If you prefer something lighter, check out the Monday Coffee Shop with polls/discussions on the Hurricanes’ free agent situations.
In getting Scott Darling signed to a 4-year contract one week after trading a third-round draft pick to obtain him, Hurricanes’ general manager Ron Francis resolved what quickly became his biggest contract situation early in the offseason.
Over the course of the next few months Francis still has a number of additional contract situations to resolve. Many are routine. Some have less certain outcomes. And a few of the biggest ones are actually situations that could wait until the summer of 2018 but have reasons why resolving them early could make sense.
A significant part of sorting out the options and likely outcomes revolves around making sense of the NHL contract legalese that is part of the collective bargaining agreement. Way back in the early days of Canes and Coffee, I wrote an article that sorts through some of the NHL legalese primarily for contracts for younger prospects and players playing at the AHL level or below.
This article will work through the set of rules and terminology more commonly applicable to older prospects and oftentimes younger NHL players with limited experience. Part 2 to follow sometime this week will categorize the Carolina Hurricanes’ players who are up for new contracts this summer (or soon), discuss the scenarios for each and offer most likely outcomes especially for the players whose outcome is reasonably predictable.
First any contract about salaries, contracts or similar would be remiss if it did not mention CapFriendly which is my go-to source for salary and contract information and also includes some helpful articles on aspects of the legalese.
Restricted versus unrestricted free agents
Unrestricted free agents: This category of free agents includes players who have accumulated enough NHL experience (via a combination of age and NHL games played) that they are free to shop their services to any team in the NHL when their contract expires on June 30. There is no cost to the team that acquires them. These players and the bidding wars for their services make up the vast majority of the player movement and free agent frenzy in July. These players also represent the bulk of the players traded at the trade deadline when teams who are out of the playoff chase trade players to collect some value before these players are free to explore the open market at the end of the season and leave for nothing.
Restricted free agents: This category of free agents has not acquired enough experience via the same formulas. As such, the team that owned the player’s previous contract has some degree of controlling rights over the player for his next contract, and the player has incredibly limited ability to leave to pursue an offer with another team.
Offer sheets for restricted free agents
Offer sheets for restricted free agents: While restricted free agents can receive and accept contract offers from other teams, these “offer sheets” are incredibly rare for a few reasons. 99.something percent of restricted free agents sign with the team that has their rights (sometimes after having those rights traded). For an offer sheet from another team, the team that holds the players rights can simply match the offer sheet and keep the player for that same contract. So even if a player signs an offer sheet with another team, it is likely that the controlling team would just simply match any reasonable offer. The result is that to actually win a player with an offer sheet, the signing team either needs to catch a team with salary cap issues such that they cannot (or will not) match the offer, or the signing team needs to overpay such that the controlling team decides to let the player walk instead of overpaying. In addition, the acquiring team must give up an often pricey set of draft picks that can total 3-4 high draft picks to the controlling team as compensation. The draft pick compensation increases with the size of the salary. Copper and Blue detailed the compensation for 2016-17. The salary ranges are based on the salary cap (which is not yet determined for 2017-18), so it could change slightly, but those numbers will be pretty close. Finally, general managers have generally frowned upon using offer sheets, so there is potential for retribution to any team that uses this rarely-used tool. In 11 seasons since the latest collective bargaining agreement, only eight players have signed offer sheets, and only one player (Dustin Penner) has changed teams as a result of signing an offer sheet. So while it is possible that a restricted free agent on the Hurricanes is signed by another team and ultimately lost, the probability of this is incredibly small.
Qualifying offers for restricted free agents
Qualifying offers: Getting back to restricted free agents, the controlling team (basically the team that had the player under contract the previous season) is required to make a “qualifying offer” to retain the rights to a player. The qualifying offer is based upon the amount of the player’s previous contract and his experience level. Again there are tables and math, but at a basic level, a team must make an offer that is equal (salaries above $1 million) to or slightly 5 or 10 percent more than the previous contract (salaries less than $1 million) to retain the right to negotiate with the player. Important to note is that the player does not need to accept the offer and often does not. It is merely a contractual formality that is required for the team to keep the player’s rights. If the team chooses not to make the qualifying offer, the player becomes an unrestricted free agent on July 1 just like other players who qualify for unrestricted status based on experience.
