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NHL To Change Qualifying Offer Rules

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Bridge contracts have often been back-loaded in the past to ensure a higher starting point for a qualifying offer.  For example, a player making $2.5MM in year one and $3MM in year two would have a qualifying offer of $3MM.

That element was used more liberally last summer with several players taking significantly lower payments up front to crank up the salary in the final year to yield a higher qualifier down the road.  San Jose’s Timo Meier is the most notable of those as he has a $6MM AAV on his four-year deal but a $10MM salary in the final season that becomes the required offer to retain his services (barring an early extension beforehand).

That caught the attention of the league and they are changing the rule as a result.  Thomas Drance of The Athletic reports (subscription required) that the Memorandum of Understanding for the CBA that is currently working its way through the ratification process includes a tweak to the qualifying offer rules.  Instead of being based on the salary in the final year of the contract, it will now be based on the lower of the salary of the final season of the deal or 120% of the AAV.  For Meier’s situation, had his deal been signed under this new policy, his qualifying offer would be $7.2MM (120% of $6MM) instead of $10MM, the final-season salary. However, this does not overwrite the qualifying offer rules on current contracts so for players like Meier, the old rule will still be in place.

It may seem like a small move on the surface but this has the potential to really affect short-term deals being signed off of entry-level contracts.  Given the decreasing escrow percentages in the CBA, players are likely going to show more interest in back-loading deals.  Under the old system, that means even more players with inflated qualifying offers and with the salary cap progression expected to slow for a few years, this had the potential to do some damage to a team’s cap structure down the road.

Now, players will still have the ability to back-load contracts to shield themselves as best as possible in the new escrow structure but teams will have a bit more protection from a salary cap standpoint if 120% of the AAV checks in lower than the salary in the last year.  It also may result in an increase in short-term bridge deals rather than the three-year and four-year pacts some have chosen to sign in recent years as well as without the buffer of the much higher qualifying offer at the end, the temptation to go with those should be lessened.  The change itself is seemingly rather small in nature (from salary to AAV percentage in only some cases) but it could certainly shift how things are done in restricted free agency as soon as this offseason.

New CBA Eliminates Free Agent Interview Period

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Over the past several days, news has been trickling out about some of the new elements of the CBA.  TSN’s Frank Seravalli was the first to report (Twitter link) that there is a big change coming to free agency as the interview period has been removed.  Now, teams won’t legally be permitted to talk to players until the opening of free agency.  While that had previously been speculated to be November 1st, that’s now projected to be October 9th as per the tentative critical dates calendar.  Having said that, that seems likely to be pushed back a little bit as some of the other target dates in there (such as camps opening July 10th) have already been delayed slightly; camps won’t open now until the 13th.

This will once again fundamentally shift the free agent landscape.  The interview window was put in during the last CBA to give teams a chance to speak to players in advance to gauge their interest in joining their franchise.  Of course, that’s not exactly how it played out as in recent years, as deals in principle were reported a couple of days before July 1st with quite a few others getting leaked in the hours leading up to the opening of the market.

With the window not being used properly, the NHL and NHLPA have decided to go back to the old way which is no permissible contact until the market officially opens up.  That will present some challenges as the market will likely go back to being one where teams make offers that expire in a very limited timeframe as they need to know whether or not they have to pivot to alternative options.

Of course, this upcoming UFA period – be it in October or early November – is going to be a rather unique one.  The freezing of the salary cap at $81.5MM is going to handcuff quite a few teams and there were already some that were pegged to be having some cap trouble anyway.  Accordingly, this is likely to deflate the market somewhat and adding that to eliminating any legal contact with free agents beforehand is going to create a very unique marketplace a couple of months from now.

