Today an NHL rarity occurred, and it involved the Carolina Hurricanes. A few hours into the kick off of NHL free agency, it was announced that the Montreal Canadiens had signed Sebastian Aho to an offer sheet. The headline terms were a five-year deal at $8.454 million per year.
But the headline numbers do not tell the whole story.
Breakdown of Aho offer sheet: $11.3M SB plus 700k salary in Year 1; $9.87M SB plus 700k salary in Year 2; $6.95 SB plus 750k salary in Year 3; $5.25 SB plus $750k in each of Year 4 and Year 5
— Pierre LeBrun (@PierreVLeBrun) July 1, 2019
The situation is interesting on many levels. Let’s step through at least most of them.
An odd move by the Canadiens
By pegging the salary where it is, the Canadiens would have to give up first, second and third round draft picks. Had they gone a bit higher another first round pick would have been added. In that regard, the salary offered looks like a steal for the Canadiens, but that only matters if the Hurricanes do not match it. There are issues with the payment structure (see below), but I would be utterly shocked to see the Hurricanes not match this.
So that begs the question of what Montreal was up to.
Did they really think that there is a chance that the Hurricanes would decide not to match this fairly modest offer in return for a ‘meh’ set of draft picks?
Or did Montreal perhaps just see an easy chance to stick it to another Eastern Conference team? Montreal did make minor problems for the Hurricanes with the onerous salary structure and all of the guaranteed money that is due next year even if there is a lockout. In addition, by doing this the Habs scheduled Aho to become an unrestricted free agent in five years instead of a maximum eight years.
The basics from the Hurricanes side
At the simplest level, the Hurricanes will undoubtedly match this offer and have Aho under contract for these terms. My wild guess is that the Hurricanes would have preferred 6-8 years and might actually have paid a bit more to get that, and if forced to give in to a five-year deal, I do not see how the Hurricanes could have offered less than $8 million per year. So the Hurricanes lost term that they now cannot get back and maybe will have to pay a tiny bit more. By no means is that something that makes matching anything more than a no-brainer.
The upshot is onerous contract structure
If the Hurricanes match the offer sheet as expected, the upshot is the onerous bonus-laden, front-loaded structure of the contract. The Hurricanes now have to pay 52 percent of the total amount basically in the first year plus a day. Further, the $9.9 million signing bonus for 2020-21 means that the Hurricanes will actually have to pay Aho even more than the $8.454 average cost even if there is a lockout. Those are both tough pills to swallow financially which is the cost that the Hurricanes will pay for not getting this deal completed smoothly and ideally before July 1.
On the assertion that Sebastian Aho actually wants to leave
Since Sebastian Aho technically signed a contract to play for the Canadiens, there are rumblings that Aho actually wants out of North Carolina. But in my opinion an understanding of the technicalities of the series of events and the NHL rules for contracts, buyouts and such makes it pretty obvious that the goal here was to get a favorable contract but remain with the Hurricanes.
2/5 If he wanted out, this is the least likely way to do it. He signed a modest offer with 'meh' draft picks returned to the Hurricanes which assures they will match. In the process he is also guaranteed to be with #Canes at for 2019-20 since he now cannot be traded for 1 year.
— Canes and Coffee (@CanesandCoffee) July 2, 2019
As noted above, the salary of the offer sheet was probably barely higher than what the Hurricanes were negotiating at, and with just one first-round pick and two others, the return was far from compelling. When you net it out, the offer did not really make it a tough financial decision for the Hurricanes nor is the return enticing.
3/5 Maybe most significantly, because contract structure, Aho almost certainly locked himself in for 5 years. At point where the Hurricanes could trade Sebastian Aho, he will be due roughly $5M per year for 4 years (salary not cap hit). No way @NHLCanes are trading out of that.
