The NHL Offer Sheets Unwritten Rule

As we are down to two teams facing each other in the Stanley Cup finals, we are also about a month away from the NHL Draft and the Free Agents’ frenzy. Teams will be allowed to speak to pending UFA’s and RFA’s of other teams starting the day after the Draft, which will be held at Rogers Arena in Vancouver on Friday, June 21st and Saturday, June 22nd. So starting bright and early on June 23rd, NHL GM’s will be trying to lure away some players whom they feel would help improve their respective team and on July 1st, they can sign them to a contract. While recent history has proven to be better known for the Unrestricted Free Agents period, each and every year, media and fans alike are wondering if finally, a GM or two will have the courage to sign a player to an offer sheet.

First of all, we must understand what an offer sheet is and who is eligible to sign such offers. An offer sheet is a contract offered to a restricted free agent (RFA) by a team other than the one for which he played during the prior season. If the player signs the offer sheet, his current team has seven days to match the contract offer and keep the player or else he goes to the team that gave the offer sheet, with compensation going to his first team. Restricted (Group 2) NHL free agents can discuss new contracts with other teams beginning on the day after the Draft, which is also the deadline for a team to make a qualifying offer. Discussions must cease if a player accepts a contract from his own team or if he is confirmed to go into arbitration with his team.

The last offer sheet which ended up being unmatched was the signing of Dustin Penner by the Edmonton Oilers on July 26, 2007. Brian Burke and the Anaheim Ducks decided that the 5-year, $21.5 million offer was too rich for their blood to match and instead, accepted the 1st, 2nd, and 3rd round picks in 2008 as compensation. But it didn’t take more to fire up Burke who went into a very public verbal dispute with then Oilers’ General Manager Kevin Lowe.

“I like Kevin Lowe and I respect Kevin Lowe. But what he did was just so stupid to me and I fried him and then he challenged me to a fight on the air.” ~ Brian Burke

The next offer sheet – or should I say offer sheets – occured the following off-season when the Vancouver Canucks, then managed by rookie GM Mike Gillis, signed David Backes of the St. Louis Blues to a 3-year, $7.5 million contract. The Blues matched and then GM Larry Pleau went a step further by getting revenge on the Canucks a week later by signing pending RFA Steve Bernier to a one-year, $2.5 million deal. The Canucks also matched but they ended up paying Bernier much more than they wanted to because of it. It is important to note that Gillis has since been fired and so far, has never been hired as GM while Pleau resigned from the position in 2010, two years after the offer sheets were exchanged.

Shea Weber’s current contract was the results of an offer sheet by the Philadelphia Flyers, matched at the time by the Predators.

Since then, there have been only three (3) more offer sheets signed by NHL General Managers and the most lucrative all-time was when Philadelphia Flyers’ GM Paul Holmgren tried to scoop All-Star defenseman Shea Weber from the Nashville Predators, signing him to a 14-year, $110 million offer sheet. Preds’ GM David Poile ended up matching the offer which finally ended up forcing them to trade away Weber when a $13 million signing bonus, due on July 1st, 2016, was too rich for the ownership’s pockets.

PLAYERDATEOFFER AMOUNTORIGINAL TEAMOFFER TEAMRESULTSNOTES
Ryan Kesler2006-09-121 yr – $1.9MCanucksFlyersMatched
Thomas Vanek2007-07-067 yrs – $50MSabresOilersMatched
Dustin Penner2007-07-265 yrs – $21.5MDucksOilersAccepted1st, 2nd, and 3rd round picks in 2008
David Backes2008-07-013 yrs – $7.5MBluesCanucksMatched
Steve Bernier2008-07-081 yr – $2.5MCanucksBluesMatched
Niklas Hjalmarsson2010-07-094 yrs – $14MBlackhawksSharksMatched
Shea Weber2012-07-1814 yrs – $110MPredatorsFlyersMatched
Ryan O’Reilly2013-02-282 yrs – $10MAvalancheFlamesMatched

A tool under-utilized?

Players want the offer sheets to be used as it helps them bring the salaries up for everyone. Fans want to see this tool used more because it would generate some additional excitement with the potential of player-movement. But why isn’t it used more if it’s “legal” under the terms of the collective agreement? There are at least three very legitimate reasons why no offer sheet has been signed since 2013… and don’t think for a second that there hasn’t been any quality RFA’s available on the last six years!

1- Hard Salary Cap

As a GM, you have to contend with either the hard salary cap imposed by the league if you manage a team spending to the ceiling, or you have your own internal salary cap set by the owners if you’re running more of a budget team. Either way, in order to stand a chance to sign a player to an offer sheet with your team, the GM will have to go at least slightly above “market value”, or what the team owning the player’s rights is willing to pay him. In both case, whether you – or any other GM – sign a player to an offer sheet, it raises the average salary and cuts back on somewhat “cheaper labour”. Further, it inflates the salaries of similar production players around the NHL, including your own, in their next negotiation.

