With #WeberWatch in full effect, I thought I would try something different with this week’s CBA 101 article. The signing of Shea Weber to an offer sheet has brought a few lesser known aspects of restricted free agency to the forefront. I thought I would use this as an opportunity to touch on them.
The first concept I’d like to discuss is regarding Weber’s restricted free agent compensation. When the offer sheet was first signed there was quite a bit of confusion as to what the compensation would actually be. Many people thought that it would be two first rounders, a second rounder, and a third rounder based upon the $7.857 million cap hit. However, that is not the case.
Section 10.4 of the Collective Barganing Agreement states:
The number and quality of draft choices due to the Prior Club shall be based on the average annual value of the compensation contained in the Principal Terms (as defined in Section 10.3(e) hereof) of the New Club’s Offer Sheet (determined by dividing such compensation by the lesser of the number of years of the Offer Sheet or five), based on the following scale:
As noted by the bolded statement, for offer sheets that are five years or longer, the compensation amount is actually divided by five, rather than by the number of years in the contract. Subsequently, the Weber offer sheet is $110 million divided by five for a $22 million dollar value when assessing compensation. That quite clearly puts it in the highest category of four first-round draft picks.
Secondly, it is quite commonly known that a single player cannot account for a cap hit greater than 20 percent of the upper limit. However, it is also true that a single player may not earn more than 20% of the upper limit in salary and bonuses as well. Per section 50.6(a)
(a) No SPC may provide for a total aggregate Player Salary and Bonuses that is in excess of twenty (20) percent of the Upper Limit for any League Year (the ”Maximum Player Salary and Bonuses”).
With a $70.2 million cap, the maximum amount a player can make in salary and bonuses is $14.04 million. Weber will essentially be earning the maximum amount allowed during the first four years of the deal. He will pull in $1 million in salary, and $13 million in a signing bonus each year.
You’ve probably heard the talk that Weber is due to earn $27 million in the next year alone, and you may be asking “well how is that possible if he can’t make more than $14.04 in a given year?” The answer is that a “league year” is different than a “calendar year”.
As defined in the CBA:
“League Year” means the period from July 1 of one calendar year to and including June 30 of the following calendar year or such other one year period to which the NHL and the NHLPA may agree.
So Weber will be paid $13 million in a signing bonus right away, make another $1 million in salary during the 2012-2013 season, and then be paid another $13 million dollar signing bonus on July 1, 2013. That date is day one of the next league year, but still within a single calendar year of the time of the offer sheet; which explains the “$27 million in one year” talk.
I’d imagine most people are aware that Nashville has seven days to decide whether or not to match the offer sheet. As noted in bold below, per section 10.3, they also are not allowed to trade Weber’s rights to another team that would then be willing to match, or trade him, period, within one year of matching the offer sheet.
(a) When a Restricted Free Agent receives an offer to sign an SPC from any Club (the “New Club”) other than his Prior Club, which offer the Player desires to accept, he shall give to the Prior Club, in accordance with Exhibit 3 hereto, a completed certificate substantially in the form of Exhibit 6 attached hereto (the “Offer Sheet”), signed by the Restricted Free Agent and the New Club, which shall contain the “Principal Terms” (as defined below) as well as all other terms of compensation of the New Club’s offer. The Prior Club, within seven (7) days after the date it receives the Offer Sheet, may exercise or not exercise its Right of First Refusal, which shall have the legal consequence set forth below. 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.
(b) If the Prior Club gives the Restricted Free Agent and his Certified Agent, if any, notice, in accordance with Exhibit 3 hereto, that it is exercising its Right of First Refusal (a “First Refusal Exercise Notice”), such notice to be substantially in the form of Exhibit 7 attached hereto, to the Player’s and his Certified Agent’s, if any, address or facsimile number listed on the Offer Sheet, if any, within the seven (7) day period, such Restricted Free Agent and the Prior Club shall be deemed to have entered into a binding agreement, which they shall promptly formalize in an SPC, containing: (i) all the Principal Terms (subject to subsection (e) below); and (ii) such additional terms as may be agreed upon between the Restricted Free Agent and the Prior Club. 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.
However, this does not mean that the Flyers and Predators could not work out a trade in a “Chris Gratton scenario”. Our own Bob H wrote a great piece on the topic last week; but what it essentially means, is that the Flyers and Preds could make an altogether separate trade. They could come to an agreement where the Predators would decline to match the offer sheet, receive the four first rounders as compensation, but then trade some or all of those picks back to the Flyers in exchange for players.
I hope this has helped lay out the Shea Weber situation from a CBA perspective, and more importantly, I hope we all enjoy the rest of #WeberWatch!