— Canes and Coffee (@CanesandCoffee) July 2, 2019
Maybe more significantly, the structure of the contract makes it very unlikely the Hurricanes would trade him. Offer sheet rules state that a player cannot be traded within one year. Aho’s contract pays $12 million in the first year and then a $9.9 million bonus right at the beginning of the second year. In total, by the one-year anniversary of the contract, the Hurricanes will have paid $22 million out of a total of $42.2 million due over five years. At the point where the team could start accepting trade offers, Aho would have four years remaining on the contract with an average salary of just over $5 million per year. (The cap hit is flat; this is talking about actual dollars.) At that point looking forward, Aho will be a massive bargain playing about something in the neighborhood of half of his fair value. That is not the type of contract that the Hurricanes are going to trade out of.
4/5 If Aho truly wanted to leave, his best leverage would have been to simultaneously request an outrageously high salary (which $8.5 million is not) and threaten to hold out for a trade. #TakeWarning
— Canes and Coffee (@CanesandCoffee) July 2, 2019
If Aho really wanted to leave, signing the type of offer sheet that he did was arguably the worst choice he could make for the reasons noted above. As a restricted free agent, his leverage is somewhat limited, but he could have threatened to hold out or demanded a massive salary that put writing on the wall for the Hurricanes.
5/5 The Sebastian Aho offer sheet was about Aho's agent seeing this as the best path to getting maximum salary (or as close as possible) with favorable terms for the 5-year term that Aho wanted. #TakeWarning
— Canes and Coffee (@CanesandCoffee) July 2, 2019
In my opinion, what unfolded today was all about Aho’s agent choosing an interesting path to get the five-year term that Aho wanted and doing so at something close to a maximum price. The favorable structure that sees Aho still get paid $10 million even if the entire 2020-21 season is lost to a lockout is icing on the cake.
The process
Having another team step in to dictate terms is not an ideal way to reach agreement on a contract for a franchise cornerstone. What Aho’s agent did to drive favorable terms was smart. And in the business world, playing different bidders against each other to maximum financials is common fare. But the move is not the norm in NHL negotiations.
Though today’s events might actually have expedited the process, one has to wonder if the team and agent could have accomplished similar without the outside messiness. I do not know what confidentiality rules exist when a team presents a contract offer, but it seems like taking Montreal’s offer to the Hurricanes or just credibly saying that you had an offer should have been enough to set the basics of the deal and enable Aho to turn down the offer sheet and negotiate pretty similar terms.
What say you Canes fans?
1) Were you surprised (I was) that an offer sheet actually came to fruition?
2) Does anyone think there is even the slightest chance that the Hurricanes will not match?
3) Other thoughts on today’s festivities around Sebastian Aho?
Go Canes!
You present many good points in this negotiation tactic. Ultimately, I’m probably of the few that think the team may not match this offer, and instead shops around the next few days seeking another center. The reason I think management will turn this down relates to two points you mentioned above:
#1 “Having another team step in to dictate terms is not an ideal way to reach agreement on a contract”
#2 “Montreal’s offer to the Hurricanes or just credibly saying that you had an offer should have been enough to set the basics of the deal”
I get that this is legit under the CBA, but Aho drew the “take it or leave it” stand with the negotiation and did so on the first day available to him. I’m also not caught up in payout being something the Canes are able to match as a meaning that Aho wants to stay in Raleigh. To do so on the first day of free agency is telling. The two sides could have continued to talk over the summer, but this deal was not a matter of heart.
Dundon and company now have a decision to make. Shop for a center (quickly) and have (3) 1st rounders (CAR, MTL and TOR) heading into the 2020 draft. Or bite the lip and begrudgingly sign a deal your own player cornered you into. The decision will not sit well either way and may even open the door for other players to follow suit. This is why I think this decision is more than just matching or not matching.
Footnote: This article should be on your front page (didn’t know it existed until I saw the link in another thread).
