Avery, who provided a huge spark to the Rangers last season after being traded by Los Angeles, earned an $800,000 raise. He was seeking $2.6 million in arbitration while New York countered with a proposal of $1.3 million. The arbitrator essentially split the difference.
The hearing lasted an unusually long five hours Monday and reportedly featured some tough talk by the Rangers.
"There are no hard feelings that exist. You move on," Avery's agent Pat Morris told The Associated Press. "In every hearing, teams are fighting for its own business and the player is fighting for his own business. Things said in normal negotiations are filtered by the agent. Everything is out in the open in arbitration."
The Rangers, who are now about $2 million below the $50.3 million salary cap for next season, could've walked away from the arbitrator's ruling but quickly signed Avery after it was handed down. Teams can be 10 percent over the cap until Oct. 1.
In announcing the signing, Rangers general manager Glen Sather spoke well of the gritty left winger.
"We are pleased to have Sean under contract and are looking forward to him returning with the same passion and enthusiasm he brought to our team last year," Sather said. "He is a terrific competitor, who we expect to play a significant role in a successful season."
Avery played in 84 games with the Rangers and Kings last season, posting career highs with 18 goals and 30 assists. He also had 174 penalty minutes, far below the previous two seasons when he led the NHL with totals above 250.
The 27-year-old Ontario native had eight goals and 12 assists after joining the Rangers. Avery, who spent most of the first two of his five NHL seasons with Detroit, has 50 goals, 84 assists and 913 penalty minutes in 322 career games.
According to the New York Post, the Rangers referred to Avery as "a reasonably effective player as well as a detriment to team" in a brief given to the arbitrator. The newspaper reported that management also said, "Avery is not a mature player. He plays, at times, like an individual rather than a member of a team."
"I have no idea what to say," Avery told the Post in an e-mail. "I don't know what this was about. I'm shocked."
"Sean was professional in the arbitration," Morris said. "He sat there and did not express any emotion, badly or at all. At the same time you're hearing some things you're not used to hearing. He played very well for the New York Rangers.
"In the end, we filed for arbitration so we knew this might be an end result," Morris said.
Avery will be eligible for unrestricted free agency after next season, but Morris said the forward wouldn't be opposed to talking about a longer-term deal with the Rangers once that is allowed after January.
"He's happy to be a Ranger," Morris said. "His time in New York has been splendid and he feels a bond with the fans. He likes the team and the coaching staff, and it's a very strong team."
Avery drew heaps of praise following his arrival from Los Angeles on Feb. 5. He injected a shot of energy and gave the Rangers a physical and emotional edge that translated into a 17-6-6 mark over the final 29 games. He was also instrumental in getting the Atlanta Thrashers off their game during a first-round playoff sweep.
But he talked about wanting to hurt Buffalo players before the second-round series and wasn't nearly as effective in the six-game loss to the Sabres. He was pointless after putting up a goal and four assists against the Thrashers and led the team with 27 penalty minutes in the 10 postseason games.
Avery was the last of New York's restricted free agents to agree to a contract. The Rangers avoided arbitration with Marcel Hossa by signing the forward to a one-year, $780,000 deal on Tuesday.