If you want something that feels less like a contract law class, I suggest hopping into the Thursday Coffee Shop where the discussion and polls aim at sorting out the top 4 defensemen for the 2017-18 season after working on the bottom pairing and #7 slot on Monday.
On May 14, 2017 I took a try addressing the NHL legalese around free agents. In a similar vein, today’s Daily Cup of Joe will attempt to explain how things work for draft rights after a player is drafted, how it works differently for Canadian junior versus US college versus European draftees and then the entry-level contracts and how those work. The aim again is the cover the basics and most common scenarios and not get too bogged down in every single possibility.
Please holler in the comments if the first try at this is hard to understand or seems to leave gaps or unanswered questions.
When are players eligible to be drafted by the NHL
At a basic level, players are eligible to be drafted into the NHL when they are 18 years old. Technically, they must turn 18 by September 15, so some players are actually 17 years old when drafted. North American players who are not drafted in the year that they become draft-eligible can be drafted in later years as long as they do not turn 20 years old before December 31 of that draft year. At the point where they age out, they become an undrafted free agent. Players drafted after the first year they become eligible are referred to as “overage” players. European players become eligible based on the same time frame but are not limited to 20 years old in terms of being drafted later.
Length of time a team keeps the rights for drafted players
When a team drafts a player, it gets exclusive rights to sign that player to a contract for a period of time. The length of time depends on where the player plays.
Canadian junior players: For Canadian junior players, the team that drafts a player has his rights for two years. If the drafting team does not sign the player to a contract by June 1, two years after drafting him, the player can go back into the draft pool if eligible; otherwise he becomes a free agent.
US college players: There are a few random details, but in general for US players who decide to play NCAA hockey, the drafting team maintains the rights to the player until June 1 after that players class would graduate from college – so more or less for four years.
European players: At a basic level, European players line up like US college players. The NHL team has four years to sign a drafted European player before he becomes a free agent.
When players can sign NHL entry-level contracts
Entry-level contracts are the first contracts signed by drafted players. The terms are basically set by pre-determined formulas. The players and teams have minimal flexibility and/or terms to negotiate. The lone exception is some bonus terms that might/might not be granted to a player, but otherwise salary and duration are basically determined by the NHL legalese.
Entry-level contracts are generally three years for 18-20 year olds and drop to two years when signed by 21-year olds.
The salaries are modest. The maximum amount currently given to top draft picks is $925,000 per season over the lift of the 3-year contract. Bonuses can boost that number to a much higher $2.7 million, but the bonuses are primarily for pretty lofty achievements like finishing in the top 10 in scoring, making the All-Star team, etc. So these bonuses are in play for the Connor McDavid’s of the world but oftentimes not really a consideration for many draftees.
Who signs when is quite different for Canadian junior and European players versus US college players. US college players CANNOT be signed to NHL contracts until they are ready to jump to the professional ranks. Signing a contract would nullify their amateur status and prevent them from playing college hockey. Canadian junior and European players can be signed to contracts immediately though those contracts might not actually kick in immediately.
Higher-end Canadian junior draftees tend to be signed well before their two years are up. The team does not want to risk losing a player to free agency. The player has some incentive to sign early too because it triggers a nice chunk of change (generally about $80,000 per year for a signing bonus) and also starts the clock ticking on some things that get the player to free agency sooner. College players do not sign until they are ready to leave college. European players are sort of a hybrid. They can sign an NHL contract and continue playing in Europe kind of like US college players do, but because the team has a player’s rights for four years, there is not as much urgency to get a player under contract
Where players can play once drafted and (if applicable) signed
One might figure that once a player signed a professional contract with AHL and NHL salaries with an NHL team that the player would play in one of these two places. This is actually not the case quite often and again differs for US college, Canadian junior and European players.
Again, the US college players can go two ways. They can stay amateur, NOT sign an NHL contract yet and play college hockey. Or alternatively, they can sign a professional contract in which case they are no longer eligible to play college hockey, and then they move up to the professional ranks. They can play in the minor leagues (AHL or ECHL) or at the NHL level and have different salaries for the NHL versus minor league level.
Canadian junior players are different. The NHL has an agreement with the Canadian Hockey League such that the NHL will not take players during their 18 or 19-year old seasons (so basically the two years after they are drafted for most players) and send them them to the AHL. This keeps quality players in the CHL which increases the league’s attraction to fans. So the upshot is that for the first two years after being drafted Canadian junior players CAN make the NHL team and play at the highest level, but if they do not make the NHL team, they must be returned to juniors WITHOUT the option of instead going to the minor leagues.
European players are more flexible. Like US college players, if signed to an NHL contract, they are eligible to play in North America in the minor leagues. Or the team can choose not to sign the player for up to four years before losing their rights. Players can also sign NHL contracts but be given permission to stay home in Europe and play there while they develop somewhat like the Canadian junior players.
How the entry-level contract works and the entry-level slide
So in the case of Canadian junior players and also European players, a player can be signed to an NHL contract (with an AHL component) but not actually be playing in either of those leagues.
And significantly, players who do not play at a North American professional level can have their contracts “slide” (often referred to as “entry-level slide”). Basically, the contract shifts forward one year such that the first year of the contract just shifts to the next year. This occurs if a player does not play at least 10 games at the NHL or professional level. It is significant because it extends forward the three inexpensive sub-$1 million years of the entry-level contract and also backs up calculations for tenure that determine when a player’s free agent rights kick in.
So for a run of the mill Canadian junior player, he would play two years in Canadian juniors after being drafted and his entry-level contract would slide forward each of those two years. Then after his second season in Canadian juniors, he would move up to the AHL or NHL level. He could have signed the contract for that immediately after being drafted or a full two years later after completing the second season after being drafted. Either way, because of the entry-level slide, the first year at the AHL/NHL level would be the first of three years on the entry-level contract. Note that Canadian junior players can return to that league for a third year after being drafted (referred to as an “overage” player), but the player must be signed to his entry-level contract within two years after being drafted; otherwise he reenters the draft.
The situation is not too much different for US college players except that they would not be able to even sign the professional contract until they were ready to play under it, and they could enter the professional level two years earlier (no requirement to go back to juniors) or two years later (rights are basically four years for US college players). European players can sign the contract at any time like Canadian junior players but have flexibility like US college players in terms of when they start their professional career in North America and being their entry-level contract.
The 9-game trial: For Canadian junior players there is what is known as a 9-game trial for highly-drafted players. Basically, a player can stay at the NHL level for 9 games at the start of the season before being returned to his Canadian junior team. The tenth game officially burns a year of the entry-level deal, so the NHL team loses one of the three inexpensive seasons on the player’s contract by going past 9 games. In addition, the 9 games much happen at the beginning of the season because once a player is returned to his Canadian junior team, he cannot be recalled to the NHL level except in the case of an emergency (basically a bunch of injuries at the NHL level that leaves the team scrambling to fill its lineup).
Like my other NHL legalese articles, my hope is to find some time to polish these up a bit, fill any gaps and needs for clarification and post a cleaner version at some point in the future (maybe August?).
Please help with any questions or comments on anything that is confusing or that I missed.