Without the out of an offer sheet, players lose too much as an RFA – it really gets to the whole question of what being an RFA mean. It shouldn’t mean the team can dictate terms of the contract – that is far too much control over a player. I doubt the Canes would have budged much on term – I am sure Waddell & Co. were pretty clear on that. Without an out like the offer sheet you get stuck in a Nylander-like impasse which works to no one’s benefit. If nothing else I actually hope this offer sheet, coming as it does right before the new CBA gets negotiated, leads to a change in the offer sheet parameters to make these things more player friendly.
I’ll admit I was surprised the team matched. Not because of the money, but because of how this was handled on both sides. The agent is the one who deserves kudos, because he did his job. But we should all probably ask why did it get to this point so soon?
The agent sold Aho as “willing” to sign elsewhere. Aho “signed”. The Canes “accepted” the offer sheet and now everything is peachy. Or is it?
Montreal (Bergevin) claims Aho wanted to play in Montreal. Dundon says otherwise. Yet there was “technical difficulties” getting Aho on the phone for the conference call after the Canes accepted??!! It’s 2019 folks, phone reception should not be an issue for events like this, even in Finland. Would have been 110% more understandable had Aho been on that call and acknowledged his desire for Raleigh and hearing his side of the story. But not one reporter was able to reach him? C’mon…this is just too weird.
I know, this is the art of the deal and sausage being made, but I want to hear it from the source. Aho, you just got paid. Time to say something.
I am definitely surprised at the offer sheet. As I understand from what has been said it Aho’s camp that initiated talks with teams about offer sheets – or actively participated in it. Yesterday Waddell said they were told Friday that a counter-offer would not be forthcoming from Aho’s people.
The offer sheet was effectively the counter-offer – and it is a “take it or leave it” offer.
I thikn the issue was term – Aho wants 5 years so he can cash in another mega-payday as a UFA. The team wasn’t going to go that low – regardless of amount – because they want control of the player longer.
I am surprised that MTL put itself in the position of being the tool to facilitate Aho’s negotiation approach – I think they have to know that CAR will match and they put themselves in the position of “GM-office non grata”.
I have to laugh at the way this must tweak Dundon. Last off-season he said the team “owned” Aho for 8 years – I thought that was rather an arrogant statement that seemed to suggest that they could dictate terms to the player. Au contraire – a player of Aho’s skill holds a trump card.
I just wonder why MTL went along with it – and if it was going to put itself in this position why it didn’t go all in with a larger offer to push the return to CAR higher and make it a more difficult decision for CAR
I can’t see the Canes letting Aho go to MTL under these terms. Watching sausage being made is never pretty; too bad this was so public.
My main takeaway is that the days on the 6-8 year contract for RFA’s is over if the player doesn’t want it, no matter what the team wants. I’m sure Rantanen, Laine, Marner, Point, etc, are watching this closely. Just because this happened on Day 1 of free agency doesn’t mean there won’t be others.
PS. That tweet from the Canes account asking the “will they match” question was a fabulous response.
I do like your sausage analogy.
No doubt the Canes will match the offer. It wasn’t enough to let him go, but enough to tweak the owner/GM who thinks he can do things his way all the time. Aho has to be happy with his agent. He got pretty much everything he wanted. Five year deal? Check. Nearly all the money in signing bonuses so he gets paid if there is a lock out? Check. Big raise? Check.
The agent’s shot at Dundon today was predictable. I am sure any European player would love the chance to play for a storied franchise in a European style city like Montreal, but I doubt Aho really wanted out or would have said so. The agent took a shot at TD, and I suspect he won’t be the last one to do so.
With this saga and the exodus of coaches and management do we still need to debate Dundon’s cheapness?
I know where my vote stands. When I had management like that, I left.
Not to mention losing 4 promising players that could’ve taken on NHL roles to free agency. The most shocking to me is not signing Jurco to a 750K NHL contract. This is a high draft pedigree guy derailed by injuries, fresh of a fantastic comeback season and with strong chemistry with the most promising prospect to make the jump to the NHL this year.