2- Steep Compensation

In order to sign a player to an offer sheet, a GM must, first and foremost, have the necessary picks to be able to compensate the other team in the event that they chose not to match the offer. For one thing, the picks must not only have all of the necessary picks, but they must be their own, not picks acquired through trades with other teams.

Here are the teams capable of signing offer sheets based on salary compensation:

Source: CapFriendly.com

So as you can see, a top-end player signed at $8.5M AAV per season costs four picks including two first rounders. Signing a player with an offer sheet of over $10.6M AAV would leave the team without a first round pick for the next four years!

Here’s an important twist however, that many don’t know… The compensation limits are the AAV of the offer sheet averaged over the length of the contract to an upper limit of five years. Here is an example to explain this: If a team signs a player to an offer sheet for 7-years at 10 million ($10M AAV), that seems at first look to require two first-round picks, one second and one third, right? That’s not the case! That $70 million has to be divided by five, so it’s actually an AAV of $14 million, and is a top-tier, four first-round picks compensation offer sheet.

3- Fear of Retribution

This is perhaps the point the most overlooked by media members and fans alike yet, it might just be the single most important point for NHL teams and their General Managers. Paul Holmgren admitted that he was forced to step down from his position as GM of the Philadelphia Flyers because of the offer sheet he signed Weber to. Why? Because no one wanted to do business with him afterwards. He was on the “blacklist” amongst NHL GMs.

Paul Holmgren admitted having to step down as Flyers’ GM because no one wanted to deal with him after signing Shea Weber to an offer sheet.

“It’s hard to do this job if you have a bad relationship, or at least a perceived bad relationship, with any number of GMs.” ~ Paul Holmgren

Unlike any other year, this summer’s list is very interesting, to say the least. I like sorting them by time on the ice per game as it often shows how valuable those players are already, gauging by how much they were counted on by their coaches. Feel free to click the link below the picture to sort them as you with on CapFriendly.com.

Source: Capfriendly.com

To get a full picture, one would have to take the time to look at teams individually and see how many NHL contracts they each have, how many pending key UFA’s and RFA’s they have to re-sign, and how close they are to the Salary Cap to determine how many teams in total would be capable of signing a RFA to an offer sheet which would either guarantee them the player, or at least put the other team in a tight spot if they chose to match the offer.

“When you sit in this chair, you’ve got to think long-term also,” Bergevin said at his end-of-season presser, noting the steep price tag of four firsts. “Trust me, it’s a tool [the offer sheet] that we look at all the time.”

While everything is possible, it is unlikely to see Marc Bergevin sign a player to an offer sheet.

That said, rest assured Habs’ fans, Marc Bergevin was being politically correct with this quote and he is very unlikely looking at the offer sheet tool as a serious option if he wants to keep a job as GM in the NHL. While very competitive and even cut-throat at times, NHL GM’s are a tight brotherhood and coaches and GM’s are being blacklisted from time to time. Pleau, Gillis and Holmgren found out the hard way, Ted Nolan has never been offered another job in the NHL (aside from a short stint back with the Sabres in 2013) after throwing his then GM John Muckler under the bus and Patrick Roy, after putting Joe Sakic in a bind by quitting late in the summer, has yet to return to the NHL in any functions.

I’ve said it before and I’ll say it again: the way for Bergevin to address his biggest need for a top-4 left-handed defenseman would be through trade. He will be going hard after Matt Duchene though. The ideal summer for Bergevin and the Habs would be, in my humble opinion, if he signs pending UFA Matt Duchene and trades for a top-4 left defenseman to play tough minutes with Weber. At the very least, he MUST finally address the need for that elusive defenseman. Anything short of that would be a huge disappointment. Go Habs Go!

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Don’t Hold Your Breath for Habs’ Offer Sheet

BergevinPuzzle800

The Canadiens’ season ending rather prematurely certainly has fans and media talking, and with good reasons. The team’s lack of offensive threat has been a problem since the second half of the season and ultimately, cost the team a chance to face the Senators in the division finals and perhaps even to represent the Eastern Conference in the finals.

No one knows that better than better than team GM Marc Bergevin who, in his press conference, acknowledged that his team needs a boost in that department, particularly at the centre position. After all, while Tomas Plekanec was starting to show signs of slowing down, it was difficult to predict that he would be completely MIA on offense and who in their right mind would have predicted that Alex Galchenyuk would hit rock bottom a year after scoring 30 goals?

