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Some RFA rules on the eve of July 1 free agency period

Posted By Joe Haggerty On June 30, 2009 @ 11:45 am In General | 6 Comments

Bruins RFAs Phil Kessel [1], Matt Hunwick and Byron Bitz are scheduled to become eligible to receive offer sheets from other teams beginning on Wednesday at noon, and there are plenty of rules within the RFA and offer sheet process per the rules of the CBA. The Bruins have seven days to match an offer sheet, can’t trade a player once they received an offer sheet, and would receive draft pick compensation for any RFAs signed by other teams.

If Kessel is signed to an offer sheet by another NHL [2] team, it would have be in the $5 million per year range for the Bruins to really toy with the notion of not matching the offer sheet. The sniping winger would easily receive that in the open market, and it’s a pretty fair assumption that Kessel should end up with a slightly bigger paycheck than the $3.75 million per year David Krejci [3] received earlier this month.

Here’s a few Q&A’s from the great website nhlscap.com [4]about the entire RFA process:

WHAT HAPPENS WHEN A PLAYER SIGNS AN OFFER SHEET? Once a player signs an offer sheet, the team (“New Team”) giving the offer will submit it to Central Registry and must also notify the player’s original team (“Prior Team”) of the offer sheet.  The Prior Team has seven (7) days from the date it receives the offer sheet to choose whether to accept the terms of the offer sheet or decline. 

If they choose to accept, then the salary, signing bonuses (if any), and reporting bonuses (if any) in the Offer Sheet become a binding SPC on both the Prior Team and the player.  If they decline, then all of the terms specified in the Offer Sheet become binding on the New Team and the player and the Prior Team receives compensation from the New Team as set forth below.

CAN THE PRIOR TEAM TRADE THE PLAYER’S RIGHTS IF HE SIGNS AN OFFER SHEET? NO!  From Article 10.3(a), Once an Offer Sheet for a Restricted Free Agent has been received by the Prior Club, the Prior Club may not Trade or otherwise Assign its Right of First Refusal for such Restricted Free Agent.

– IF THE TEAM MATCHES, CAN THEY TURN AROUND AND TRADE THE PLAYER? Again, no.  From Article 10.3(b), The Prior Club may not Trade that Restricted Free Agent for a period of one year from the date it exercises its Right of First Refusal.

WHAT IS THE COMPENSATION REQUIRED FOR SIGNING A RFA TO AN OFFER SHEET? For 2008-09, the compensation due for signing a RFA to an Offer Sheet is listed below. This last year’s compensation schedule, and things might have raised slightly given the rising level of NHL [5] contracts, but the compensation should be roughly the same for this summer. Here are the numbers:

Amount (Compensation Due)
 
$863,156 or less (None)
 
$863,156 – $1,307,811 (3rd round pick)
 
$1,307,812 – $2,615,625 (2nd round pick)
 
$2,615,623 – $3,923,437 (1st and 3rd round pick)
 
$3,923,437 – $5,231,249 (1st, 2nd, and 3rd round pick)
 
$5,231,249 – $6,539,062 (Two 1st’s, one 2nd, one 3rd round pick)
 
$6,539,062 or more (Four 1st round picks)

 The amount is determined by taking the total compensation due in the Offer Sheet, and dividing by the number of years specified in the Offer Sheet, or five (5) – whichever is less.

Example:  A team signs a RFA to an offer sheet which calls for salaries of $4 million in Years 1 and 2, and $5 million in Years 3 to 5.  The average amount for compensation purposes is $4.6 million ($23 million divided by 5 years) – so the compensation required in 2008-09 would be a 1st, 2nd, and 3rd round pick.

Example:  A team signs a RFA to an offer sheet which calls for a salary of $3.5 million per year for 6 years.  Even though the Averaged Salary on the offer sheet would be $3.5 million, for compensation purposes the average amount is $4.2 million ($21 million divided by the lesser of the number of years on the offer sheet, or 5) – so the compensation due in 2009-10 would be one 1st’s, one 2nd, and one 3rd round pick.

MISCELLANEOUS
– The numbers in the table above change at the same rate as the change in the Average League Salary.
– Teams must use their own draft picks for the purpose of compensation, including picks that were traded and later reacquired.  They cannot use draft picks acquired from other teams (which were not originally theirs) to offer as compensation.
– A team can have multiple offer sheets active, provided it has the necessary draft picks available to offer as compensation.
– From Article 10.4,
      — Clubs owing one (1) draft selection must have it available in the next draft.
      — Clubs owing two (2) draft selections in different rounds must have them available in the next draft.
      — Clubs owing three (3) draft selections in different rounds must have them available in the next draft.
      — Clubs owing two (2) draft selections in the same round, must have them available in the next three (3) drafts.
      — Clubs owing three (3) draft selections in the same round must have them available in the next four (4) drafts, and so on.

When a Club owes two (2) or more draft selections in the same round, the signing Club does not elect the years in which such selections shall be awarded to the Prior Club; rather, the selections next available will be transferred to the Prior Club (i.e., a Club that owes two (2) selections has them available in the next two (2) drafts ‘€“ that is when they are transferred).


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URLs in this post:

[1] Phil Kessel: http://media.weei.com/hockey/phil-kessel.htm

[2] NHL: http://media.weei.com/hockey/nhl.htm

[3] David Krejci: http://media.weei.com/hockey/david-krejci.htm

[4] few Q&A’s from the great website nhlscap.com : http://www.nhlscap.com/offer_sheets.htm

[5] NHL: http://media.weei.com/hockey/nhl-hockey.htm

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