I am increasingly convinced that, despite the miracle worked by RBA and the boys last year, that the ownership is not in it to win it, but in it to maximize profit, and in the triangle that’s a tough task and giving away or low balling your best players and coaching staff is not going to get it done.
I agree with you on Jurco – that is a cheap contract he signed with EDM. He had great chemistry with Necas on the ice and they developed a good friendship off the ice.
On a related note, EDM got a great deal on a contract with Jurco. He is high skill and will do well on either McDavid’s or Draisaitl’s lines.
I’m haven’t watched Jurco, so I have no opinion there, but losing Poturalski and Patrick Brown are no big deal.
Brown could be a serviceable fourth liner, but nothing more. He’s 27. He is who he is. Better to have a guy there that can do the job and may have upside.
Poturalski had a cup of coffee a couple years ago and was dreadful. Played scared from what I saw. He made Skinner look like Bergeron defensively. I can see how they would let he go as well. He’s 25 which is generally two years past when a team decides what they are going to do with you.
Brown was the heart-and-soul leader of the CLT team. That team doesn’t win the Calder Cup and the young AHL players don’t see professionalism at it’s highest level in that league if he is not there. That makes him very valuable to the organization even if his time on NHL ice is limited.
Poturalsky is not the same player he was 2 years ago – he was an AHL star. Whether he can play on NHL ice is yet to be seen – but it wouldn’t be seen here in CAR. He has a much better chance in ANA (and probably a few other places he could have gone to as well).
We will see. I heard a lot of the same stuff about Zykov. Three teams don’t seem to want to play him to date. Four if you want to include LA.
At this time it doesn’t matter whether either succeeds or not – they will both get a better chance for NHL ice than they were going to get here.
For the record, Dundon has said they will match and may announce it formally as soon as this afternoon.
1) it is totally fare and MTL had the right to do it. I hope there will be a payback as I believe we know who the bunch of jerks are now.
2) already matched.
3) I did not like the process. I totally expected Aho to accept the offer sheet. Why wouldn’t you. Our management was low balling and got caught with their pants down. The problem I have is why did we not deal fairly with the centerpiece of our team. Not impressive.
Carolina will match for sure.
The Patrick Marleau deal is looking a bit sillier now though.
That deal still comes down to if we paid the signing bonus or if TML fronted money for that. If we paid it then it was not a good move. We knew he wanted a buyout and would play for us.
Y’all read too many canadian rumor rags. This was never in doubt.
Were we negotiating a trade for the Seabass with Montreal before the offer sheet? Does he have a lingering injury from last season? Is he still the player we hope he is? Are we still negotiating with Montreal for Aho? What leverage does Montreal have (other than the obvious)? What leverage do we have (other than the obvious)? Does the Seabass want to be here? Does he want to play in Montreal? Does it matter? We have said we will match the offer sheet, but have we? I will believe that we have when Montreal signs with Gardiner.
If we have not yet finalized our match of the offer sheet, the chances that we will match it diminish as time passes.
What does Aho have to say about all of this?
What I got out of the Aho situation was:
1. The league is changing in regards to RFA’s. Young star players are no longer going to automatically sign on with their existing team for long terms. They want short term with high pay so they will have another crack at free agency while in their prime.
2. Forget loyalty as a motivating factor for young stars to resign with their existing team. They all have agents and agents are in it for the best deal for their client AND themselves. Dollars and term are what count for young star (not third and fourth lineers) free agents which are the players fans are MOSST concerned about.
3. GM’s better get on their horse and start contract negotiations sooner and be prepared to be more flexible when dollars and term are discussed. You can’t win without good players. Losing seasons cost some teams more revenue from loss of fan base, hockey related product purchases, etc. over the period of a player’s contract than the dollars they would save by knocking a million off a star player’s salary.
dmilleravid is right on point with his comments IMO.
