Minnesota Wild GM Chuck Fletcher said before the start of free agency that his club would not be outspent in their pursuit of free agent left winger, and native Minnesotan, Zach Parise. On July 4, Fletcher made good on his word, handing out a 13-year, $98 million contract to the 27 year-old Parise and an identical contract to free agent defenseman and fellow Midwesterner, 28 year-old Ryan Suter. While two signings of this magnitude are sure to energize the fanbase in hockey-crazed Minnesota, these contracts are important for another reason: they might be the last of their kind.
One of the issues that will certainly be addressed in the ongoing CBA negotiations is so-called "cap-circumventing" contracts. The current CBA contains a provision that a team's total salary cannot exceed a certain number (currently $70,200,000). A player's salary cap "hit" is calculate by dividing the total dollar amount by the length of the contract. In some cases, NHL GMs and player agents manipulate the "cap hit" of a player's contract by front-loading the contract in terms of real dollars and extending the contract in terms of years. This gives teams with more cash at their disposal an additional advantage in signing top players.
For example, in Suter and Parise's case, their "cap hit" is $7,538,462 per year for the duration of their contract ($98 million / 13 years). However, their actual salary per year is vastly different from their cap hit. According to Capgeek.com, for the 2012-13 hockey season, Suter and Parise will each earn $12 million dollars, while they will each earn only $4 million for the final three years of their contracts combined. This allows their contracts to be bought out relatively cheaply or if they retire before then (both Suter and Parise will be at least 40 years old when this deal expires) it will not be a huge financial burden to the team. Additionally, these "extra" years lowers their cap hits and gives the team additional financial flexibility in filling out the rest of their roster.
These kind of contracts have been used for several years by savvy GMs to sign star players (see Marian Hossa, Ilya Kovalchuk, and Henrik Zetterberg's contracts for additional examples). While each of the aforementioned contracts caused debate, and in Kovalchuk's case reviewed and rewritten, ultimately they were deemed appropriate under the current rules of the CBA. As was mentioned here last week, there are several ways the league can change the rules to prevent these kinds of contracts and it will be interesting to see which of these controls are implemented.
Regardless, congratulations are due to both Parise and Suter, two excellent hockey players who just happened to be fortunate enough to cash in before this CBA loophole inevitably closes.Tags: Law, NHL, Ryan Suter, Sports, Sports Law, Zach Parise