes. However, the contract contains a deferred signing bonus payment that is due on July 1st, 2032, a day after the expiration of the contract, which clocks the cap hit to approximately $7.5 million per year. The deal also includes approximately $30 million of signing bonus money, which the breakdown is not yet known. It is also not known precisely how much money has been deferred, or in which years the money has been deferred.

TSN’s Chris Johnston reported that the deferred payment has been part of the NHL’s Collective Bargaining Agreement since the 2005 lockout, but has not been used very often. This has also been covered by other teams that looked into it recently, such as the Vegas Golden Knights with Jonathan Marchessault. However, the Hurricanes are believed to be the first NHL team to use this in a meaningful way. In fact, the eight-year deal to Jaccob Slavin was the first deal to be registered this summer with a deferred payment, but wasn’t significant enough to alter the salary cap hit.

The contract covers Jarvis’ final four RFA years and the first four years where he would be eligible for UFA status. It is only during those final four years of the contract in which Jarvis is eligible for trade protection.

How do Deferred Payments Work?

As broken down by Frank Seravalli of DailyFaceoff, the goal of deferred payments in the NHL is to spend more over time to benefit a team in the short-term. A smaller cap hit allows for more spending and a more competitive team if it is used in the right way.

The CBA allots for a time value of money discount calculation. With this, the NHL uses a formula to estimate how much the time value of money is, based on the current interest rate, and adjusts to it. Say that a team defers $1 million of salary to four years from now: It may only count in the books at $800,000 today.

The risk here is that the contract structure requires understanding from both the signing party and their agent on a number of topics, such as tax structures, investments, and a healthy risk profile along with escrow rates, and the possibility of a trade or buyout that could change the payout. In this case, it took a conversation between Jarvis, his agent—Gerry Johansson—and the front office brass of the Hurricanes, including general manager Eric Tulsky.

This contract may be a precedent setter for the rest of the league. Deferred payments can exploit the salary cap hit with the larger the payment and the longer it goes to.

Carolina Keeps a Crucial Piece to Their Core

The Hurricanes drafted Seth Jarvis with the 13th overall selection in the 2020 Draft, he has made a big impact on the team, getting 17 goals and 40 points in 68 games in his rookie season, earning Calder Trophy votes. While his scoring production dipped in his sophomore season (14 goals and 39 points in 82 games), last season was a breakout year for him. He set career-highs with 33 goals and 34 assists for 67 points in 81 games while averaging 18:45 per night. The 67 points were second on the team, only behind Sebastian Aho.

He brings more than just regular season scoring. Not only is his fun personality a positive influence in the Carolina locker room, but he also provides crucial playoff scoring, with 27 points in 40 career games. He also finished 8th in Selke Trophy voting, and also took a big step on the physical aspect of his game. Last season, he racked up a career-high 115 hits, showing that his presence on the ice is developing quickly.

The Hurricanes are a strong possession team in the NHL, which includes Jarvis. His responsibility on the defensive end makes him a very effective two-way winger, primarily playing alongside Aho on a top line that can play on any situation, whether it be five-on-five, the power play, or the penalty kill. That top line is where he fits ideally, though what makes him valuable is his two-way game and his versatility.

This contract, especially with the deferred payment, is another excellent piece of business for both sides, and it could be a steal in the coming years. Jarvis gets his money guaranteed and an extra salary payment after the contract ends. The Hurricanes know he is a crucial piece to the core, and they rewarded him by such in getting this deal done.

Written by Alec Nava (@DatYinzerAlec)

Sponsor: YouTube TV

If you are interested in signing up for YouTube TV use our link here: https://tv.youtube.com/referral/r330aw0o0ds147, it will take $15 off your initial sign up price, and give us a small kick back for referring a friend. Thank you for your continued support of Shady Sports Network.

YouTube

Please also help us continue growing on our YouTube Channel by subscribing if you haven’t already. Also like and comment on any videos you enjoy! Thank you for your support and we hope you continue to tune in!

Thursday Broadcast Schedule

Dynasty Academy 8:00 pm ET (Fantasy Football)

Hosted by Michael Washington, Eli Manuel, and Mark Angst