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Early Notes: Offer Sheets, Bridge Deals, Matthews

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One of the most exciting and simultaneously disappointing parts of the current offseason structure is the offer sheet. While fans and media alike speculate on who will get one each year, it’s almost never done. Interestingly, now we have a former management voice also speaking up about how he’d like offer sheets to play a bigger part in the NHL summer. Frank Provenzano, a former assistant general manager with the Washington Capitals and Dallas Stars, is now a writer for The Athletic, and penned an article today looking at why teams don’t give out many offer sheets. In it he talks about how he used to try and get his team to use them:

When I was in charge of negotiating NHL contracts, I pushed to find offer sheet candidates EVERY summer. And yet I never made a single one. I can tell you first hand it wasn’t because of some fear of pissing off another GM. It was because the offer sheet lever, as it’s currently constructed, simply doesn’t work.

It’s a fascinating look behind the curtain of NHL front offices, as Provenzano explains why the current compensation structure doesn’t allow offer sheets to be signed very often. The long-standing belief that teams just didn’t want to incite a run on their own restricted free agents is challenged, and from first hand knowledge. It’s definitely a worthwhile read, as is so much coming out of the Athletic these days.

  • On the theme of contract structures, Puck Daddy’s Ryan Lambert examines bridge deals and their effect on eventual player salaries. Citing Ryan Johansen as the latest example, Lambert wonders why team’s aren’t more willing to “pay up” coming out of an entry-level contract instead of spending big on post-prime years. Johansen will be earning $8MM per year through his age-32 season, something that wouldn’t have happened had he signed a long-term deal in 2014 instead of a bridge deal. Interestingly, this is the approach the Oilers have taken with Connor McDavid, instead of perhaps saving some money on a shorter term deal that doesn’t buy out as many UFA years. Could it end up costing them when McDavid hits the open market at age-29?
  • Adam Kimelman of NHL.com caught up with Mike Babcock at the World Junior Summer Showcase, where the Toronto Maple Leafs coach is presumably scratching his hockey itch by watching some of the best young players in the world. The conversation turned to Auston Matthews, who Babcock believes can be even better this season. After scoring 40 goals and 69 points as a rookie and almost unanimously taking home the Calder trophy, Babcock thinks the improvements to his defensive game and pace of play will allow him to have the puck even more and dominate play. Matthews turns 20 in September, and will be a big part of any return to the playoffs for the Maple Leafs in 2017-18.
  • NBC has announced its nationally televised schedule for the upcoming season, which includes three games each from the aforementioned Matthews and McDavid. The first Vegas Golden Knights’ home game will also be on national television, when they face off against the Arizona Coyotes on October 10th.

East Notes: Kuznetsov, Spooner, Athanasiou, Melanson

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Last weekend, the Capitals wasted little time locking up center Evgeny Kuznetsov to an eight year, $62.4MM deal and flipped Marcus Johansson to New Jersey to free up some cap space.  Newsday’s Arthur Staple reports that part of the reason that the Kuznetsov contract came together so quickly was the potential for an offer sheet.  Although there’s no word on which team may potentially have been sniffing around, it’s still interesting that even the possibility of one impacted the timetable for Kuznetsov.

Other notes from around the league:

  • Bruins forward Ryan Spooner was among the players to file for arbitration earlier this week. He’s coming off a contract that had a cap hit of just $950K and despite a bit of a down season compared to 2015-16, he still should be in line for a notable raise.  CSN New England’s Joe Haggerty suggests that a one year deal between $2-3MM seems to be a likely outcome given his 39 point season.  Spooner has long been the subject of trade speculation and if he is still in play, it may be more wise for GM Don Sweeney to try to move him before the hearing comes up.
  • Although Detroit is likely to be right up near the upper limit when they reach a new deal with winger Tomas Tatar, they’re not likely to move their other restricted free agent of note in winger Andreas Athanasiou, notes MLive’s Ansar Khan. While the 22 year old was in and out of the doghouse at times, he still has a combination of speed and finishing ability that would be hard to give up on unless he was part of a package for a top pairing defenseman which is highly unlikely.  Khan adds that the lack of cap space the Red Wings will have also plays a factor here as even if they decided to look at moving Athanasiou, they’d be restricted to trying to match money which would basically limit them to players on or near their entry-level contract, prospects, or picks.
  • The Devils announced the hiring of Roland Melanson as their new goaltending coach, replacing Chris Terreri. Melanson has previously served in that role with Montreal and Vancouver and will be reunited with one of his former netminders with the Canucks in Cory Schneider;  he was Schneider’s coach for three seasons.  The team also noted that Terreri will remain with the organization in a yet-to-be-determined capacity.

