CBA Explained: Contract term limit, additional year expires upon reaching free agency

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Posted on at 1:00 pm

Prior to the expiration of the old Collective Bargaining Agreement (CBA), I ran a column I called CBA 101. In it, I attempted to explain some of the more important nuances of the CBA as it relates to putting a team on the ice. Many (honestly, most), of those topics are still applicable today, so I would encourage you to check them out.

People frequently ask me “why do you care about that stuff?” Well, the way I see it, this boring, legal verbiage directly effects the team that Paul Holmgren and other General Managers are able to put on the rink. Therefore, I find it both incredibly important and compelling.

It’s not good enough for me to just accept that a player transaction occurred be it a trade, waiver acquisition, re-signing, free agent signing, or what have you. I want to know why. Why did he get that much money? Why is that trade rumor completely impossible? Why did they waive him?

So here I am, attempting to explain it.

While the new CBA has not yet been fully transcribed, a summary of terms is available. And with that, let’s take our first look into some of the finer elements of this new CBA. My column will run weekly, under the title “CBA Explained”. I hope you find it educational and interesting. Please don’t hesitate to ask me any questions, or to request any specific topics.
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By now, many people in the hockey community are aware that one of the larger changes in the new CBA is surrounding contract term limit. Previously, there were no limits on contract term, and in an attempt to ultimately drive down cap hit, teams were handing out exceptionally long contracts.

Now contracts are capped at seven years, or eight years if the team is re-signing their own player.

However, upon inspecting the summary of terms, there is one little wrinkle that is slightly interesting.

From the summary of terms, item #17:

“Maximum contract length of seven (7) years subject to Club’s ability to re-sign its own Player for a term of up to eight (8) years (provided the Player was on the Club’s Reserve List as of the most recent Trade Deadline). With respect to potential Unrestricted Free Agents only, the option to resign a Player for an 8-year term expires with the opening of Free Agency on July 1.”

As indicated by the bolded statement, a team’s ability to re-sign their own player expires upon that player actually reaching free agency on July 1 of the given year. Now, it’s pretty uncommon that a player enters the free agent market only to eventually re-sign with their club, but that is still a pretty important designation.

Just this past summer, the New Jersey Devils were considered to still be an option for Zach Parise before he ultimately signed with the Minnesota Wild. One of the Devils’ biggest bargaining chips in this circumstance (had it taken place under the current CBA), would be that they could offer an additional year. Well, they would have had to convince Parise to take that additional year before he ever has a chance to field offers on the market.

I, for one, hope Giroux gets his eight years from the Flyers well before he ever approaches unrestricted free agency.

My column will run weekly, under the title “CBA Explained”. I hope you find it educational and interesting. Please don’t hesitate to ask me any questions, or to request any specific topics.

  • http://www.facebook.com/parker.smith.71 Parker Smith

    I think this article might be off a bit. As I understand it, a team does not lose their ability to resign a player once they hit free agency, however that 8th year comes off the table. So they are now on equal footing with other teams to negotiate with the FA player. This was an important detail because a lot of teams were concerned that every player would hit the FA market and, after receiving their top offer, go back to their original team for only slightly more money but an extra year tacked on to reduce the cap hit. The CBA aimed at driving more equality for FA signings and this was the best solution they came up with. A team can still resign its own player out of free agency, but that team is limited to the same 7-year maximum as every other team.

    I think it will be really interesting to see how both teams and players handle this new element. The incentive for an owner to offer an 8-year deal primarily revolves around the cap-hit. If the player is really good but you don’t have the cap room to make a compelling enough 7-year deal to an FA, then you can alleviate that hit by offering more money but an extra year. However, in this case, the player has little incentive to accept because he is sure to fetch more on the FA market where other teams might not have the same restrictive cap room. In the reverse scenario, if a team has the cap room to work with, then they will save themselves on the total investment amount if they let their player go into FA. It is better for the ownership group to limit the sunk salary investment if they can sustain the cap hit, so dodging the 8th year would be beneficial. However, in this situation, the player might feel slighted because the total amount (whatever it is) would be one year less than he could have made if the team had made a compelling 8-year offer before free agency.

    Ultimately I think 8-year contracts will be the result of mutual respect and good faith. If you have a good player who wants to resign with his time and the team wants to resign him – they’ll sign the 8-year deal based on a fair market appraisal. Maybe the team is getting a bit of a bargain and maybe the player is being overpaid a bit. We’ll never really know, but it isn’t important because the contract is the equivalent of a bro-hug. It’s a buddy-buddy contract and not a business decision in that case.

    • http://www.flyersfaithful.com/ Kevin Christmann

      Yes, you are correct. Only that additional 8th year would become unavailable upon reaching free agency. They can still re-sign with their own club for 7 years.