Year: 2016

Salary arbitration remains one of the more complex aspects of the NHL’s CBA. With the player-elected salary arbitration notice deadline passing this afternoon, ProHockeyRumors is here to give you a breakdown of the process.

At its heart, salary arbitration is simply asking a designated third-party arbitrator to determine a player’s salary. Both sides—the team and the player—present their case to the arbitrator. Like in court, the parties will use evidence such as graphs, statistics, and comparable players to make their case. Arbitration presents an independent and decisive way to determine a player’s salary in situations where both parties are at odds. The process, however, is inherently unpredictable, and is why most players and teams facing arbitration hearings settle before being heard.

Arbitration Basics

Two types of salary arbitration exist: (1) player-elected salary arbitration (PESA), and (2) club-elected salary arbitration (CESA). Definition-wise, they differ only in who elects the arbitration hearing. The difference lies in the procedure requirements.

Player Eligibility

A player’s arbitration eligibility is the same regardless of whether arbitration is player-elected or club-elected. A player is arbitration eligible if:

1. He qualifies as a restricted free agent;
2. He did not sign an offer sheet; and
3. He meets the minimum professional experience guidelines.

The first two criteria are self-explanatory. The third, however, requires some additional explanation. The minimum professional experience (PE) required for salary arbitration eligibility depends on when a player signed his first Standard Player Contract (SPC):

• If a player signs his first SPC at 18-20, he needs four years of PE;
• If a player signs his first SPC at 21, he needs three years of PE;
• If a player signs his first SPC at 22-23, he needs two years of PE;
• If a player signs his first SPC at 24 or older, he needs one year of PE.

As with everything in the CBA, each key word entails specific definitions. Here, both age and professional experience are specifically defined.

Age is defined as the player’s age on September 15th of the calendar year he signed the SPC. That means that if a player born in July signs an SPC in June at 20 years old, his age for eligibility purposes is 21 because he is 21 on September 15th.

Professional experience is defined as a condition of age. An 18 or 19 year old player must play in 10 or more NHL games to accumulate a year of professional experience. Players 20+, however, accumulate a year of professional experience by playing in any professional league (AHL, KHL, etc).

Additional CESA eligibility requirements

In addition to a player being arbitration-eligible, the CBA requires more for club-elected salary arbitration. A club can only elect salary arbitration for a player who has not been subject to a previous club-elected salary (any team), and either:

1. made more than $1.75MM (including bonuses) in the previous year and in lieu of a qualifying offer; or
2. received but did not sign a qualifying offer.

Finally, a team may only elect salary arbitration twice per year.

Deadlines

The deadline for PESA is 5pm EST on July 5th. The deadline for CESA is either (a) the later of June 15th or 48 hours after the Stanley Cup Finals for arbitration in lieu of qualifying offers, or (b) 24 hours after the player-elected deadline passes.

Miscellaneous

Teams can trade players with pending arbitrations up until the hearing. Teams and players can also come to a contractual agreement. Because of the unpredictability mentioned above, players and teams rarely go to hearing—most cases settle.

Part Two will address the arbitration Process, and Part Three will address the arbitration decision.