Aho Offer Sheet: Bergevin Skating On Thin Ice?

You sort of expect it to happen every year, but it doesn’t. Yet, it’s totally legal according to the Collective Bargaining Agreement. Every single year, there’s a tool totally under-utilized by NHL General Managers for what seems to be a boys’ club unwritten rule. And then BOOM! There it is. A good young Restricted Free Agent signs a contract with a team other than their own. And the Montreal Canadiens shocked the hockey world on this Canada Day of by going for it, by signing a good young talent to an offer sheet. But it comes at what risk?

Desperate times call for desperate measures… and it seems like Canadiens’ GM Marc Bergevin has reached that desperation level. The Canadiens apparently were in discussions up until the very end with two high profile pending UFA’s in Matt Duchene and Anders Lee.

Matt Duchene tells @DavidAmber he was close to signing in Montreal. Has tremendous respect for that franchise.#signingseason— John Shannon (@JSportsnet) July 1, 2019

But as we know, Duchene put pen to paper with the Nashville Predators, a seven year deal worth $56 million. Tennessee has the third most attractive tax rate amongst NHL teams after the two Florida teams. In order to match the Preds’ average of $8 million, the Habs would have had to offer him around $71.4 million ($10.2M AVV) for the same net pay in Duchene’s pockets.

Having missed on Duchene, then the news came out that it was down to the Habs and the Islanders for signing Anders Lee.

All signs point towards the #Habs and #Isles battling for Anders Lee— Andy Strickland (@andystrickland) July 1, 2019

But just before the official announcement that Lee had signed an extension with the Islanders, the Canadiens announced that they had signed restricted free agent Sebastian Aho to an offer sheet.

The offer sheet signed by Aho

While I won’t deny that Bergevin and his team had this option lined up for a while, it seems pretty obvious that it was plan C for them. Seeing that plan A (Duchene) and B (Lee) didn’t work, Bergevin certainly didn’t want to come out of yet another free agency summer without at least trying something. To me, this is a sign of desperation not because Aho isn’t a worthy candidate, but because Bergevin is willing to risk his relationship with fellow GMs to make something happen.

According to sources, Carolina got calls from 3 different teams today on Sebastian Aho, hinting at an offer sheet. The ‘Canes told them they would match any offer sheet. Carolina did tell them they would entertain trade conversation. Believe that Habs is among 3 teams who called— Pierre LeBrun (@PierreVLeBrun) July 1, 2019

What I will give full credit to Bergevin for is how he handled the situation. As mentioned by NHL Insider Pierre LeBrun, the Canadiens’ GM did call his homologue Don Waddell prior to presenting an offer to Aho. And in his press conference from Carolina, Waddell acknowledged that fact.

Bergy did things right though. Waddell did say that the #Habs contacted him trying to work out a trade prior to the offer sheet. #GoHabsGo
Bergevin a fait les choses proprement. Waddell a dit que les #Canadiens l’ont contacté pour compléter un échange avant l’offre hostile.— 📰 J.D. Lagrange 🎙 (@Habsterix) July 1, 2019

In his own press conference, Bergevin qualified his offer as tactical based on Carolina’s “situation”. It’s a well published fact that the Canes’ owner, Thomas Dundon is in hot water, having invested $250 million into the Alliance of American Football that shut down soon after. So their offer to Aho was heavily bonus structured, with all bonuses due on the first of July except the first one, due 5 days after the approval of the contract. Here’s how the contract is structured:

Aho agreed to a five-year, $42.27 million deal, coming with a cap hit of $8.45 million cap hit. As shown above, only $3.65 million of the $42.27 million is actual salary. The rest ($38.62 million) is bonuses.

Interesting to note that the first $11.3 million will be due 5 days after the contract is made official. Then he will get paid $700,000 the following season, with an additional $9.87 million bonus due on July 1st, 2020. Based on Gary Bettman‘s historical negotiation tactics, we may very well see a lockout that year, affecting revenues. So that’s a grand total of $21.87 million in hard cash within the first 12 months! Can Dundon swallow that pill?

According to Forbes the #Habs made $90 million at the gate, operating income $102 million.

Canes $27 million at the gate, -$3.9 operating income.

Dundon does not like to spend, and this team makes zero money…this week will be a hard one to guess what will happen.— Eric Lepine (@ericlepine26) July 1, 2019

The risk is real

As we’ve explored on this very blog, breaking the Code as GM can be costly. As former Philadelphia Flyers’ GM Paul Holmgren mentioned in Jay Greenberg‘s book “The Philadelphia Flyers at 50”, offer sheets can have serious repercussions. One of the reasons Holmgren stepped down from the general manager’s job was because he sensed other GMs didn’t want to deal with him after he signed restricted free-agent Shea Weber to a 14-year, $110-million offer sheet in 2012.

“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,” Holmgren told Greenberg.

Holmgren said that even though restricted free-agent offers are legal, they are “really frowned upon” and that his relationship with a lot of other general managers “changed.”

Marc Bergevin

And it had. After the Weber offer sheet was signed and matched, Holmgren has completed 12 trades, all of them considered minor trades. To the point where he felt like it was best for the team to step down and let Ron Hextall do the General Manager’s duties.

With that information, you can choose to ignore this reality, like many fans I’ve exchanged with on Twitter by finding 1,000 excuses, or you can be legitimately concerned about Bergevin’s ability to further improve his team with the NHL GMs blacklisting him. Yes, it’s a “what if” scenario and no one is hoping more that yours truly that GMs will get over it. But ignoring that possibility is a huge mistake.

Either way, I’m truly hoping that the Habs are successful as Aho is a very good young player. Either way, the damage could already be done. Let’s hope not. Go Habs Go!

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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!