How to improve restricted free agency

Dylan Larkin is a free agent this offseason -- a restricted free agent, that is, with all the lack of leverage that entails. Dan Hamilton-USA TODAY Sports

The notion of "restricted free agency" ranks right up there with "jumbo shrimp" and "deafening silence" in the oxymoronic hall of fame.

None of the NHL players that qualify for it are "free" to do anything but remain shackled to the team that holds their rights. Sure, it could be argued that some of them have the "agency" to decide to haggle over salary or, if they just want to watch the world burn, sign an offer sheet with another team. But "restricted" is the boldface term in the title, casting a shadow over the rest of the descriptor like a granite massif.

Does the restricted free-agent system work? Is there a way to make RFA status kinder to the players, while maintaining the advantages for teams?

Or should we scrap the whole thing?

"If you're going to get rid of it, what are you going to replace it with?" asked played agent Lewis Gross.

Make everyone an unrestricted free agent, at all ages. How about that?

"Sure. That's a free-market society. Who wouldn't love that? We'll let the market dictate everybody's salary," said Gross. "I think we'd all be happy with that. Well, everybody but the teams would be, that's for sure."

Gross was one of several NHL player agents we contacted recently to ask how they would reshape restricted free agency if given the chance to rewrite that section of the Collective Bargaining Agreement. (We assume they'd then get NHL owners to agree to these terms through the use of hypnosis or hallucinogens.)

Most offered substantive changes to the current process, including one alteration that would revolutionize the salary structure for young star players. Some argued that they system's not too broken, so it doesn't need fixing.

But before we break it down, let's define some terms.

A quick free-agency primer

NHL free agents are either restricted or unrestricted, and that status is controlled by their experience and age.

Any player that has seven accrued seasons in the NHL -- a season is defined as having played 10 or more games -- or is at least 27 years old as of June 30 of that year becomes an unrestricted free agent. They can throw their arms open and let the overcompensation envelop them, all the while knowing that they have at best three years left before their inevitable statistic decline.

Otherwise, with a few exceptions, players are restricted free agents. When their contract expires, their team makes a qualifying offer to maintain negotiating rights, i.e. gives the team a chance to match or be eligible for compensation if a player signs an offer sheet. Qualifying offers are perfunctory. The eventual contract with an RFA usually isn't going to resemble those terms.

Then there's salary arbitration for RFAs, which can be team- or player-elected. Eligibility for it is experience- and age-based as well: Players that come into the NHL at ages 18-20 need four years of pro experience to be arbitration-eligible; three years if they're 21; two years if they're 22-23; and only one season if they're 24 or older when they enter the NHL.

In other words: If you're a standout young player, you're not going to have any arbitration leverage after the expiration of your entry-level contract, which is capped at a three-year term.

About those offer sheets: Outside of "Rivalry Night" and Peter Chiarelli, they're the most overhyped and underwhelming things in the NHL. And stunningly scarce.

If a team doesn't match an offer sheet, they receive draft pick compensation from the team that signed away their restricted free agent. There are seven levels of compensation, depending on what the average annual value of the contract is:

  • $1,110,249 or below: None

  • Over $1,110,249 to $1,682,194: Third round

  • Over $1,682,194 to $3,364,391: Second round

  • Over $3,364,391 to $5,046,585: First round and third round

  • Over $5,046,585 to $6,728,781: First round, second round and third round

  • Over $6,728,781 to $8,410,976: Two first rounds, second round and third round

  • Over $8,410,976: Four first rounds

We haven't had an offer sheet signed since Ryan O'Reilly inked a two-year, $10-million deal with the Calgary Flames as a member of the 2012-13 Colorado Avalanche.

When they do happen, they're momentous: Shea Weber's 14-year deal with the Philadelphia Flyers in 2012, Blackhawks defenseman Niklas Hjalmarsson's four-year deal with the San Jose Sharks in 2010 -- a rare instance of a "weaponized" signing that sought to damage a capped-out conference rival -- and the 2007 signings of Buffalo's Thomas Vanek by the Edmonton Oilers and the Anaheim Ducks' Dustin Penner by the Oilers. Of the last eight offer sheets, only Penner's wasn't matched. Please recall this situation between the Oilers and Ducks was so intense that Anaheim GM Brian Burke was going to fight Edmonton GM Kevin Lowe in a barn until Gary Bettman sadly intervened.

So that's restricted free agency. So what do we do about it?

Should we abolish restricted free agency?

It's human nature to enter an investigation with some preconceptions. Such as assuming most agents would just like to be done with restricted free agency altogether and make everyone unrestricted, all the time, no matter the age or experience.