The Weakest Position In Free Agency

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One of the big discussions going around the hockey world this week has been whether or not a team like the Toronto Maple Leafs should take a chance on an offer sheet for restricted free agent defenseman Colton Parayko. The offer sheet strategy, while allowed by the NHL collective bargaining agreement, is generally frowned upon in the sport. There is an unwritten code that you don’t poach other teams’ young talent. Those who do often pay the price by having their own prospects come under fire. There is also an actual price to pay for the practice, as offer sheets come with a steep compensatory formula. The 2017 compensation levels, just recently announced, dictate that a team would owe a third-round pick for a contract not even worth $2MM annually, while a contract north of $4MM per year would cost a first-rounder plus.

So why would a team like the Leafs entertain going after Parayko? And if they’re going to face the risk of an offer sheet, why Parayko and not another defenseman like Shayne Gostisbehere or Nikita Zadorov or even star forwards like David Pastrnak or Leon Draisaitl? The reason: Parayko represents the best free agent, restricted or unrestricted, at his position – right-shot defenseman.

Calling the right-shot defenseman grouping for this years unrestricted free agency pool “weak” is an understatement. Other than Kevin Shattenkirk, Parayko’s teammate in St. Louis and possibly the biggest name on the market at any position, you would be hard-pressed to find a single top-four defenseman and only a hand full of bona fide starters altogether. Cody Franson, under-utilized in Buffalo the past two years, is likely the next man up and the painstaking wait of the 2015 off-season showed how willing teams were to meet his salary demands. Toronto specifically already has had experience with Franson and know he is not the answer to their struggles. Behind Franson comes half of the Calgary Flames 2016-17 blue line: Dennis Wideman, Deryk Engelland, and trade deadline acquisition Michael Stone. The trio played a combined 165 man-games for the Flames this season, with Engelland and Stone playing each game of their first-round sweep by the Anaheim Ducks, and combined for just 50 points. Stone has the greatest upside, but hasn’t proved himself as a reliable top-four option and has struggled with injuries. The Flames were desperate to get Wideman out of town and Engelland has become a one-dimensional player in recent years. Next, there is Roman Polak, another former Maple Leaf. The team seems to have ruled out re-signing the veteran blue-liner and other teams should follow suit. Yannick Weber, currently playing in the Stanley Cup Final with the Nashville Predators, picked a good year to be a free agent, as his effective albeit unexciting style of play should still pay off in a weak class. After Weber? Matt Tennyson from Carolina? Paul Postma from Winnipeg? That is basically it.

This is why the Parayko-to-Toronto talk will continue. Those teams in need of a right shot near the top of their defensive depth are largely out of luck in 2017. Once Shattenkirk is off the board, which should be right away on July 1st, there are slim pickings for the rest. Best wishes to whatever righty D-needy team misses out on Shattenkirk, Franson, Stone, and Weber. There are simply no options. Unless, of course, you dip into restricted free agency. Beyond Parayko, another option is Pittsburgh’s Justin Schultz,who put up a whopping 51 points in the regular season and has 11 points (and counting) in the playoffs. The Penguins would likely be unable to match an expensive contract for Schultz if he were presented with a lucrative offer sheet. After back-to-back strong campaigns, New Jersey’s Damon Severson has proven to be a legitimate offensive defenseman and could entice the right team. Jake Dotchin had a successful rookie season, but the Lightning have a world of cap problems to solve this summer and would struggle to fit an offer sheet-inflated contract for Dotchin into the mix. Finally, even if both Alex Petrovic and Mark Pysyk survive the Expansion Draft in Florida, the Panthers may simply choose one over the other if an offer sheet were involved. The options are plenty on the restricted side of free agency, but the question remains whether any teams will be bold enough to go that route.

