Yesterday’s Daily Cup of Joe did a reasonably deep dive into the rules around teams’ draft rights, entry-level contracts and the differences between Canadian junior, US NCAA and European prospects. If you missed it, you can find that HERE.
Today’s Daily Cup of Joe works through he Hurricanes’ prospect pool to provide real world examples.
Examples of the “entry-level slide” for Haydn Fleury, Alex Nedeljkovic and Roland McKeown
The 2014 NHL draft class offers a great illustration of how the entry-level slide works.
Josh Wesley and Clark Bishop signed their entry-level contracts prior to the 2016-17, so obviously the 2016-17 season in the AHL/CHL was the first of three years on each of their entry-level contracts.
But Haydn Fleury, Alex Nedeljkovic and Roland McKeown who were similarly drafted Canadian junior players drafted in 2014 were actually signed over the past two offseasons. But because they did not play the required 10 games at the professional level in the 2014-15 or 2015-16 season, their contracts have the full three years remaining just like the players signed later.
The “slide” and team benefit of keeping the players from reaching 10 games at the professional level is significant contractually down the road. First, the slide extends the duration of the players’ inexpensive contracts and increases the chance that some of those years could be tremendous bargains. If Fleury breaks into the NHL this season and pulls a Pesce/Slavin, he will earn less than $1 million this season and also in 2017-18 because of the 2-year slide on his entry-level deal while he developed at the Canadian junior level. Delaying the start of the contract also impacts who soon players gain arbitration and unrestricted free agent rights that increase their bargaining power and therefore contract costs going forward.
Warren Foegele – The oddball
On my spreadsheet of Hurricanes prospects below the AHL level, Warren Foegele is the lone remaining entry from the Carolina Hurricanes’ draft class from 2014. That class included a bunch of Canadian junior draftees who had to be signed before June 1, 2016 or otherwise be returned to the draft. From the same 2014 draft class, Haydn Fleury, Alex Nedeljkovic, Josh Wesley, Clark Bishop and Roland McKeown (obtained via trade with Los Angeles) were signed to entry-level contracts and playing the 2016-17 in the Hurricanes’ minor league system. Lucas Wallmark also jumped across the pond after a couple seasons in Sweden and joined the group. The Hurricanes’ chose not to sign Kyle Jenkins by June 1, 2016, so they gave up his rights.
So with Warren Foegele playing in Canadian juniors like most of the list, how was he able to return to Canadian juniors for the 2016-17 without a contract and yet still be Hurricanes property at the end of the season when they signed him? It is because of his start. When drafted, Foegele was slated to play NCAA hockey at the University of New Hampshire (and did for a season plus). As an NCAA draftee, the Hurricanes retained his rights until his class was scheduled to graduate from college in the summer of 2018. So despite being a junior player, the Hurricanes held Foegele’s rights past the normal two years for that type of player.
That leaves only Kyle Jenkins who was drafted in the seventh round of the 2014 NHL draft but was not signed to a professional contract before his rights expired. In general, it is surprising for players drafted in the first half of the draft not sign a contract. Even players who do not develop as expected still have enough potential that teams will usually do an entry-level deal and give the players another three years to develop. Players in the last half of the draft are less certain. Many of these players are high risk/high reward prospects who do not work out and are never signed.
Extended development time for NCAA college draftees
If we roll forward to the Carolina Hurricanes’ 2015 draft class, we find a good example of a potential benefit of drafting US players slated to play college hockey after being drafted.
Canadian junior players drafted in 2015 must be signed by June 1 (next week). If not signed, Canadian junior players drafted in 2015 will either reenter the draft or become unrestricted free agents (depending on age). The Hurricanes’ strong draft class yielded four Canadian junior players, all of whom will move up to the next level. Callum Booth, Nicolas Roy, Spencer Smallman and Steven Lorentz are already signed and expected to play in the AHL next season. This set of four is also joined by Aleksi Saarela who was drafted by the New York Rangers in 2014 and acquired by the Hurricanes in the Eric Staal trade. He signed his entry-level deal before the 2016-17 season, played in Europe and saw his contract slide forward to line up with the group of four.