But that wasn't the case in our conversations with agents.

"I don't have any issues with restricted free agency. I think players should play a certain number of years to achieve UFA status," said agent Allan Walsh.

It used to be a few more years. Before the 2005 NHL lockout, the unrestricted free agency eligibility age was 31. It gradually decreased to the current standards during the CBA's term.

To that end, the staggering of unrestricted free agent eligibility creates the frenzy that we see every July. "An ideal system would be that everyone become a free agent after every contract. But that could hurt a lot of players. When the market is flooded, a lot of players aren't going to get what they get when the market is tight," said one agent.

Every summer, there are cries of "overcompensation!" from fans and pundits about veteran players that strike it rich in the UFA market. If every player on every team was eligible to become an unrestricted free agent, these blockbuster deals with average players likely disappear. Is Loui Eriksson really getting $6 million annually, over six years with trade protection, if better or younger talent are available in that free agent class?

No. Which is why most agents are quite alright with an unrestricted market giving veteran players that kind of advantage.

What these agents really want, however, is for younger players to finally have some leverage.

One fix: Salary arbitration for young stars

Cap Friendly, the indispensable NHL contract resource, separates its restricted free agents into two categories: Ones with that little gavel graphic, and ones that lack it.

The gavel represents arbitration rights. A quick scan of the Toronto Maple Leafs' salary cap page reveals that, for example, 25-year-old forward Josh Leivo will have arbitration rights next summer. It also reveals that 22-year-old forward William Nylander, currently a restricted free agent for the Leafs, is sans gavel, and therefore has little to no leverage in his current discussions with Toronto on his second NHL contract.

It's a scenario that plays out for young star players every summer: After their entry-level deal is completed, they enter a purgatory of contract negotiations, where the second-contract player has no leverage.

OK, that's not necessarily true: They eventually will become unrestricted free agents at 27, and as such there's an enticement to teams to sign them long-term and eat up a few of those seasons. So that's a little leverage, but that's about it. Contract holdouts eventually end, and never quite in the player's favor. Unless you're Evgeny Kuznetsov and you're like, "peace out, I'm headed back to Traktor Chelyabinsk if you don't give me the deal I want," you don't really have any influence as a young player.

All of the agents we spoke to sang the same tune here: Give players coming off their entry-level contracts full arbitration rights. That would be the major change they'd make to restricted free agency in the CBA.

"Being that the league is trending younger and younger, and players are making an impact at an earlier stage of their careers, I'd like for young players to have arbitration rights immediately after their entry-level contract," said agent Michael Deutsch, who recently closed a one-year deal for client William Karlsson of the Vegas Golden Knights to avoid arbitration.

This scenario played out recently for another breakout player in 2016: Nikita Kucherov of the Tampa Bay Lightning. Kucherov scored 29 and 30 goals in the final two years of his entry-level contract. Normally this would lead to a massive payday for a young player; and given what Vladimir Tarasenko ($7.5 million AAV) and Johnny Gaudreau ($6.75 million AAV) were earning, one assumes Kucherov would have gotten north of $6 million per year, in theory.

But the 22-year-old forward's contract was up the same summer that GM Steve Yzerman signed franchise cornerstones Steven Stamkos and Victor Hedman to massive eight-year deals. Fair or not, the Lightning told Kucherov there wasn't much left for him. They offered a paltry long-term deal that was rejected. They settled on a three-year bridge contract with an average annual value of $4.766 million, an incredible bargain that has only added to Yzerman's status as salary cap Jedi.

In Kucherov's case, it worked out: Yzerman got the cost certainty he needed, and the player broke through with MVP-level numbers that earned him an even bigger contract this summer: eight years and $76 million, beginning in 2019.

In other cases, it's a bit more contentious. Sometimes players miss training camp. Sometimes that absence creeps into the regular season. Walsh finds this nonsensical: Give young players arbitration rights and this dance ends.

"All of the RFAs that end up going towards camp and holding out, you would do away with them if you had mutual arbitration kick in after the entry-level contract," he said. "By having this one dark year, you're putting some of the top restricted free agents into a Faustian bargain where they either take a deal with no leverage at below-market value or are being forced to hold out. Why?"

(A "dark year" is a year into which an RFA has no arbitration rights. Prior to 2005, there were two "dark years" for young players, but that was dropped to one in that CBA.)