2017 Offer Sheet Compensation

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Though it is almost never used in today’s NHL, the idea of an offer sheet still intrigues fans and media alike. Signing a restricted free agent out from under the nose of a rival, taking a superstar away in his prime. Brett Barrett broke it down for us earlier this month, when he took a look at some of the top available names on the RFA market this summer. We’ve seen examples of offer sheets in the past, with Shea Weber signing a 14-year contract with Philadelphia in 2012, only to have it matched by Nashville. The Predators would have received four first-round picks had they let the then-26-year old Norris runner-up walk away.

Offer sheet compensation is based on the average salary of the league, something that Elliotte Friedman reports has gone up to ~$3.01MM this season, a 4.55% bump from a year ago. Because of it, the compensation has been set and Friedman has provided a breakdown.

$1,295,571 or less No compensation
$1,295,571 to $1,962,968 Third-round pick
$1,962,968 to $3,925,975 Second-round pick
$3,925,975 to $5,888,960 First and third-round picks
$5,888,960 to $7,851,948 First, second and third-round picks
$7,851,948 to $9,814,935 Two firsts, a second and third-round picks
Over $9,814,935 Four first-round picks

This season has an impressive group of RFAs headlined by players like Leon Draisaitl, David Pastrnak and Ryan Johansen (among many, many others). There will be much speculation over a possible offer sheet, but they’re used more as a negotiating tactic for the player than a real option for teams looking to acquire talent. Even if they are signed, the player is hardly ever allowed to leave.

It is important to note, that to sign a player to an offer sheet a team must still have their own original picks for the compensation. That means they can’t go out and deal for picks in order to sign a player. Compensation would begin from the 2018 draft, as none of the sheets could be signed until July 1st when these players become free agents. Another small note, is that if a team does decide to match an offer sheet to retain the player they cannot trade him for an entire year afterwards.

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.

Friedman’s Latest: RFAs, Yakupov, Datsyuk

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Sportsnet’s Elliotte Friedman published his weekly 30 Thoughts column today and devoted a significant portion to the big name RFAs who remain unsigned. His first note was on Nikita Kucherov, whose agent – Scott Greenspun – Friedman believes has met with at least one club on the subject of an offer sheet. Due to Tampa’s precarious cap situation, both in the short and long term, the Lightning would be vulnerable to an offer sheet, particularly this close to the start of the regular season when all teams must be in cap compliance. The Lightning have roughly $5.5MM in available cap space but Kucherov may well be able to land significantly more than that from another club. GMs tend to steer clear of offer sheets for fear of angering their colleagues but Kucherov’s talent and track record might eventually prove too tempting for one manager to resist.

The full column is always worth the read but here are a few more key points from Friedman:

