Have the Carolina Hurricanes Discovered the Newest Salary Cap Loophole?

In major league sports, everyone is looking to get a leg up on their peers.

With parity at an all-time high and the margins between teams so razor thin, front offices need to find advantages anyway they can.

In the NHL, that has primarily been through the use of LTIR to circumvent the salary cap for the postseason as of late, but it seems like the Carolina Hurricanes may have made the latest breakthrough.

With the recent signing of Seth Jarvis to an eight-year extension, it was pointed out by Daily Faceoff’s Frank Seravalli that the contract structure of that new deal was much different than the average NHL contract.

That’s because the Hurricanes included a deferred payment on July 1, 2032, one day after the contract expires which would technically be in year nine, thereby dragging the overall cap hit down by a pretty sizeable margin.

So Jarvis’ eight-year, $63.2 million deal actually has an annual cap hit of $7.5 million, $400,000 less than the $7.9 million average annual value (AAV) that would be expected in a normal contract structure.

However, Jarvis’ deal wasn’t the first one Carolina tried this on.

Jaccob Slavin also signed an eight-year extension earlier this summer and his deal has a similar structure with a pseudo-ninth-year deferred payment that made the actual cap hit lower than the AAV.

I recall that when the original release was sent out, it did not include Slavin’s cap hit and when we asked one of the team staffers, they told us that the cap hit wasn’t as straight forward due to the unusual structure of the deal.

Well, now it’s clear that the structure was this new use of deferred payments.

According to Servalli, central registry and the NHL have been briefed on this use of deferred payments through signing bonuses and both have signed off on it, paving way for perhaps many more teams to start following suit.

In a business where you need to find advantages anyway you can, Eric Tulsky and the Canes’ front office have hit this one out of the park.

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