Walsh sees salary arbitration for players coming off entry-level deals as mutually beneficial. "This will help both sides. Teams will still have the benefit of getting a short-term contract if they don't want to go long. It's a one- or two-year deal in arbitration. But instead of having [a player like] Darnell Nurse miss camp and maybe the first three weeks of the season to get a contract, there's going to be an arb case, there's most likely going to be a settlement and it'll be at fair-market value," he said.

The players get a modicum of leverage here. The beauty of arbitration for a player is that it's all about looking back, not forward. The "platform season" (i.e. the last season of the player's contract) is factored in with his previous years of performance, and linked to comparable other salaries. Teams can't say "we just paid Stamkos and Hedman" and then cry poverty about Kucherov in the arbitration hearing, for example. They also can't make their case based on anything they believe might happen in the future, only what's occurred.

"Arbitration gives a player the right to seek a new contract in line with a league-wide marketplace. Team salary structures are irrelevant," said Walsh.

But in the end, the teams get the short-term contracts they want through arbitration, likely with some cost controls. So what's not to like about arbitration for young players?

Well, arbitration does complicate things, as Gross noted when discussing Nylander's talks with the Leafs.

"If Willy had arbitration rights, then we would have had to determine whether to file for arbitration. Then we might end up getting a one-year deal. Isn't it better to maybe negotiate a longer deal, like some of these other players have been able to get?" asked Gross.

He should know, as he's done it twice recently. Gross landed that six-year, $40.5-million deal for Gaudreau with the Calgary Flames after his entry-level deal expired in 2016. He did the same for Brandon Saad in 2015, after the Chicago Blackhawks traded him to the Columbus Blue Jackets out of financial considerations. Saad signed a six-year, $36-million deal; two years later, he was back in Chicago.

"Those [deals] wouldn't have been available with arbitration," said Gross.

While the agents favored arbitration rights for young players, getting that changed in the next CBA is a tall order -- not only because the players would have to sacrifice something to get it, but because the wants and needs of 19-year-old rookies aren't exactly paramount to the rest of the NHLPA. But Walsh is optimistic.

"Entry-level players are always going to be thrown under the bus, because that includes a lot of players that aren't in the league during portions of their entry-level contract," said Walsh. "The RFA guys are different. I think that there are a lot of teams that I've talked to that have no issue with players having arb rights as soon as they hit RFA status."

Of course, players could also add leverage if the offer sheet system in the NHL wasn't such a joke.

Fixing offer sheets

Blame "the old boys club" for a lack of offer sheets on restricted free agents.

Or don't.

"I'm not a believer that there's collusion going on since we're living in the cap system," said Walsh. "All we're doing now is allocating money across that system. Pre-2005, offer sheets were taboo because they were seen as inherently inflationary. But now you know it's 50 percent of HRR (hockey-related revenue). All you're doing is arguing which players get the most money, but it's going to be 50 percent."

So, no collusion. But Walsh used another term for it: That general managers approach offer sheets "collegially," in that they know that an offer sheet they tender to a player could open them up for an offer sheet on one of their own at some point. It's not necessarily collusion. But there's a certain unspoken agreement that teams don't poach each other's talent through offer sheets, lest they suffer the consequences.

But more than that ... they never work.

"Why aren't there offer sheets? Compensation," said Walsh. "There's an impression out there that offer sheets are an exercise in futility because no matter what it is, 99.99 percent of the time the team is going to match. Because if you don't, you're basically making a statement that your best players are up for grabs. So you have to match. No team is going to tender an offer sheet if they know the other team is going to match."

As another agent put it: "It's not just the old boys club. The compensation isn't enough."

There's little incentive for a team with a player worth upwards of $6.7 million per season to let that player slip away for a first-, second- and third-round pick. Conversely, a team offering a contract worth $8 million in annual average value might be hesitant to surrender two first-round picks, a second and a third. Or perhaps they can't: Only 18 teams currently have that quantity of picks to attempt an offer sheet of that magnitude.

(To wit: Every team in the league is eligible to tender an offer sheet to a player in the highest tier, but who would dare give up four first-round picks for anyone not named Connor McDavid?)

Perhaps there's a sweet spot where compensation meets price, and teams are better incentivized to not match offer sheets. Because right now, "no one is getting offer-sheeted because the numbers don't make any sense," said one agent.

There are ways to tweak the system. There are ways to radically reshape it. But with another collective bargaining labor war on the horizon, there's one thing to remember about leverage:

The owners have it. The players, by and large, don't.

"It's never going to be a perfect world that we live in, but within that perfect world, I'd love to have players have as many rights as they can get, like arbitration and offer sheet," said Gross. "But to get that would be to sacrifice something else, and that might not be in the best interest of the players."