NHL Free Agency: What to Expect Under the New Collective Bargaining Agreement

By Ryan Kiray (@RyanK_THG)

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Getty Images

Friday afternoon saw the first significant free agency related domino fall, with the Ottawa Senators sending veteran defenseman Sergei Gonchar to the Dallas Stars in exchange for a conditional sixth round draft pick. With free agency looming, the time seems ripe to discuss what to expect in free agency under the new Collective Bargaining Agreement.

First and foremost, expect free agents to have higher salary cap hits. The NHL made a number of changes to contract structure that will lead to free agents carrying higher Average Annual Values (AAVs). Chief among these is the contract term limit. Free agents changing teams will not be able to sign contracts that are longer than seven years, or eight years if they are signing with their own teams. Most of the infamous “cap cheating” deals carried terms in excess of ten years. Roberto Luongo, Ilya Kovalchuk, Marian Hossa, and Zach Parise, among others, are all signed into the next decade, and all of their contracts end with take-home salaries lighter than their actual cap hit. Under the new CBA, their contracts would all be illegal. Parise in particular would still be in his prime money-making years at the end of a seven year term, at only 35. His take home pay in the seventh year of his current contract? $9 million. Without the ability to tack on those meaningless, low salary years to the end of a contract, the AAV of every long-term deal is going to rise.

Another change that will lead free agents to represent a greater share of their teams’ annual salary payout is the limitation on monetary variability in contracts. While that seems like a mouthful, it is actually fairly simple. The provision applies to front-loaded contracts; that is to say, to contracts whose Average Annual Value in the first half of the contract is higher than its AAV over the contract’s full term. For example, Hossa’s deal with the Chicago Blackhawks is a 12-year pact with an AAV of $5,275,000. However, his average salary over the first six years of his contract is $7,900,000. Because that number is higher than his total AAV, his contract is front-loaded. For similar deals in the new CBA, in no year of the contract can the player’s salary increase or decrease by more than 35% of their salary in the first year. Again, it sounds more complicated than it is. A player that makes $10 million in the first year of their deal can never make more than $13,500,000 or less than $6,500,000. Unlike under the old CBA, a player can’t make $10,000,000 in one year and $1,000,000 in another. Just in case a GM decided to try to find a loophole by moving the $10 million salary to year two, a player on a front-loaded deal can never make less than 50% of the salary that they make in their highest-paid year. That clever GM would not be able to pay a player less than $5 million in any year of the contract that once paid the player $10 million. Limits on contract variability, aside from being an accountant’s nightmare, are simply a way to prevent teams from tacking on meaningless, low salary years to drag down players’ cap hits.

Next up, while it seems minor, General Managers will no longer be able to pull the “Jeff Carter”.  A team won’t be able to sign players to deals that include No Trade and No Movement Clauses, then trade them before those clauses kick in. This provision does not apply when the No Trade Clause doesn’t commence in the first year of the contract, and it would obviously only come into play for a player that signs a contract prior to the expiration of their current contract. For example, Sergei Gonchar’s new contract with the Dallas Stars includes a No Movement Clause. While that contract doesn’t take effect until Gonchar’s previous deal expires on July 5th, if Jim Nill were to have a change of heart next week, he would not be able to make Gonchar the newest over-aged defenseman to plague the Florida Panthers’ blueline without Gonchar waiving his new No Movement Clause. Thus, you can expect free agents with new No Trade Clauses to be able to exercise them immediately.

Finally, and perhaps most disappointingly, say goodbye to “Parise Watch”. While some reports following the passage of the new CBA suggested that there would be no free agency interview period, the NHL’s summary of the new collective bargaining does in fact provide for such a period. Each season, starting the day after the NHL Entry Draft, or on June 25, whichever is sooner, unrestricted free agents can meet with teams interested in their services for interviews. They will not, however, be able to sign new contracts until free agency opens on July 1st (or July 5th this year). As of publication time, the NHL had not responded to a request for comment by The Hockey Guys seeking to confirm if the beginning of this period would be stalled this year to compensate for the delayed NHL Entry Draft and beginning of free agency. However, based on the delay in the rest of the offseason, it seems likely that the interview period this season will open on July 1st, the day after the NHL Entry Draft.

Fans of the New Jersey Devils, Pittsburgh Penguins, Los Angeles Kings, and Minnesota Wild remember the agony of waiting to find out where Zach Parise, the highly coveted superstar winger, would land. Parise, making the most difficult decision of his adult life, understandably took his time before putting pen to paper. However, with the new interview period, players will have nearly a week to find out which clubs are interested in them and to begin weighing their options before they can ever sign with a new club. Beginning July 1st (or 5th), players should begin joining new teams much faster, as they will already have weighed most of their options.

A number of quality players are carrying contracts that expire this year. On the whole, the annual bidding wars for these players will carry restrictions that will complicate teams’ attempts to add these players, but will ultimately benefit the players with consistent salaries, job security, and time to make major life decisions. Fans will also benefit from a faster-paced opening day, and, consequently, a few more nights of sleep. The lockout-shortened season has delayed the end of the Stanley Cup Finals, the NHL Entry Draft, and the beginning of free agency significantly; the new rules in the new CBA make that action-packed time that much more exciting, and hopefully worth the wait.

Details of Luongo’s contract can be found on his CapGeek page, located http://capgeek.com/player/683.

Details of Kovalchuk’s contract can be found on his CapGeek page, located http://capgeek.com/player/339.

Details of Hossa’s contract can be found on his CapGeek page, located http://capgeek.com/player/291.

Details of Parise’s contract can be found on his CapGeek page, located http://capgeek.com/player/773.

The terms of the new Collective Bargaining Agreement can be found http://www.nhl.com/nhl/en/v3/ext/CBA2012/NHL_NHLPA_Proposed_CBA_-_Summary_of_Terms_FINAL_-_Jan._12,_2013%20(1).pdf. Details relating to free agency and contracts and particular are concentrated in sections 16-18.

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