As far as how these particular negotiations went, IMO this is going to be the norm from here on out. I’m a bottom line man and only concerned with the net result. You either retain your star players within the existing signing environment or you don’t. You don’t you become an annual also ran non competitive team that shouldn’t even be in the league (you can’t afford it and/or you are poorly managed and/or you don’t have a sufficient fan base that will pay the price to be competitive.
Brandon Smillie is a Montreal contributor on Eklund’s Hockeybuzz site. His recent column entitled Big Game Hunting is food for thought on the Aho offer sheet.
I, for one, can’t seem to shake the feeling of being betrayed by the Seabass. However, I am reminded of the story of Joe Sakic. So maybe we can mend fences. I hope so.
But things are changing in the NHL. Have you noticed that players are no longer interested in long term contracts? Owners seem to be less inclined to over pay both in money and term. Look at the number of one and two year contracts being signed by UFAs this summer.
As of the deadline yesterday 40 RFAs signed up for arbitration. If memory serves, this is more than usual.
Are the owners getting smarter? Are the players getting more savvy?
Does this mean that the CBA will be renegotiated? Does this mean a lockout is likely? Or inevitable?
Are more offer sheets coming this summer? Will they be shorter term and for a lot more money? Marner and Laine are being mentioned. 1 year at 12 plus million is being bandied about.
Very interesting.
Is the problem Aho or TD.
It seems like TD always treated Aho as an asset and has continually boasted he would get signed, but never actually signed him (we’re 2 days away from TD having to sign the line or letting Aho walk).
There are two sides to the story and I ask myself why the owner did not get Aho signed, he’s has over 18 months to do it, all the while letting Aho’s price tag go up but never taking the action.
5 key pieces of the team that made it to the conference finals last year have elected to part ways with the team (goalie coach, AHL winning coach, big Mac, Ferland, Aho, Ferland and Aho may end up with the team but they both have expressed desire to move on, or at least strong dissatisfaction with the organization). What does that say about the organization?
Is it normal?
I honestly don’t know the answer, but it is food for thought.
But it’s true that player contracts are getting pretty ridiculous.
Teams and players have increasingly gotten more and more creative with bonuses and other ways to boost or front load contracts, to the point where a player can collect half their 5-year contract in a single year (there are probably limits on this but I don’t know the CBA that well).
I also don’t understand why the cap is constantly going up, it certainly is going up way faster than the average income or inflation rate, and the parity effect of the salary cap is certainly getting less pronounced. Increased TV revenue is typically one of the reasons revenue is going up, but TV subscription prices can’t keep going up forever. I’ve never seen so many people that I know personally cancel their cable packages as last year and I have started considering cancelling mine.
I wonder if the next lockout will result in a removal of the cap or drastic changes to it.
I also don’t understand how players that clearly and shamelessly do not perform are guaranteed millions of dollars, even if they virtually don’t do anything for the team.
I know the type of issues that guys like Semin or Darling have experienced, I would either have been fired or put on a pretty extended unpaid leave (if the issue was medical). Why is the lack of performance rewarded with millions of dollars. We’re not talking ensuring a basic quality of life here. No wonder the owners are getting less and less happy with long term contracts.
I guess we’re seeing a pretty unusual combination, a union of millionaires.
Excellent points, Pwrlss and Breezy. Teams are forced to find loopholes with the CBA (mega signing bonuses to lure RFA/UFA’s), otherwise they risk not being competitive. Likewise, players are not as willing to stay loyal to the team they were drafted by. Case in point, Aho forced the team’s hand not because there was lack of money or desire from the team, but because player wanted shorter term and majority of contract paid via bonus. Can’t say I blame owners in this regard, it’s out of hand and outside the CBA logic.
All reasons why a lockout is on the horizon.
Well, sounds like the Canes have officially matched the offer sheet.
Wonder what happens next.
Hopefully something more exciting than signing an undersized older player like Gibbons. I truly don’t see the logic behind that signing.
Give us an Anisimov trade an one more upgrade at forward. Find a goalie coach and AHL coach and show us this team is in it to win it.