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Mutual Terminations And Their Value To Players

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Over the last three seasons in particular, we’ve seen a number of so-called “mutual terminations”. In fact, we’ve seen more mutual terminations over this period than buyouts. They are just as they sound – when a player and team decide their prior arrangement is no longer agreeable, the teams cut ties entirely. The benefit for the team is that the cap hit of the player is cancelled out entirely. The benefit for the player is that they then have the opportunity to seek employment with a different franchise or a different league. Unfortunately for players, such an agreement may not be totally in their favor.

In the 2016-17 season, there were exactly 10 mutual terminations. Most of them flew under the radar, even for the most avid of hockey fans. The players concerned were David Rundblad (Chicago), Ben Johnson (New Jersey), Mason Raymond (Anaheim), Calle Andersson (New York Rangers), Nicklas Grossmann (Calgary), Axel Blomqvist (Winnipeg), Matt Carle (Nashville), Matia Marcantuoni (Arizona), Gregory Campbell (Columbus), and Jonathan-Ismael Diaby (Nashville). Not a single one of these players competed in another NHL game last season. That’s a success rate of exactly 0% on the player end. Regardless of one’s opinions of these particular players’ hockey abilities, the likelihood of them seeing game action prior to termination was much higher. (It should be noted that Carle announced his retirement, while Johnson was incarcerated, so it’s more like 0-for-8)

Rundblad was forced to return to the Swiss-A League, where he found moderate success with Zurich HC. Andersson also made a return appearance in the Swiss League, playing 26 games as a depth forward. Grossman played 28 games in the Swedish Hockey League with the lowly Orebro, while Blomqvist played only 7 contests for the SHL’s Sodertalje. Campbell, luckily, was employed by the Jackets as a player development coach. Raymond was an interesting case, as he refused to report to the San Diego Gulls due to family issues, which made the arrangement less “mutual” than the others. He signed a contract with SC Bern in June.

Each of these players struggled to find meaningful employment elsewhere while two didn’t find any whatsoever (Marcantuoni & Diaby). It’s understandable as to why a player would want to stay in game action, considering that every player subject to mutual termination is necessarily under the age of 35. Maintaining the physical standards of a pro hockey player is difficult, and being benched for the majority of a season can be crippling to future success. Still, there are solid hockey players on this list who saw marginal benefits from negating the remainder of their contracts. Seven contests for Sodertalje doesn’t really qualify as meaningful. And the story from past seasons is much the same. If you look through the 2015-16 list, most are essentially out of hockey at this point. None have played over 40 contests in a season for a serious foreign league outside of Petr Zamorsky for the SHL. Most terminated players don’t even see over 20 games total after this arrangement.

In the negotiations for a new CBA, this sort of maneuvering might become an issue of contention. Management loves this loophole, as it allows cap and total contract space with no repercussions to the organization. Still, there is an element of strong-arming to this arrangement, one in which the player rarely, if ever, comes out on top. Unless the player has a prior arrangement already in place, it’s a risky proposition. It will be interesting to see how often this strategy will be utilized in 2017-18.

Making Your Case At An Arbitration Hearing

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With the salary arbitration figures for Tomas Tatar and Colton Parayko leaking today, it is worthwhile to take a look at what actually goes on at an arbitration hearing. Salary arbitration determines a player’s salary through a hearing governed by a third-party arbitrator. The arbitrator takes all the permissible evidence into account in deciding how much a player should be paid per year. This section outlines three key elements of that process: term, permissible evidence, and the decision.

Term

The party being brought to salary arbitration chooses whether the decision is for one or two years. If a team chooses, however, they are restricted to one year if the player is eligible for unrestricted free agent the following year.

Evidence

Parties can present witnesses, affidavits (sworn written testimony), documents, statistics, and any other relevant evidence during the hearing, subject to certain restrictions (see more below). The CBA suggests the following preferred evidence:

  • the player’s overall performance in previous seasons;
  • number of games played in context of injuries or illnesses (or lack thereof);
  • length of service in the league or with the team;
  • how much a player contributed to the success/failure of his team last season;
  • special qualities of leadership or public appeal relevant to his team responsibilities (i.e. the intangibles).
  • performance of players considered comparable to the player in question by either party; or
  • compensation of players considered comparable to the player in question by either party.