Fans and media alike are looking at ways that the Habs can improve their offense rather rapidly, based on what’s available out there on the market and they are quick to point out that both Jonathan Drouin and Leon Draisaitl are Restricted Free Agents (RFA) with compensation and could be eligible to offer sheets. While those players are exceptional young talents, many like yours truly question if the offer sheet is even an option.

drouin3
Jonathan Drouin is a pending RFA

While legal according to the Collective Bargaining Agreement, Offer Sheets are seldom used by NHL General Managers and while no one will come out publicly and admit it, the tool is heavily frowned upon by GMs around the league as it is perceived as putting their homologues in dicy situations in a salary cap world, where cheap talent is key to having a competitive team. The fact is that most GMs don’t want to use it, whether is by principle alone, or by fear of retribution by their colleagues in the future.

But instead of going with suppositions, why don’t we look at all of the offer sheets signed since the introduction of the salary cap after the 2005 season. Here’s a chart to help have a clearer picture:

NAME DATE OFFER OWNER SIGNED RESULT
Ryan Kesler Sept 12/06 1 year $1.9M VAN PHI Matched
Thomas Vanek July 6/07 7 years $50M BUF EDM Matched
Dustin Penner July 26/07 5 years $21.5M ANA EDM Accepted
David Backes July 1/08 3 years $7.5M STL VAN Matched
Steve Bernier July 8/08 1 year $2.5M VAN STL Matched
Niklas Hjalmarsson July 9/10 4 years $14M CHI SJS Matched
Shea Weber July 18/12 14 years $110M NAS PHI Matched
Ryan O’Reilly February 28/13 2 years $10M COL CGY Matched

As you notice, only eight players have signed offer sheets as a RFA and all but one was matched by the team. Only Brian Burke‘s Anaheim Ducks backed out and took, instead, the compensation which was the Oilers 1st (12th), 2nd (43rd) and 3rd (73rd) round picks in the 2008 draft.

Everyone else matched the original offer, which is quite telling. If a team is going to brave the rest of the league by signing a player to an offer sheet, they will usually sign players who can have, in their opinion, an impact in the NHL. More interesting though is what happened (or not) to those so-called gutsy GMs who dared to break the unwritten rule.

  1. The first GM out of the gate after the salary cap CBA was Bobby Clarke, who signed Kesler back in September 2006.  He was replaced by Paul Holmgren the following month, on October 22, 2006.
  2. Kevin Lowe is the GM who signed both Vanek and Penner in 2007. He lasted a year before being replaced by Steve Tambellini on July 31, 2008.
  3. Canucks’ GM Mike Gillis was just hired on April 23, 2008 prior to signing Backes to an offer sheet the next summer. St-Louis Blues GM at the time, Larry Pleau, gave him a taste of his own medicine when a week later, he signed Bernier, who was just acquired in a trade four days earlier by Gillis, to an offer sheet of his own. Gillis completed several minor deals after, but had to wait to 2013 before being able to complete a substantial trade, acquiring the 9th pick overall (Bo Horvat) from the Devils for Cory Schneider.
  4. Doug Wilson of the San Jose Sharks is definitely the exception to the rule. He has completed several trades, including some important ones, after signing Hjalmarsson to an offer sheet in 2010. Wilson has even completed three trades with the Blackhawks since that time!
  5. Faced with the loss of Chris Pronger to injury, Paul Holmgren and the Flyers were in desperation mode and signed Shea Weber to the richest offer sheet in NHL history, hoping that the Predators couldn’t match… but they did. In the two following years at the helm of the team, Holmgren has completed a dozen trades, but none of impact. In the book released for the Flyers’ 50 anniversary, he admitted being unable to find people to trade with because of it. He had to step down and give way to Ron Hextall for that reason.
  6. Brian Burke, then interim GM for the Flames and who was quite verbal against Kevin Lowe’s offer sheet to Dustin Penner six years earlier while GM with the Ducks, signed Ryan O’Reilly to an offer sheet of his own in what is perhaps the most hypocritical offer sheet signing ever. Colorado matched and Burke went back into is President’s role making ways to Brad Treliving just a few months later.

So Habs’ fans and media, unless you want Marc Bergevin out, which clearly some of you do, what do you really think the odds are of him signing one of Drouin or Draisaitl to an offer sheet? Do you honestly think for a minute, based on facts and history, that it would be for the best of the team, of the organization? Oh don’t get me wrong here, if Drouin is available as rumours around the NHL seem to suggest, Bergevin will be all in to get him, but it will be, in my humble opinion at least, through the traditional way of trade. As for Draisaitl, don’t lose too much sleep over that folks, he will be re-signed in Edmonton.