Kavan’s Crease: Salary Arbitration

With the recent release of the list of players going to salary arbitration, I’ve noticed lately that a few people are having trouble grasping the concept of it. I know it sounds confusing, but it really is quite simple.

Basically, a player or team opting to go to arbitration is like 2 young siblings arguing over who should get the last cookie.

When a player becomes a restricted free agent, that player has finished his entry level contract and is still property of his NHL team. Under the new collective bargaining agreement, a player cannot become an unrestricted free agent until he is 27 years of age or has been in the NHL for 7 years. Therefore, players who finish their entry-level contracts are without a contract but cannot sign with whichever team they like.

Everyone who follows player movement and contracts knows that negotiating is not simple and quite often can be a lengthy process. Occasionally, somewhere in these negotiations, the player or team says, “Alright, we’re clearly not in the same page whatsoever, so this needs to be resolved.” In the case of unrestricted free agency, the team or player would simply walk away from the negotiations and that would be it. However, restricted free agents still belong to the team and take up a spot on the roster, so if a deal cannot be reached, the player sits out and cannot be replaced externally. A couple recent examples of this are Montreal Canadiens defenseman PK Subban, and Colorado Avalanche forward Ryan O’Reilly. In these cases, both players eventually re-signed with their teams and had good seasons (especially Subban, who would go on to win the Norris Trophy as the league’s best defenseman).

If a deal cannot be agreed upon, however, there are 2 options available. The team can seek out a trade and both parties can go their separate ways, or one can opt to file for arbitration. Arbitration has to be filed by a certain date (July 5th this year), but teams and players can still negotiate up until their hearing date.

If a team chooses to take a player to arbitration, that player cannot be taken to arbitration again in his career and he cannot receive less than 85% of his previous year’s salary.

After arbitration has been filed, team and player each compile their respective arguments and make their case to a neutral party: the arbitrator. After reviewing each party’s case, the arbitrator then makes an informed decision about how much salary the player is entitled to.

At this point, one of 2 things can happen:

1. Both parties accept, the contract is signed and it’s off to the rink.

2. The team can choose to walk away from the deal, resulting in the player becoming an unrestricted free agent and being allowed to sign with whichever team has a mutual interest in him.

Another possible scenario is an RFA being proposed to by another team with an offer sheet. What this means, is that the player can sign with that team, but his current team first has the opportunity to match the offer. If the team decides to match, the player remains with his current team and the contract is signed. If, however, the team believes the contract is too much and does not want to pay, they can decline to match and receive draft pick compensation in return for the
player leaving. The draft pick(s) the team receives depends on the size of the salary the player signs with his new team. The limits are as follows:

$1,110,249 or below – No Compensation

Over $1,110,249 to $1,682,194 – 3rd round pick

Over $1,682,194 to $3,364,391 – 2nd round pick

Over $3,364,391 to $5,046,585 – 1st round pick, 3rd

Over $5,046,585 to $6,728,781 – 1st round pick, 2nd, 3rd

Over $6,728,781 To $8,410,976 – Two 1st Round Picks, 2nd, 3rd

Over $8,410,976 – Four 1st Round Picks

It’s not often you see teams present a player with an offer sheet, but it does happen every now and then. Its even more rare that a team decides to walk away from that player, but when it does happen, it generally creates animosity between people. Whether it’s between the player and former team or former team and new team, GMs generally feel robbed when they lose a player to an offer sheet. Just look at the case of Kevin Lowe/Brian Burke/Dustin Penner. We all know how much Burke and Lowe now love each other.

In any case, salary arbitration is not usually a good thing for anyone, but unfortunately, is a necessary evil. Hopefully that clears up any confusion, and if there are any questions, comments or if i’ve missed something, please don’t hesitate to let me know in the comments section below! As always, thank you for reading and keep checking back!

Cheers!

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