As stated above, this list is subject to certain restrictions.  The CBA prohibits parties from introducing or using the following:

  • any contract signed outside restricted free agency, including one signed after a team exercises a walk-away right;
  • any contract of a player not considered a comparable by either party;
  • any contract otherwise permissible that is signed less than three hours before the hearing starts.
  • qualifying offers;
  • the negotiation history between the parties, including any offers made;
  • testimonials, videotapes, newspaper columns, press game reports, or similar materials;
  • references to walk-away rights;
  • any award issued by an arbitrator that preceded a team exercising its walk-away rights;
  • a team or NHL’s financial condition;
  • a team’s salary cap (or floor) situation;
  • any salary arbitration award issued in ’05-’06; or
  • compensation information for salary arbitration awards issued before July 22nd 2005.

There are three main takeaways from the evidentiary rules. One, the arbitrator’s decision is based largely on a player’s stats and intangibles, and the compensation received by players with similar stats and intangibles. Two, visual evidence such as highlight reels and game tape do not factor in to the arbitrator’s decision. This makes any determination strictly fact-based. Finally, if, during a players hearing, a comparable player signs an otherwise admissible contract, that contract cannot be used as evidence by either party.

Decision

The arbitrator’s decision comes within 48 hours after the hearing closes. The decision states:

  • the contract term (one or two years as mentioned above);
  • NHL salary to be paid by the team for that term;
  • whether it is a two-way contract, and how much the player is paid in the AHL; and
  • a statement explaining the decision.

Walk Away Rights

A team may reject an arbitration decision in a player-elected salary arbitration if the award is $3.9MM or more per year. That threshold increases by the same percentage rate that the average league salary increases.

A team does not have unlimited walk away rights. Rather, the number of times a team can reject a decision is tied to the number of decisions issued. A team facing up to two decisions has one walk away right. A team facing three of four decisions has two walk away rights. Finally, a team facing five decisions has three walk away rights.

The consequences of rejecting a decision depends on whether the club elected a one or two year term. If the decision is for a one year term, the player immediately becomes an unrestricted free agent. If the decision is for a two year term, the player and team enter into a one year contract for the salary awarded. The player becomes an unrestricted free agent at the end of that year.

Who’s Playing On Another Team’s Dime?

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The most recent CBA introduced retained salary transactions—trades where a team trade a player but agree to pay a percentage of his salary. This is ideal when a team wants a player but will have trouble fitting him in under the cap. The ability to retain salary comes with restrictions, however, so let’s briefly look at how retained salary transactions work before looking at which players are subject to them.

  1. A team can retain up to 50% of a player’s average salary (including bonuses);
  2. The retained salary amount is uniform over the full length of the player’s contract;
  3. A team can retain up to three players’ salary at one time;
  4. A team cannot have more than 15% of the salary cap devoted to retained salary;
  5. A team cannot retain salary on a player who is already subject to two current retained salary transactions;
  6. If a team acquires a player with retained salary, then trades him while also retaining salary, the second retained salary agreement cannot modify the initial retained salary agreement;
  7. Teams cannot reacquire a player within a year of trading him if it agreed to retain salary in the initial transaction (unless the player’s contract terminated);
  8. Retained salary obligations apply to any cap advantage recapture amounts; and
  9. Retained salary obligations still apply if a player is bought out or loaned to an AHL club. The NHL team would pay a portion of the player’s AHL salary (if applicable).

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NHL Salary Cap Raised To $75 Million

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The NHL’s salary cap ceiling has been raised by $2 MM to $75 MM, according to NBC and various sources. The NHLPA voted on this decision back on June 16th according to TSN’s Pierre Lebrun, and the results of that vote resulted in next season’s total. The floor (or minimum) will be set at $55.4 MM.

The increase is slightly less than what many fans had hoped for, though the figure had been floated around for quite some time. This is only a 2.6% increase in the ceiling, which is less than the option the NHLPA could have opted for – an automatic 5% yearly increase. The stagnation in the cap overall is concerning to many teams who are very near the cap and/or have players due raises in the near future.

Many teams have been operating under the assumption that the ceiling would be around this number, so it shouldn’t affect any single organization too greatly. The team that will be most impacted is the Chicago Blackhawks, who are already over that ceiling. Teams such as the Washington Capitals and Tampa Bay Lightning highlight a group that will struggle to get a compliant roster in the near future with such little room to maneuver.