NHL Announces Tentative Key Dates, Notable CBA Changes

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The NHL and NHLPA today released the details on their Memorandum of Understanding regarding the agreed-upon extension of the Collective Bargaining Agreement. The memorandum, as detailed by TSN’s Frank Seravalli, reveals a number of potential key dates for the adjusted 2020 postseason and 2020-21 off-season and regular season. The dates are as follows:

July 10 – Beginning of training camp

July 24 – Travel to hub cities

July 25 – Beginning of exhibition games

July 31 – Beginning of qualifying round

Aug. 9 – Beginning of Stanley Cup Playoffs

Aug. 23 – Beginning of Second Round

Sep. 6 – Beginning of Conference Finals

Sep. 20 – Beginning of Stanley Cup Final

Oct. 2 – Last possible day of Stanley Cup Final

Oct. 6 – 2020 NHL Entry Draft

Oct. 9 – Opening of free agency

Nov. 17 – Beginning of training camp for 2020-21 season

Dec. 1 – Beginning of 2020-21 regular season

Not only are these dates of course pending a vote to ratify the CBA extension by the players, but Seravalli also notes that they are subject to change based on logistical delays. This has in fact already occurred, as training camps are listed as opening on Friday, when in reality they will open on Monday, July 13. Regardless, the NHL clearly has a plan to start play within a month and wrap the expanded postseason by early October. This would set the league up to take nearly two months off for the off-season but still begin the next season less than two months later than usual.

Seravalli also noted that there are some proration rules in place with regards to eligibility for player bonuses for this season but that does not extend to trades that were made with conditions for players reaching certain statistical thresholds, such as the James Neal–Milan Lucic trade.  The league will instead allow teams to make arguments and then potentially have it decided by an arbitrator.

Other key CBA notes revealed by Seravalli include:

  • An increase in maximum entry-level contract salaries from the current $925K to $950K from 2022-2024, $975K from 2024 to 2026, and finally $1MM beginning in 2026-27.
  • An increase in the minimum salary from the current $700K to $750K from 2021-2023 and $775K from 2023-2026
  • An agreement that the NHL and NHLPA will discuss abandoning the Return To Play plan if players opting-out on a league-wide or club-wide basis “materially impacts the integrity” of the postseason

Snapshots: NHLPA Executive Board Approves CBA, DEL, LeBlanc, Stutzle

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The NHL and NHLPA have crossed another hurdle to ratifying their CBA extension, the NHLPA announced. The NHL’s Executive Board has approved of the extended CBA and sent it to the NHLPA membership for a vote. The full body of NHL players still needs to cast their ballots, which is expected to take place sometime over the next 48 hours. Only a simple majority is needed to pass, per Sportsnet’s Elliotte Friedman. As we await the final vote, let’s check-in elsewhere around the NHL…

  • Former Chicago Blackhawks prospect Drew LeBlanc signed a two-year extension to stay with Augsburger Panther of the Deutsche Eishockey Liga, per NHL.com’s Brandon Cain. LeBlanc appeared in two games with the Blackhawks in 2012-2013 and last appeared stateside with the AHL’s Ice Hogs in 2014-2015. He’s carved out a role in Germany over the last five years, scoring exactly 11 goals in the last four. He posted a career-high 49 points last season for Augsburger.
  • Speaking of the DEL, top draft prospect Tim Stutzle put up 34 points (7 goals, 27 assists) for Adler Mannheim last season, a strong enough showing to put him in the running to become the highest-drafted German prospect ever (Leon Draisaitl went number 3 overall to the Oilers in 2014). As a consensus top-5 prospect, Stutzle – who has drawn comparisons to Patrick Kane for his offensive creativity – could go as high as number two to the Los Angeles Kings, who may understand Stutzle’s path better than most, writes The Athletic’s Lisa Dillman.
  • Kings’ assistant coach Marco Sturm took a similar path on his way to the San Jose Sharks in 1997-1998. Sturm ought to be able to help connect the Kings’ to whatever intel they need on Stutzle. Most pundits suggest the Kings’ choice will come down to Stutzle or Quinton Byfield, though Jamie Drysdale could be in the running as well, which Dillman wrote about in-depth here.

 

Timelines For Contracts To Be Signed

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With the CBA being agreed upon in principle, we now have a better idea of when certain contracts will be allowed to be signed again.  Here is an overview of the various timelines and scenarios.

