Just over a year ago, I wrote about the Toronto Maple Leafs and possibly signing Joe Thornton. The idea was to sign a free agent, in order to trade a pending unrestricted free agent in Tyler Bozak. The Leafs could trade Bozak, for picks and/or prospects. At the time, Thornton was not just a replacement for Bozak, but an improvement. Thornton confirmed this by getting 36 points in 47 games. Bozak had the same amount of points in 69 games, but despite perennially great faceoff stats, he has been horrendous in his own end. Bozak is likely going to become a free agent this summer, and signing Thornton would allow William Nylander to remain on the wing of Auston Matthews instead of shifting to centre. In my Reddit post, I correctly predicted Thornton would take a one year, $8 million contract, so I’ll try to predict his contract once again.
Revisiting Joe Thornton and the Toronto Maple Leafs
Thornton suffered an MCL injury in January, and it’s possible he misses the rest of the season. His production actually increased since 2016-17, and it’s not because the San Jose Sharks has gotten better. There’s no denying that players gradually decline after the age of 30, however, some styles of play are less influenced by age. Players who rely on speed or a crash and bang type of play are prime examples of this. Their bodies wear down, and rarely are they able to compete by the time they turn 40.
Luckily for Joe Thornton, he is not one of those players. He uses his elite passing and playmaking ability to remain an offensive weapon. His size and strength are used to keep the puck away from opponents before he makes his play, similar to the style Jaromir Jagr was able to use to stay in the league until age 45.
It is fair to say Thornton is still more than capable of playing a third line centre role. It would not be wise to offer him a multi-year contract due to his age, so it will be another one year deal. Bozak, the player the Leafs are looking to replace, earns $4.2 million this season, so that’s a fair ballpark to start in. Thornton’s pedigree, production, and possession metrics all indicate that he would be an upgrade, so perhaps on the high side of that number. Matt Cane’s free agent prediction formula has predicted Thornton signs for one year at $4.4 million. A one-year deal has very little risk for a team that has enough cap space. Since Thornton has also played for a long time in San Jose, he would likely need to be overpaid to leave, so one year at $5 million is pretty reasonable.
A one-year, $5 million contract sounds pretty simple. However, there’s a lot of options for a 38 year old seemingly one year from retirement. First of all, players on a one year, 35+ contract are eligible for performance bonuses. With Nylander’s $850,000 performance bonuses coming off the books next year, there will be plenty of room under the performance bonus cushion. Whether or not it would be advantageous to use that room is another discussion. Additionally, the Leafs could choose to defer compensation.
What’s deferred compensation?
Briefly, deferred compensation is paying a player their salary after the term of their contract has concluded. The benefit is that a team can agree to pay interest on the contract. Depending on the agreement, the player either takes home the face value of the contract plus interest, or the face value of the contract plus interest equals an agreed upon amount. The only time, to my knowledge, it’s been done before is with Shane Doan‘s 2016 extension. In that case, it was the latter, with a cap hit of $3,876,134, which would end up as $4,000,000. In addition, he had $963,438 in Performance bonuses, that would end up being $1,000,000. The reason being that Arizona couldn’t afford a $5,000,000 contract, so they deferred any bonuses in order to limit the amount they actually paid him that season to $2,500,000.
What’s in it for Jumbo?
You might ask why there’s motivation for Thornton to accept a deal that has deferred compensation, but there’s more than one benefit. For starters, he could earn more than the face value of his contract. It will also make sure he gets paid in his retirement and in this case a shot at playoff money. One thing that has been almost entirely overlooked on this subject is Escrow. Players typically have just under 15% of their salary withheld in order to maintain a 50/50 split of Hockey Related Revenue (HRR). This is called escrow. Since a player that signs a contract with deferred compensation is not paid during the league year, there is no salary to withhold. In this article, we find that only about 3% of that withheld salary is returned to the players on average.
If Thornton were under contract for $5 million, he would lose $600,000 (12%) to escrow. BY deferring salary, he would not be subject to escro, and saves that $600,000. Add that to the fact that he could potentially earn deferred performance bonuses, and the advantage could be in the millions.
There’s lots of weird things in the Collective Bargaining Agreement, why not use them?
Main Photo: SAN JOSE, CA – DECEMBER 30: Joe Thornton #19 of the San Jose Sharks skates with the puck against the Philadelphia Flyers at SAP Center on December 30, 2016, in San Jose, California. (Photo by Rocky W. Widner/NHL/Getty Images)