Latest On Salary Cap Limits For 2017-18

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There has been much speculation over the past few months over where exactly the upper limit of the NHL salary cap will land for the 2017-18 season. Some have claimed it will remain flat, but a new report from James Mirtle of The Athletic (subscription required) refutes that. Because of the revenue that the league has generated over the past year, Mirtle writes:

It’s important to note here that there’s actually no scenario where the cap goes down or stays flat at $73-million.

Mirtle’s sources tell him that the most likely number for the cap will be $75MM, a relatively low bump but one that could be crucial to teams already pressed to the limit. The Chicago Blackhawks for example are already projected to be over the cap by more than $4MM for next season, while others like the Ducks, Red Wings and Kings could all desperately use a few extra million to work with. It also means that the cap floor is likely to increase at least slightly, meaning teams like Carolina and Arizona, currently projected for less than the 2016-17 floor, will need to do some work to increase their payroll for next season.

The decision on the upper limit comes down to whether the NHLPA exercises its full 5% escalator as it has traditionally done. This year, as Mirtle writes, the players’ union is considering not pushing it up as far as possible because of the escrow issue that has been brought up several times. Not only is the amount of escrow players are losing off each paycheck determining this specific decision, but negotiations on a whole between the two sides when it comes to the next CBA. It has been widely speculated that the players may use their 2019 termination deadline to opt-out of the current agreement in 2020, which could potentially cause another work stoppage for the league should a new deal not be ironed out.

Either way, the expected increase in the salary cap for next season will come as a breath of fresh air for several teams hoping to make an impact in free agency this summer, and for those with several high-priced restricted free agents to sign this summer (see: Tampa Bay, Nashville). For other clubs, like Toronto and Edmonton who will have to pay their young talent over the next few seasons, any increase above $75MM would also be welcome. According to Mirtle, should the NHLPA use the entire 5% the cap would sit somewhere around $77.5MM, a large increase from last season.

Snapshots: CBA, Getzlaf, Ekman-Larsson, De La Rose

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While the expiration of the current Collective Bargaining Agreement is still several years away (the earliest expiration date is September 15, 2020), NHL Deputy Commissioner Bill Daly has already brought up one element that the owners will be looking to tweak.  Speaking at the Sports Lawyers Association Annual Conference, Daly told the attendees, including Liz Mullen of the Sports Business Journal (Twitter links), that they will be looking to redefine the definition of Hockey Related Revenues, more commonly referred to as HRR, which set the salary cap and floor.  He clarified that they want to make definitions more precise and that it wouldn’t necessarily mean that they would be looking to exclude (or include) certain income as part of HRR.

On the union side, Steve Fehr, special counsel for the NHLPA, noted to Mullen (Twitter link) and others in attendance that the biggest issues they intend to look at are escrow and cap management issues.  Escrow has risen sharply since being instituted to the point where some expect that the players won’t exercise their cap inflator next month in an effort to reduce the percentage that is withheld off of each pay.

CBA talks are still probably another couple of years away but we’re already starting to hear what some of the key points will be when discussions get underway.

Elsewhere around the hockey world:

  • Ducks center Ryan Getzlaf has been fined $10K for a homophobic remark uttered during Thursday’s Game Four against Nashville, the league announced. The fine is the maximum allowed under the CBA.
  • There will be two Ekman-Larssons in the Coyotes organization next season. Arizona’s AHL affiliate in Tuscon announced the signing of defenseman Kevin Ekman-Larsson to a one year, minor league contract.  He is the younger brother of Coyotes blueliner Oliver Ekman-Larsson.  The 22 year old has spent the past two seasons with Tingsryds AIF of the Swedish Allsvenskan.
  • Canadiens center prospect Jacob de la Rose is drawing interest from the SHL, he told Värmlands Folkblad’s Johan Ekberg (link in Swedish). However, the pending RFA noted that his priority is to remain playing in North America and that talks have already started with Montreal on a new contract.  He played in just nine NHL games this season, the fewest in his three years with the Canadiens.

Pending Restricted Free Agents And Offer Sheets

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It’s been four years since the last offer sheet in the NHL, but that hasn’t stopped the speculation surrounding them.

The past two years leave little clue to what could happen this summer. Two summers ago saw several major moves made to avoid the threat of an offer sheet, then last summer saw seven high-end players go the entire summer without a new contract with no whisper of an offer sheet.