In that same draft, the Hurricanes selected Luke Stevens and David Cotton in the fifth and sixth rounds respectively. Luke Stevens will be a sophomore at Yale next year, and David Cotton will likewise be a sophomore at Boston College. For later round picks, it can take more than two years for a player to develop and prove that he is worth a professional contract. For Canadian junior draftees, this is not possible. The team basically has two years to make a decision on whether or not to sign the player. But in the case of Stevens and Cotton, the Hurricanes are afforded the benefit of watching them grow for a couple more years before making a decision. In addition, because college players are never under contract until they leave the NCAA unlike their Canadian junior counterparts, they offer more flexibility for NHL teams in terms of carrying more players in their prospect pool but still staying under the contract maximum of 50.
The 2016 draft class entering their make or break seasons
The norm has become for top of the draft players to sign their entry-level contracts in the year that they are drafted. There are advantages for both the teams and the players in this regard. From the player standpoint, signing a contract includes a signing bonus which is generally tops out at $92,500 annually for each of the first three years of the entry-level contract. In NHL terms, that amount of money is small, but for an 18-year old kid, I would say that is a nice chunk of change. In the event that a player suffers a major injury or just does not mature and make it to even the AHL level, signing a contract with a signing bonus at least guarantees the player a nice chunk of money ($277,500 for top prospects with maximum signing bonuses). From the team side, the entry-level slide legalese means that the team only spends the modest signing bonus financially, but they lock in the player’s rights. The risk of not signing a highly-drafted prospect early is that the player could theoretically not sign and then reenter the draft.
The footnote in Hurricanes’ history in this regard is that the Hurricanes drafted Maple Leafs goalie Frederik Andersen in the seventh round of the 2010 NHL draft. The Hurricanes were unable to sign him, so he reentered the draft in 2012, was drafted by the Ducks in the third round and then began his career in Anaheim.
Getting back to the here and now, the Hurricanes have already signed their top draftees in Jake Bean, Julien Gauthier and Janne Kuokkanen. Unless he surprises and makes the 2017-18 NHL roster, Bean is likely to return for one more year in the WHL and have his contract slide forward another year in the process. Gauthier and Kuokkanen are less certain. Because Gauthier has an early birthday, he will be old enough to jump to the AHL level in 2017-18, and best guess is that he will do so. If he does, he will burn the first year of his entry-level deal in 2017-18. Janne Kuokkanen is a 2016-17 Canadian junior player who will not be old enough to jump to the AHL because of age like Gauthier, but because he was drafted as a European player and only later signed on to play in Canadian juniors, I believe it is correct that he can jump to the AHL at any time just like any other European drafted player. If he does so, like Gauthier, Kuokkanen would use the first year on his entry-level deal.
The middle of the 2016 draft featured three more US college players in Max Zimmer, Matt Filipe and Jack LaFontaine. All three completed their freshman seasons at the college level and are on the extended 4-year draft rights schedule.
That leaves three Canadian junior players for whom the 2017-18 season is an important proving point. Hudson Elynuik (third round), Jeremy Helvig (fifth round) and Noah Carroll (sixth round) will all need to be signed by the Hurricanes by next June. If not signed, Carroll and Elynuik would reenter the 2018 draft. Helvig who is older (was drafted as an “overage” player not drafted in first year he became eligible) would instead become an unrestricted free.
Then there are those NHL guys
With so many players jumping the the normal development schedule, the Hurricanes actually have four NHLers who will still be playing on their entry-level deals in 2017-18. Jaccob Slavin, Brett Pesce and Noah Hanifin will be in the final year of the entry-level deals, and Sebastian Aho actually has two more years remaining.
Grouping players by contract expiration
One year remaining their entry-level contract (8): Jaccob Slavin Brett Pesce, Noah Hanifin, Lucas Wallmark, Valentin Zykov, Andrew Poturalski, Tyler Ganly and Sergey Tolchinsky.
Two years remaining on their entry-level contract (7): Haydn Fleury, Roland McKeown, Alex Nedeljkovic, Josh Wesley, Clark Bishop and Sebastian Aho.
Three years remaining on their entry-level contract (9): Nicolas Roy, Callum Booth, Aleksi Saarela, Warren Foegele, Spencer Smallman, Steven Lorentz, Julien Gauthier (could slide if he returns to juniors), Jake Bean (could slide…) and Janne Kuokkanen (could slide…).
Not yet under contract (8): Luke Stevens (NCAA), David Cotton (NCAA), Matt Filipe (NCAA), Max Zimmer (NCAA), Jack LaFontaine (NCAA), Hudson Elynuik (2016 draftee), Jeremy Helvig (2016 draftee) and Noah Carroll (2016 draftee).
Did I miss anyone?
Who is checking my contract math, and did I make any mistakes?