  • With regards to Johnny Gaudreau, Friedman believes there has been progress made since the two sides met earlier this week. He also notes that negotiations could again reach a stalemate if and when the two sides have moved far enough. The key, Friedman says, is how many unrestricted free agent years the Flames will be buying out, suggesting the longer the term, the higher the AAV. Gaudreau has five years remaining before reaching free agency meaning a max, eight-year term would buy out three free agent seasons.
  • There may be as many as six teams with serious interest in trading for Winnipeg Jets RFA defenseman Jacob Trouba. The scribe lists Buffalo, N.Y. Rangers, Detroit, Colorado, Boston and Arizona as the clubs looking at making a deal for the talented young blue liner. Of course given Winnipeg’s believed asking price – a left defenseman of similar ability and age – it’s difficult to fathom any of the aforementioned clubs being a match. Evidently that thought has also occurred to the Jets and that has prompted interested suitors to try to engage a third team to help meet Winnipeg’s demands. One obvious team that could facilitate a trade would be Anaheim as Friedman notes. The Ducks still have Hampus Lindholm to come to terms with and recently sent both Brandon Montour and Shea Theodore – two of the team’s top blue line prospects – to San Diego in the AHL. They certainly have the depth to meet Winnipeg’s needs.
  • Apparently the Jets also asked Trouba’s camp to provide the numbers it would take to convince the 22-year-old to re-up in Winnipeg but they were told as long as the situation on the right side of the team’s defense remained the same that re-signing “wasn’t going to happen.”
  • Friedman wonders whether the St. Louis Blues will employ the newly acquired Nail Yakupov as a power play specialist and if so, would they play him with two right-shooting forwards. He notes that Yakupov’s man-advantage shooting percentage with Edmonton was 14.8% when on the ice with at least two right-handed forwards and just 7.1% otherwise. The problem with the theory is that the Blues list just three forwards who fire the puck from the starboard side and of those, just David Perron is likely to see much power play time. St. Louis does have four right-handed blue liners so the coaching staff could get creative if they have in fact given any thought to Friedman’s suggestion.
  • When the Arizona Coyotes agreed to take on the final year of Pavel Datsyuk’s contract from Detroit, it was thought their primary motivation was moving up in the 2016 draft four slots to secure the rights to talented young blue liner Jakob Chychrun. Secondarily, Datsyuk’s $7.5MM cap charge would help the team exceed the cap floor. However, Friedman reports that first-year GM John Chayka had something else entirely in mind. With Datsyuk already committed to signing in the KHL, Chayka tried to convince St. Petersburg to allow the Coyotes to speak with two of their players, Yevgeni Dadonov (perhaps misidentified in Friedman’s post as Evgeny Davydov) and Vadim Shipachyov, in exchange for releasing Datsyuk’s rights. Obviously it didn’t work out for Chayka but it shows his willingness to look at outside-the-box for ways to upgrade his roster.

Offer Sheets And The Remaining RFAs

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Training camps open soon and valuable restricted free agents (RFAs) remain unsigned. An RFA has two options if he cannot reach a deal with his current team: sit out or sign with another club via an offer sheet. There are rules and restrictions regarding offer sheets, and the following guide should help navigate the thicket before training camp starts.

Offer Sheets are governed by Section 10.3 and 10.4 of the CBA. The basic premise is that an RFA can sign a contract with any club, but the RFAs prior club has seven days to match the principal terms—salary, bonuses, and length. If a prior club matches, then they are bound to the contract. If the prior club declines to match, however, they get compensated with draft picks from the RFA’s new club. The draft pick compensation is commensurate with the average annual value (AAV) of the RFA’s new contract. The prior club gets better (and more) draft picks the higher the contract value.

Determining draft pick compensation is easy. Take the full salary offered and divide it by the contract term, but only up to five years. Even if a player signed a seven year contract, the CBA dictates that the salary only be divided by five. The resulting number determines the draft picks a prior club receives from the new club. The CBA breaks the compensation down into tiers, and CapFriendly published a convenient guide:

Offer Sheet Chart

The draft pick compensation mechanism limits the teams that can submit offer sheets. A team must only use its own draft picks—not picks previously owned by another team—and must have them available for the next draft. General Fanager has a great resource that keeps track of which teams can submit offer sheets at each value tier. If a team owes two picks in the same round, both picks must be available in the next three drafts. If they owe four, then they must be available in the next five drafts.