Leon Draisaitl, David Pastrnak, Mikael Granlund, Ryan Johansen, Viktor Arvidsson, Evegeni Kuznetsov, Alexander Wennberg, and 23 more 30-plus point scorers are restricted free agents this summer. Those seven names all scored more than 59 points this past season, and would be plug-and-play options on most NHL clubs. And while the official compensation has not been reported for the upcoming season, last season it broke down this way (per Elliott Friedman):

Less than $1.23MM No compensation
$1.23MM to $1.87MM Third-round pick
$1.87MM to $3.75MM Second-round pick
$3.75MM to $5.63MM First and third-round picks
$5.63MM to $7.51MM First, second and third-round picks
$7.51MM to $9.38MM Two firsts, a second and third-round picks
Over $9.38MM Four first-round picks

The price to acquire a marquee name would realistically be two first-round picks, a second, and a third. Arguably, none of those players are in line to make more than $7.5MM on their new deals with their current clubs, but offer sheets need to be high enough to discourage the player’s club from matching, leading to overpaying players. It’s for that reason that offer sheets are so rare; no GM can afford to harm their team’s reputation among their peers (or take part in a barn fight). Additionally, offer sheets raise salaries and no team owner wants to be seen as responsible in the next CBA talks. Back in the mid-90s, Colorado Avalanche superstar Joe Sakic signed an offer sheet with the New York Rangers that raised the standard salary for NHL stars from $3MM to $7MM.

On TSN 690 in Montreal, where fans and media are speculating about a potential offer sheet for the Oilers’ big center Draisaitl, TSN Insider Darren Dreger shot down rumors. Dreger believes the Oilers know what it will likely take to sign Draisaitl and 2018-RFA Connor McDavid and are willing to sacrifice players like Jordan Eberle and perhaps even Ryan Nugent-Hopkins in order to keep their two young stars together. As mentioned above, offer sheets harm working relationships and with other big names becoming available from Edmonton for cap purposes in the coming few years, it doesn’t make sense to rule one’s team out of those discussions.

Realistically, the threat of an offer sheet is a more effective way to acquire a player. In 2015, the Bruins and Blackhawks traded Dougie Hamilton and Brandon Saad quickly to avoid being hit with an offer sheet. In the Blackhawks’ case, losing Saad for draft picks would have lead to future trades to replace him. Acquiring actual NHL players and prospects (like Artem Anisimov and Marko Dano) is more valuable than the risk associated with draft picks because the GM knows exactly what he’s getting back.

While fans and media love to speculate about offer sheets, the combination of losing several high draft picks, CBA issues, and the guarantee of harming the franchise’s reputation, it’s understandable why offer sheets are close to extinct.

2020 World Cup Tied To New CBA

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While the 2016 World Cup of Hockey wasn’t as successful as the NHL and NHLPA had hoped, it was a promising first step for a tournament that had been dormant since 2004. Now according to Gord Miller of TSN, who is commentating the IIHF World Championship currently, the 2020 tournament may be in jeopardy.

Miller tweets that the World Cup is “unlikely” should the NHLPA opt out of the current CBA—which they can do in September 2019—and don’t have a new agreement in place in time for the 2020-21 season. The 2004 tournament was followed by a lockout, a situation that will not be allowed to happen again.

There has been speculation for months (if not years) that the NHLPA will utilize their opt-out clause due to the growing concern over escrow and the NHL’s stance on the Olympics. When the NHL tried to bargain a CBA extension for Olympic participation, it was met with a resounding rejection from the players. Executive Director Donald Fehr at the time told the Canadian Press that there was “no appetite among players to extend the agreement.”

As Pierre LeBrun of TSN clarifies, neither side wants to hold the World Cup before they “turn the lights off” on a season, and have been in agreement on that part since the September tournament. It’s interesting though, that not only will the next negotiations impact league play but international competition as well. The 2019 opt-out dates—September 1st, 2019 for the league, and September 19th, 2019 for the players—will some of the most important since the last lockout to determine the future of the league.

Kovalchuk Flirting With Return?