Yesterday, it became official that players that were unsigned as of the shutdown in the schedule will not be allowed to play for the rest of this season, even if they were on a reserve list beforehand.  But there will be a very narrow window where those players will still be allowed to sign contracts for this season.

Sportsnet’s Elliotte Friedman reports (Twitter link) that if and when the CBA is ratified by the NHLPA, teams will have a 53-hour window running between 11 AM CT of the third day following the ratification of the agreement through 4 PM CST on the fifth day to sign those players to a current-year deal.  Signing bonuses will not be permitted and since no physical payment can be made, those entry-level deals can be structured with a base salary of the league minimum of $700K.  In doing so, the cap hit for any subsequent year will be lowered while the player still gets to his second contract earlier.  CapFriendly adds (via Twitter) that players that sign under this avenue will not accrue a year of professional experience and thus will be classified as 10.2.c players (ineligible for an offer sheet) when their deal expires.

As for players looking to head overseas, Friedman adds in a separate tweet that any player not participating in the resumption of play in August (due to elimination or non-inclusion on the playoff roster) will be eligible to sign a contract in another league seven days after the CBA has been ratified.  Those that opt out of playing next month can also do so but unlike the other players, they will not be eligible to sign an NHL for 2020-21 if they go that route.  For any player who is looking to go overseas but will be playing when games resume, they will be eligible to sign outside of North America two days after their team is eliminated, adds Sportsnet’s Chris Johnston (Twitter link).

Then there are those that will be entering the final year of their contracts and normally would be eligible to sign an extension by this time as we normally would be in the next NHL calendar year by now.  However, the 2020-21 league year likely won’t begin until November now.  However, Friedman reports (via Twitter) that anyone that is about to enter the final year of their contract can sign an extension three days after ratification instead of having to wait until November.  Additionally, players wanting to sign 2020-21 contracts can do so three days after the agreement is finalized as well.

NHL Adjusts Recapture Penalties

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With the NHL set to ratify a new extension for the Collective Bargaining Agreement, labor peace will be guaranteed for at least the next six years. That comes as very welcome news for hockey fans that have been waiting to see their favorite players back on the ice for several months. With any CBA negotiation, however, small changes will be made that benefit one side or the other—the NHL and NHLPA.

One of those changes, as reported by Michael Russo of The Athletic and explained by Frank Seravalli in his latest piece for TSN, is to the rules governing recapture penalties. Previously, a complicated formula would force substantial cap penalties onto teams if a player with a front-loaded contract retired before its expiration. Now, that penalty cannot eclipse the original contract’s cap hit in a single year.

So far only Roberto Luongo has created such penalties with his retirement last year.

When Luongo hung up his pads, the Vancouver Canucks and Florida Panthers were each forced to deal with penalties against their salary cap, with the former suffering the bigger charge. The Canucks have a $3.033MM penalty through the 2021-22 season and unfortunately will not receive any relief from this rule change given Luongo’s cap hit was $5.33MM.

The biggest winner (if you can even call it that) out of this new change may be the Nashville Predators, who were in danger of a potential ~$24.6MM cap charge if Shea Weber had retired just before the 2025-26 season. That number will now not eclipse the $7.86MM cap hit he carries, though that means it would be spread out over several years as the entire penalty must still be paid eventually.

The Minnesota Wild are another team who could be affected, given the front-loaded nature of contracts signed by Ryan Suter and Zach Parise in 2012. Those deals don’t expire until 2025 but will have paid out $88MM of the initial $98MM guarantee by the end of next season.

Seravalli has a comprehensive list of the other changes, but they include an increase to minimum salaries and a rule that no-trade clauses will remain in contracts even if the player is traded before the clause kicks in. Previously, the acquiring team was given the option to honor them—something the Predators chose not to do when they acquired P.K. Subban in 2016, days before the clause kicked in.