Fourteen RFAs remain unsigned as of writing, and with NHL training camp only two weeks away, time is ticking for both players and teams. The following players still have yet to sign, in order of last season’s scoring:

  1. Johnny Gaudreau – Calgary Flames
  2. Nikita Kucherov – Tampa Bay Lightning
  3. Rickard Rakell – Anaheim Ducks
  4. Rasmus Ristolainen – Buffalo Sabres
  5. Tobias Rieder – Arizona Coyotes
  6. Dmitry Orlov – Washington Capitals
  7. Valeri Nichushkin – Dallas Stars
  8. Hampus Lindholm – Anaheim Ducks
  9. Ryan Strome – New York Islanders
  10. Jacob Trouba – Winnipeg Jets
  11. Zemgus Girgensons – Buffalo Sabres
  12. Nikita Nesterov – Tampa Bay Lightning
  13. Stefan Elliott – Nashville Predators
  14. Freddie Hamilton – Calgary Flames

Some teams are close to signing their RFAs—like the Flames and Gaudreau—but others, like Arizona and Rieder, are far apart. The next two weeks should bring a wave of signings, but for now offer sheet speculation ramps up as fans ponder what a player is worth and whether a team is better off receiving draft picks or matching value.

Are Offer Sheets A Thing Of The Past?

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This summer’s restricted free agent (RFA) list is quite impressive, with nine 20-goal scorers and 13 players who scored more than 40 points last season. Forwards Sean Monahan, Johnny Gaudreau, Nikita Kucherov, Marcus Johansson, and Mike Hoffman headline the forwards; while Hampus Lindholm, Tyson Barrie, Rasmus Ristolainen, Danny DeKeyser, and Jacob Trouba are the top defensemen. Detroit’s Petr Mrazek is the only big-name RFA goalie remaining.  Most of the above players are eligible for offer sheets.

According to Elliotte Friedman, compensation for offer sheets is as follows:

  • Less than $1.239MM (average annual value of contract) – Nothing;
  • $1.239-$1.878MM – Third-round pick;
  • $1.878-$3.755MM – Second-round pick;
  • $3.755-$5.633MM – First and third-round picks;
  • $5.633-$7.510MM – First, second and third-round picks;
  • $7.510-$9.388MM – Two first, a second and third-round picks;
  • Over $9.388MM – Four first-round picks.

With this in mind, teams could target rival teams top young players, with both outcomes having their benefits to the aggressive team: either they acquire a good young player for only picks, or they mess up a rival’s salary cap by inflating the player’s salary.

The threat of an offer sheet was evident last summer, with the Blackhawks trading Brandon Saad to the Blue Jackets and the Bruins trading Dougie Hamilton to the Flames. Both players were pending RFAs and in line for a big raise before being shipped out to prevent their teams from being subjected to an offer sheet. However, this summer has been the complete opposite, with teams taking their time to sign the above-mentioned stars, apparently not overly worried about offer sheets.

Why could that be?

The last time an NHL team successfully acquired a player via an offer sheet was in 2007. Then-Oilers-GM Kevin Lowe signed Anaheim Ducks LW Dustin Penner to a 4-year, $21.5MM contract. The Ducks did not match, and the Oilers forked over their first three rounds of draft picks in 2008. Penner enjoyed varying degrees of success in three-and-a-half seasons in Edmonton before being traded to Los Angeles where he won a Stanley Cup. The Penner offer sheet is most fondly remembered by then-Ducks-GM Brian Burke and Lowe’s escalating war of words which nearly lead to a fist-fight in a rented barn in Lake Placid. Commissioner Gary Bettman was forced to have a conference call with the two GMs to get them to stop.

It’s perhaps this sort of reaction that prevents GMs from making offer sheets. Earlier this summer, ESPN and TSN reporter Pierre LeBrun quoted an unnamed GM as threatening opposing GMs with an offer sheet per year for the next ten years as retribution for a potential offer sheet. There appears to be an unspoken agreement between GMs to leave RFAs alone. There hasn’t been an offer sheet tendered since 2013 when Colorado matched Calgary’s contract with Ryan O’Reilly, saving the Flames from an embarrassing and costly mistake.

So despite several fan bases calling for offer sheets, it seems unlikely that any players will be switching sweaters this summer because of one.

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