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Per Elliotte Friedman, Ilya Kovalchuk is considering his possible return to the NHL. The star Russian winger left New Jersey following the shortened 2012-13 season, officially retiring from the NHL. His contract had 12 years and $77 MM remaining, ending a contract which had caused a massive headache for both the league and the Devils franchise. The initial Kovalchuk contract was determined to be cap-circumventing, one of many deals prior to the new CBA that placed extended years onto a player’s contract in order to bring the average annual cap hit down for the team. The re-organized deal was largely guilty of the same machinations, although it was accepted by league – but not before the Devils franchise was punished by losing a first and third (the former being eventually re-awarded) round draft pick. When Kovalchuk decided to “retire” merely a year after New Jersey had made the Stanley Cup Final, the contract was essentially cancelled. This was beneficial to both Kovalchuk (who looked to earn more in the KHL) and the Devils ownership (who were struggling financially), although the move was unorthodox and generally maligned. In the post-Kovalchuk era, New Jersey’s team identity was essentially lost, accompanied by the previous loss of Zach Parise and subsequent departure of GM Lou Lamoriello.

If Kovalchuk were to return, the stigma of his faux retirement will likely linger in the minds of NHL owners. If you sign the forward to an extended contract, what guarantee is there that he will honor it? The KHL will always be looming over financial negotiations, an extra competing factor general managers would be happy to do without. Then there is the matter of Kovalchuk’s age – he is now 34, and not quite in the prime  years he was when he left North America. In his last (nearly) full season, the winger amassed a ridiculous 37 goals and 43 assists – but that was 5 seasons ago.

Nonetheless, Kovalchuk has proven overseas that he is still a very effective, dynamic star. This past season with SKA St. Petersburg, he collected 32 goals and 46 assists in only 60 games, helping to lead the squad to a Gagarin Cup title. His speed has not significantly decreased, and he looks just as deadly leading a forecheck or driving the net as he did in the States. Kovalchuk, a former Atlanta Thrasher star, had been criticized early in his career for his one-dimensional offensive play. But his greater focus on the defensive aspects of his game helped carry his underdog Devils to the Finals shortly before his departure. Although the KHL admittedly plays a game tailored more to goal-scoring and creativity, Kovalchuk has seemingly maintained some of those good two-way habits.

Regardless of your feelings on Kovalchuk as a player, he would instantaneously be in the conversation for top-5 winger in the league were he to return at anywhere near the same level. Long-term contracts may prove to be a sticking point for owners, but this is the sort of player that could inspire a sweepstakes of bidding and negotiations. He is still a game-changer with incredible offensive flair and consistent production – nearly every general manager would be wise to consider making an inquiry.

Morning Notes: Ritchie, Bjork, Lockout

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The Anaheim Ducks may lose a young forward for the start of their playoff series, as Nick Ritchie has a hearing with the Department of Player Safety this afternoon to determine his fate. Ritchie attacked Michal Rozsival in their game last night after the Blackhawks’ defender sent Corey Perry to the ice. Whether the league gives him just the one remaining game in the regular season, or a match in the playoffs is yet to be seen.

Recently, Micheal Haley received just a one-game ban for a similar incident though he actually struck Calle Jarnkrok when the Predators forward wasn’t even looking. In this instance, Rozsival is looking straight at Ritchie, despite not protecting himself. The Ducks forward does not have a history of supplemental discipline with the league, though was suspended multiple times during his stint in junior hockey with the Peterborough Petes. Hopefully for Ducks fans, the league hands out the same punishment it gave Haley.

  • Fluto Shinzawa of the Boston Globe opines that the NHL’s Olympic decision could have an effect on whether or not the team can get Anders Bjork to leave school early now that Notre Dame’s dream season has come to an end. The team’s leading scorer could go back to school for one year, likely play for Team USA in the Olympics—he was born in Wisconsin—and then become an unrestricted free agent next August and decide on his NHL future. For what it’s worth, Bjork told Shinzawa’s colleague at the Globe John Connolly yesterday that he hadn’t really thought about what to do after this season yet, as he was still focused on the NCAA tournament. Notre Dame was eliminated last night at the hands of the powerhouse University of Denver 6-1.
  • Jonathan Toews spoke with Stephen Whyno of the Associated Press for an excellent piece surrounding the possibility of another lockout looming after the tension of the Olympic decision. The NHL and NHLPA are clearly not on the same page at this point, and Toews wouldn’t be surprised to see another work stoppage. September 15th of 2019 is the month that should be circled on all of our calandars, as that is when the players could opt out of the current agreement and terminate the current CBA. The league has an opt out two weeks earlier, but with them offering the Olympics for an extension, it would be unlikely to see them use the clause.

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