NHL, NHLPA Reach CBA Extension

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The NHL and NHLPA have a tentative agreement in place for the memorandum of understanding on the CBA, per TSN’s Bob McKenzie. The NHL and NHLPA have both announced the deal.

The owners and the players must ratify the agreement with a vote, but this is definitely trending in a positive direction. Ratification could happen as soon as the end of this week, but there is no set deadline, per McKenzie. Per the agreement, Phase 3 will begin as planned on July 13, followed by travel to hub cities on July 26 and the beginning of play on August 1.

The full press release from the NHLPA reads as follows: “The National Hockey League (NHL) and National Hockey League Players’ Association (NHLPA) have reached a tentative agreement on a Return to Play Plan and Memorandum of Understanding (MOU) that adds an additional four years to the term of the current Collective Bargaining Agreement and includes transition rules and a new critical dates calendar. As part of the tentative agreement, the following dates have been established: July 13  start of formal training camps; July 26  Clubs travel to hub cities; August 1  start of Qualifying Round. The tentative agreement is now subject to approval by the NHL’s Board of Governors, as well as the NHLPA’s Executive Board followed by the full NHLPA membership. The respective review and approval processes will take place over the next few days and there will be no further comment until those processes are completed.”

Given the troubled history between these two sides, that they could come to an agreement without a work stoppage under these rushed and dynamic conditions speaks volumes. The extended CBA will now expire on September 15, 2026, per NHL.com.  There are still plenty of hurdles ahead before August 1, but for now, it appears that the NHL will return in less than a month’s time.

Latest On Impact Of Coronavirus On NHL, CBA Talks

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With the NHL’s report today announcing 23 confirmed cases of coronavirus out of the 396 players in camp, data points are emerging that might reveal the NHL’s risk tolerance as it returns to play. Still, we remain in the dark about what it would take to shut the whole thing down, per the Athletic’s Justin Bourne. Presumably, so long as the integrity of the competition remains intact, games will go on – the adjudication of that line provides a ton of interpretability, however. It’s rote for teams to lose a player or two before the playoffs due to injury, but there would never be a threshold for cancellation prior to coronavirus. Terms of a shutdown are said to have been defined in the recent agreement between the NHL and NHLPA, even if we don’t yet know its definition. More from Bourne and elsewhere around the NHL:

  • Bourne adds an interesting wrinkle, noting that with so many players from the Toronto area, the threat of breaking the bubble is greater in Toronto where family and friends are the temptations versus the alluring entertainment options of, say, Vegas. It’s nice to think that all players and staff will adhere to the strict rules of the hub quarantine, it’s also likely unrealistic.
  • Bourne also touches on some details of the proposed CBA. With the help of The Athletic’s Jonathan Willis, Bourne notes that entry-level contracts are expected to see a bump in pay, a surprising evolution that obviously benefits young players in a strictly financial sense. But the pay increase may also incentivize teams to prioritize veterans on minimum deals over a max ELC prospect. The balance between paying young players an acceptable wage and washing out the market for minimum-wage vets is a complicated relationship in all sports, but if the proposed increase holds, NHL clubs could find increased value in a minimum-price veteran.
  • NHL Players have until next Tuesday, July 13th (the start of Phase 3) to opt-out of the 24-team playoff, veteran NHL writer John Shannon reminds us. A number of players in the NBA and MLB have chosen to opt-out of the season, but we haven’t heard as much of those rumblings from the NHL. It’s been presupposed that the culture of toughness would attach a stigma to players electing not to play, but we should find out for sure within the next week.
  • Shannon also notes that Oiler’s owner Daryl Katz played a key role in moving the NHL’s hub location from Las Vegas to Edmonton (via Twitter). Katz spoke to the NHL Board about the safety benefits of hosting play in Edmonton, and he was apparently convincing. The surging number of coronavirus cases in Nevada surely played a role as well.