There are two reasons why a team would not qualify a player. First is simply because the team thinks the qualifying offer is too much for the player’s next contract, and the team is not willing to pay that match. The other is because the team does not want to risk going to arbitration with a player.
Arbitration: Again there are fun tables and details for determining which players are eligible for arbitration. As a general rule of thumb, it is available to players around 22-24 years of age and for a second or third contract. The easiest thing for arbitration eligibility is looking for a gavel-looking thing next to the last year of their current contract on CapFriendly which shows that they will be arbitration-eligible for their next contract. At a basic level, arbitration means that the salary for a player’s next contract is determined by an arbitration process instead of negotiating it with the team. In arbitration, the team puts forward a proposed salary and contract and lays out its case for why it thinks that is a fair amount relative to comparable players. The player and his agent then do the same. All of this information is then reviewed by an arbitrator who decides on a fair salary which could be either side’s proposal or something in the middle. Important to note is that just because a player exercises his right to file for arbitration does not necessarily mean his next contract will be decided in arbitration. The two sides can negotiate up until the arbitration date. In fact, contracts are rarely decided in arbitration for a couple reasons. First, ill will can be created when the team has to present a case for why the player is not so good and deserves less than what he is asking for salary-wise. Second, teams especially do not like to hand the salary decision over to an arbitrator. The arbitration process has a history of yielding some puzzling contracts, so teams generally view the process as risky and only a last resort versus negotiating a deal.
The contract process and schedule for restricted free agents
For restricted free agents, the process often has required steps that are mostly meaningless in the process of negotiating a new deal.
First, the team is required to qualify its restricted free agents by June 26, 2017 for this summer. Some of these mathematically-determined offers will be accepted, especially for AHL-level players who have limited leverage. But for many cases where the offer is not a fair offer, the player will not accept the qualifying offer, and the team will not expect the player to accept the offer. It just formally keeps the player’s rights for the team.
Next, if the qualifying offer is not accepted, players who qualify will likely file for arbitration. Again, very few contract negotiations actually make it to arbitration, but by filing for it, a player keeps that option open in case he does not like how the negotiation is going with the team. In addition, he gains some negotiating leverage since as noted above, teams generally do not like to resolve contracts via arbitration.
In cases where arbitration is elected, that becomes a deadline for the team and player negotiating a deal. For restricted free agents without arbitration rights, the contract negotiation does not really have a deadline. Ideally, a team wants to have its players under contract for the start of training camp, and deals frequently happen well before that when the team and the player’s agent are on the same page. Restricted free agents with limited leverage do have the capability of just not signing a contract for the next season (“holding out”) to convince the team to increase its offer.
Process for unrestricted free agents
For players scheduled to become unrestricted free agents, a team has exclusive negotiating rights until the last week of June. During the last week of June, players scheduled to become unrestricted free agents can discuss contracts with other teams, but they cannot actually sign a new contract with another team until free agency opens on July. If a team and a player both want to stay together, deals can be worked out in May or June (like Scott Darling’s), but the team has minimal leverage other than financials and being a good situation for the player since the player has the opportunity to explore options with the 29 other teams on July 1.
Hurricanes free agents by category
Unrestricted free agents: Derek Ryan, Jay McClement, Matt Tennyson.
Restricted free agents with arbitration rights: Andrej Nestrasil.
Restricted free agents without arbitration rights: Teuvo Teravainen, Phil Di Giuseppe, Brock McGinn plus multiple AHL-level players.
Either tomorrow or within the next few days, I will work through the list of Carolina Hurricanes impending free agents by category and provide my expectations for how things are resolved for each.
What say you Caniacs?
Is anyone still awake? 🙂
I am thinking maybe I fill in a few more details and turn this into something more formal maybe in the dog days of late July/early August. For readers just learning NHL legalese, is there anything that is not explained clearly?
For those who understand the legalese, is there anything I missed or that you could help me explain more clearly?