Getting to Know the CBA – Episode 3: Free Agency

So far we’ve been through the introductory stuff that defines why a CBA is a CBA and through the draft & entry level contracts.

You can find the entire CBA here (PDF)

Article 10 – Free Agency

There are six “Groups” of players defined in the CBA, but each of those groups is defined for the purpose of deciding whether a team has any residual control over a player’s next team after his contract has expired. Players under entry-level deals are considered group 1; the remaining five group designations define whether a player will be a restricted free agent (RFA) or an unrestricted free agent (UFA) at the expiration of his current contract (a Group 1 player will almost always become a Group 2 player when his entry-level deal expires).

The CBA lays out in both cases that a player who has completed his entry-level requirement may negotiate a contract with any team he wishes; the difference between restricted and unrestricted free agency is that in the event a player is an RFA, the team which holds his rights has a right to match an offer the player receives or get draft pick compensation for the player leaving. The player “earns” his way out of restricted status by accruing either enough seasons (7) or simply growing old enough (age 27 by June 30th of that year).

Let’s break down the groups:

Group 2 (Restricted) Free Agents
This is the larger of the two restricted groups. Essentially, everybody who has made it through the entry-level system and isn’t old/experienced enough to be a UFA and doesn’t qualify as a Group 4 player is eligible for restricted free agency. In fact, the official rules here overlap perfectly with entry-level requirements, even including the “slide”. Here’s how many years of professional experience you have to accumulate to qualify for restricted free agency:

The Definition of Professional Experience changes based on age as well. If you’re 18 or 19, you only gain professional experience by playing 10 or more games in the NHL. Players older than that gain a year by playing 10 or more games of hockey at any professional level (NHL, AHL, ECHL, European league).

Group 3 (Unrestricted) Free Agents
The easiest-to-define class. If you’ve accrued 7 seasons (with the same definitions as laid out about how 18 and 19-year olds accrue differently), you’re a UFA. If you haven’t accrued those 7 seasons by the time you hit age 27, you get to be a UFA anyway. The birthday issue is a little funny here, in that everywhere else, the date that matters is either September 15 or December 31. Here it’s June 30. You could technically have a guy miss out on becoming a UFA because he doesn’t turn 27 until July 2nd.

Group 4 (Restricted) Free Agents – Defected Players
This is a special category for players who jump ship on their current deal hoping to magically turn into an unrestricted free agent by bolting for an unaffiliated league before their contract is up (or before they sign their EL deal). While there are lots of other considerations here which relate to punishing a player for doing this, a Group 4 free agent gives the team that owns his rights the right to match any deal he accepts. The main difference is there’s no draft pick compensation given for Group 4 players if a team decides not to match an offer.

Group 5 (Unrestricted) Free Agents
This is a dinosaur group that no longer exists, but is defined as a player with 10 years of professional experience who made less than the Average League salary in the season prior to becoming a free agent. Since everybody makes Group 3 before 10 years, there’s no point in electing to become a Group 5 player. However, one of the letter agreements at the end of the CBA discusses that they not just delete this definition because 1) they didn’t agree to delete it and 2) future CBAs might have a need for such a group.

Group 6 (Unrestricted) Free Agents
Any player 25 or older with at least three professional seasons who has not played in at least 80 NHL games (28 for goalies) becomes a UFA at the end of his contract. For this part, the definition of a professional season is pretty lenient. 11 games for 18-19 year olds and just one game played anywhere professionally counts for anybody over 20. It’s nearly an unnecessary definition, since a guy with that much experience who is obviously not that wanted by the team isn’t likely to draw the kind of salary which would bring draft pick compensation in, but it’s a nice bit of a catch-all just to keep teams from being dicks to people like that.

Draft Unrelated (Unrestricted) Free Agents
I know I said six groups, so bear with me, this one’s a half-group anyway. If a guy gets the freedom to sign with any team because of not having a contract after being drafted, he only keeps that freedom until he signs. After this, he still qualifies for entry-level rules and then the remaining UFA/RFA rules above.

Qualifying Offers

There is one caveat about having a restricted free agent for teams, and that’s the one which states they have to make a qualifying offer to one in order to retain the right to match an offer sheet he signs. These are near-automatic for players, although it’s not uncommon for RFAs to become UFAs by not being given an offer sheet (because his team doesn’t want to pay him what an offer sheet requires they offer).

In order to keep a player as an RFA, you have to offer a one-year deal and, depending on how much that player made, you have to either automatically offer as much or more than his previous salary (paragraph 1 salary, no bonuses count here because you can’t give bonuses to these players anyway).