NHL, NHLPA Hoping To Finalize CBA, Return To Play Agreement Saturday

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The NHL and NHLPA are hoping that they will finalize a six-year CBA agreement today along with a tentative agreement on Phase 3/4 protocols as well as a critical calendar, according to TSN’s Bob McKenzie. Assuming it’s both finalized and ratified, it should provide the league some long-term economic stability with all the issues that have surrounded the league since the COVID-19 pandemic began.

Assuming the new CBA is agreed on today, it would need to be ratified by the Board of Governors and the full membership of the NHLPA, where the players would get 72 hours, starting Monday.

While some details were leaked yesterday, TSN’s Frank Severalli notes a few more additions to return-to-play discussions as well as other CBA changes:

  • Dates for Phase 3/4 will be finalized with trainings camps scheduled to open on July 13. Teams will then be expected to report to their hub cities in either Toronto or Edmonton by July 26 and games expected to begin on Aug. 1. Assuming there are no setbacks, the Stanley Cup should be awarded in the first week of October. The second phase of the draft lottery is expected to be held on Aug. 10 immediately after the play-in series is over. The NHL draft is expected to be in mid-October, with free agency starting on Nov. 1.
  • Players can opt out of the 24-team tournament for any reason without penalty and will receive a playoff share regardless. Bonus pool money has also doubled with players who lose in the play-in round receiving $20K, while the Stanley Cup winners would receive $240K.
  • As reported earlier, Olympic participation for NHL players will be included for the 2022 Beijing Olympics as well as the 2026 Milan Olympics, pending negotiations with the IOC and IIHF.
  • There will be no changes to signing bonuses. It was believed the NHL was trying to limit signing bonuses in the next CBA to no more than 50 percent of the total contract, but this will not take place.
  • Players will now also be allowed to rehab from long-term injuries from any where they want, unless the team can prove it’s not possible from that location.
  • Teams will also no longer have to place players playing in Europe on waivers when they wish to return to the NHL. That was an issue back in 2013 for Ryan O’Reilly, who opted to play in the KHL while holding out for a new deal while with the Colorado Avalanche. The Calgary Flames signed him to an offer sheet. However, had Colorado opted not to match the offer, the Flames would have been forced to place him on waivers since he was playing overseas before he returned and likely would have lost him.

 

Snapshots: Contract Negotiating, Escrow, Second Draft Lottery

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Trying to negotiate a new contract in the looming new marketplace is going to be tough as the projected salary cap increases aren’t coming for a while like they used to.  Accordingly, how discussions for a new deal occur are likely to change as well.  Speaking with Postmedia’s Jim Matheson, agent Gerry Johansson discussed his approach towards how things may change for a while:

Right now, we’re just giving our players guidance that it could be a tough year. We’re telling them that this is the year to take a deal even if it’s not the one you might want. It’s like musical chairs. There are 100 players and only 75 chairs.

Johansson noted that he doesn’t have many notable players that are slated to become unrestricted free agents in November so his focus will be shifted towards working on extensions for clients like Anaheim’s Ryan Getzlaf and Montreal’s Brendan Gallagher who will be entering the final year of their contracts next season. PuckPedia has a full listing of Johansson’s client list.

Elsewhere around the hockey world:

  • The players have opted to put their final regular season pay into escrow, a decision that had seemed like the probable outcome for a while. Accordingly, the escrow percentage for the season jumped from 14% to 19.55%, notes Gavin Hockey Wealth (Twitter link).  If that seems high, keep in mind that the escrow percentage for the next couple of seasons appears to be slightly higher as the recent CBA talks have that pegged at 20% to help offset the expected drop in league revenues as a result of the pandemic.
  • It doesn’t appear as if we’ll be waiting too long after the completion of the play-in round to know who has the top pick in the 2020 NHL Entry Draft which is tentatively slated to occur sometime in mid-October. In the latest Insider Trading, TSN’s Bob McKenzie reports that the second draft lottery is likely to take place immediately following the conclusion of the best-of-five series which would be around August 10th or 11th.  The second lottery is required after the results of the first lottery revealed that one of the teams that loses in that round will get that top selection with each team having identical one-in-eight chances of winning.

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