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Saturday, 4 July 2015

Creative Accounting

I'm not sure what Ryan O'Reilly has done in the NHL thus far to warrant him receiving his latest contract from the Buffalo Sabres, but GM Tim Murray clearly sees something I don't. It was announced yesterday that the Sabres handed O'Reilly a $52.5 million, seven-year contract extension to make him the highest-paid player on the Sabres. O'Reilly had 17 goals and 55 points in 80 games last season despite leading all Avalanche forwards in time-on-ice, so I can't really fathom how he squeezed $7.5 million for the next seven seasons out of the Sabres. That's their problem to solve, though, if it comes to that, but I'm far more concerned with how O'Reilly is being paid because it seems like he's become quite avaricious.

While I struggle with the amount of money he's being paid, it's more HOW he's being paid his annual deal that irks me. O'Reilly's deal pays him $1 million annually with the remaining amount coming as a signing bonus per year. Yes, you read that correctly. The reason for this, apparently, is because the signing bonus is taxed less heavily than the annual income is, and therefore he keeps more of his $52.5 million than he would had he been paid like any other normal human being on the planet.

I get that it's within his negotiating right to have the contract structured however he pleases, but does it not bother anyone else that he's complaining about paying taxes on $11 million in 2016-17? I won't see $11 million in my life over the course of my work career, and O'Reilly has a gripe with the taxes he pays? Are you serious?!?

In looking at his deal, O'Reilly's contract is approximately 87% in bonuses, meaning he's paying less taxes than he should be on more than $46 million. Those are taxes that will benefit the state of New York and, hopefully, the city of Buffalo, but he's not willing to shell out a few more dollars to help the people paying his salary - and taxes, apparently - for those seven years.

Further to that, the buyout process, if O'Reilly becomes expendable, becomes an absolute headache for the Sabres as they are still on the hook for $7.5 million annually despite paying O'Reilly just $1 million annually. In other words, O'Reilly's contract messes up the Sabres' salary cap dramatically if the Sabres choose to buy him out in the future. Guess what won't be happening in the next eight years?

O'Reilly's career stats show him with a career-high in goals and points in 2013-14 with 28 and 64, respectively. It's hard to imagine that he's a "franchise" player based on those stats despite what Tim Murray believes, so it needs to be asked if O'Reilly is worth the amount of money Murray threw at him to become Buffalo's all-time highest-paid player. To me, it says he's not worth the money, so O'Reilly will have to find a way to score 30 goals and 80 points for the next eight years for this contract to reflect other players' contracts who are making that much money. To put O'Reilly on a level with Crosby, Ovechkin, and Stamkos seems way out of whack.

Then again, maybe I'm looking at this all wrong. Perhaps he's the most affordable player in the league at $1 million per season that just happens to have a gargantuan bonus payment added to his bank account every summer. I have yet to see another established NHL player who scores about fifty points per season play for just a million bucks per season. It's just that massive $45.5 million asterisk that can't be overlooked.

All of that to save a few tax dollars. Seems petty, no?

Until next time, keep your sticks on the ice!

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