Collective Bargaining: Summarizing the Current Rules of NHL Free Agency
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The NHL owners reportedly submitted their first proposal to the NHLPA. It was a move that some anointed as "the first shot in what could be an all-out war." Yahoo's "Puck Daddy" blog has an excellent summation of the offer here.
The issues that surround these negotiations range from eliminating salary arbitration to player's percentage of the hockey-revenue pie. One of the biggest issues, and the one which could prove most time-consuming to resolve, is the idea of free agency.
Under the current CBA, free agency is summed up in these points:
- Any player who, upon completing his Entry Level Contract (ELC) or any other Standard Player Contract (SPC), has not played seven professional seasons or is not 27 years old is a Group 2 free agent. Group 2 free agents are free to negotiate with other teams. Should a contract be offered by another team, the original team has first right of refusal. If the offer sheet is not matched, the original team gets compensated in the form of draft picks.
This year's biggest Group 2 free agent is Nashville Predators captain Shea Weber. Weber and his agent, Jarrett Bousquet of the prominent Titan Sports Management Group, could negotiate with the Detroit Red Wings, Pittsburgh Penguins or any other team before Weber makes it to unrestricted free agency. In order to receive compensation, the NHL team must offer the player a qualifying offer (explained in detail later) by June 25.
- Any player who is 27 years old as of June 30 may become a free agent that year (July 1). These are referred to as Group 3 free agents.
Two recent examples of Group 3 free agents are Zach Parise (27 years, 353 days old) and Ryan Suter (27 years, 180 days old). These were players who, at their earliest opportunity at testing free agency, did so.
- Any player who has seven professional hockey seasons under his belt, provided that in the final year of his most recent contract he earned less than the league's average salary, may become an unrestricted free agent as of July 10. These are Group 5 free agents.
Because I am from Edmonton, I will use Sam Gagner as an example. Gagner, currently a Group 2 free agent, made the Edmonton Oilers the fall after he was drafted in 2007. Gagner has five seasons of pro hockey experience, all at the age of 22.
In 2014, Gagner has the opportunity to become an unrestricted free agent, barring his salary not exceeding the 2013-14 NHL average salary. As an example, during the 2010-11 season the average NHL salary was $2.4 million. Taylor Hall, Ryan Nugent-Hopkins and Jeff Skinner are all in a similar position.
CSN Washington recently reported that Washington Capitals defenceman Mike Green had rejected his qualifying offer. He signed a new contract the following day, one that will pay him $18.25 million over three years. What exactly is a qualifying offer? It is an offer for a Group 2 free agent that prevents them from becoming an unrestricted free agent. A qualifying offer is determined by the following:
- If a player's salary in the previous year was under $660 000, the qualifying offer is for 110 percent of that final year's salary.
- If a player's salary in the previous year was between $660 000 and $1 million, the qualifying offer is for 105 percent of that final year's salary.
- If a player's salary in the previous year was greater than $1 million, the qualifying offer is for 100 percent of that final year's salary.
If a team does not at least issue a qualifying offer to a player, that player may immediately become an unrestricted free agent. As seen by the Mike Green scenario, even if a player rejects their qualifying offer, the two sides can still negotiate.
Salary arbitration is a technique used by all four North American pro sports in varying capacities. It involves having an independent party determine the salary of a player.
Typically, it involves each side presenting why their number should be accepted. The arbitrator then makes a ruling, and the team has the right to walk away. If they do so, the player is rendered an unrestricted free agent. Eligibility for salary arbitration varies.
Players ages 18-20 are eligible for salary arbitration after four pro hockey seasons. Players age 21 are eligible after three seasons, players age 22 after two seasons and players age 24 are eligible after just one season.
Free agency is one of the pillars of any industry. Early in their careers, hockey players rarely choose which team they play for and are bound by contracts that often span multiple years. From the owner's perspective, they invest millions in the development of these players.
If Florida Panthers prospect Nick Bjugstad exhausts his NCAA eligibility, he could only play five seasons in the Panthers organization before becoming a free agent. And remember, he could very well need time in the American Hockey League to develop.
Meanwhile, Zach Parise gave the New Jersey Devils only seven seasons before leaving for Minnesota.
The days of "franchise players" are over, much to the owner's dismay. But should NHL players be denied their basic rights in the process to return the game to that level? It's a controversial issue to navigate.
These next two months are sure to bring out arguments for each case. Let's hope we don't lose any games over it.
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