$660,000 or less: The club must offer no less than 110% of that salary.
$660,001 – $952,380: The club must offer 105% of the player’s salary.
$952,381-$999,999: The club must offer $1M in salary.
$1,000,000 or more: The club must offer 100% of the player’s salary.

The weird third category stems from a definition in the 2nd that in the 105% group, you can’t exceed a $1M offer.

Now, a player doesn’t have to take that offer. After it’s made, he can negotiate with the club for just about any amount. A QO is simply the mechanism by which teams retain the compensation rights. QOs take effect July 1st and expire on July 15th (provided the player hasn’t signed a deal and neither side has elected arbitration by then). Any time in there, he can just take his QO and have a contract for the next season.

Also, if a player has played 180 or more NHL games over the last three seasons, 60 games last season, and didn’t clear waivers all season, the QO has to be one-way. (This was pro-rated to 156 games in 3 seasons and 36 games this season to account for the lockout)

Offer Sheets and Draft Pick Compensation

Once the free agency period rolls around, a restricted free agent who received a qualifying offer but didn’t sign it may sign an offer sheet with any club who’ll have him. If this happens, the team which owns his rights has seven days to match the offer or choose to receive draft picks from the signing team in compensation for him. Here are the considerations at play here.

• A player can sign an offer sheet any time, but if he signs before July 5th and the team can take him to arbitration, then the offer sheet is voided and the arbitration rules kick in.
• A team must have the draft picks available that they would have to give up if the other team didn’t match. They must be that team’s own draft picks; you cannot substitute another team’s pick which you’ve received that just happens to be in the same round. Picks need to be available for the very next draft. If these qualifications aren’t met, the offer sheet becomes void.
• If compensation equals multiple picks from the same round spread over multiple years, the team giving them can have given one of them up already (or have lost it to a commissioner-levied punishment against the team). For example, a team giving up four first rounders must have them available in the next five drafts.
• A team cannot trade the right of first refusal. Once an offer sheet is signed, they either have to accept that contract or let the player go. you can’t turn to a third club and offer to trade the power to match that sheet.
• If an offer sheet is matched, a club can’t trade that player for one calendar year after the sheet is matched.
• Offer sheets are irrevocable (they can be voided by arbitration, but they may not be revoked by a player or club).
• An offer sheet is as good as a contract… almost. All you can put in an offer sheet are the terms and pay. You can’t give a guy a no-trade clause in an offer sheet. Once it’s matched or let go, the club and player have to formalize those terms in a contract. They may add clauses, but cannot change the primary terms of the deal.
• The only thing which limits how many offer sheets one team can have on their books is how many draft picks they have available to make those offers. For all intents & purposes, the minute you’ve signed an offer sheet, the draft pick that might go away no longer belongs to you. You may get it back later, but you can’t do anything with it in the meantime./

Still with me? Good. Now let’s get to the draft pick compensation list. The amount a player gets on an offer sheet determines the compensation a team gets if they choose not to match. This is decided the same way as in the last CBA: Take the player’s total salary offered and divide it by either the number of years on the contract or by five, depending on which one of those numbers is lower.

The five-year limit is designed in there to keep teams from getting away with lower compensation limits thanks to longer contracts (something the matching team may not view as a benefit). For example, a 7-year $47M offer sheet would have a cap hit of $6.7M, but for purposes of RFA compensation, it would be treated as though the hit were $9.4M. This would change the compensation tier for a player significantly

Here are the limits for the upcoming season.

This amount will change every year. The amounts set right now will change every year at the same percentage rate that the Average League Salary changes. If that figure increases by 10%, so will the compensation thresholds above.

So there we have it. All of this really boils down to how much dues a player has to play before he can become an unrestricted free agent. It’s a long and complicated process because teams don’t particularly like free agency at all. Entry level and restricted free agent players tend to make less than they could for what are often their most-productive seasons because they’re also very risky seasons and those teams put in a lot of time and effort to develop that player’s skills. When a team loses a player before then, the team gets at least something for their trouble thanks to the compensation system.

While the system has its ups and downs, you can really see the balance of considerations between a team wanting to get maximum value from players they develop and a player getting a chance to escape a situation where he’s either not wanted or not appreciated enough by the team who also owes something of a fair value to him for what he brings to them.

I personally feel that the system unnecessarily restricts movement, since it seems the only way to drag an RFA away from a team is to offer him more than he’s worth and in the process saddle yourself with a problematic contract, but this is the system that’s going to be in place for the foreseeable future.

Up next, we’ll start to tackle the rules and procedures governing standard player contracts. this is something of a long article and has attached to it the longest exhibit of the CBA, so we might have to break this one up a bit to make it.