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MELTZER'S 411: The Offer Sheet

Get to know the rules, regulations & history of the NHL's hot button topic this offseason

by Bill Meltzer @billmeltzer

Both before and after the implementation of a salary cap system in the National Hockey League, the use of offer sheets as a means of attempting to acquire prominent restricted free agents has been uncommon. Although offer sheets are a perfectly legal if aggressive strategy under the Collective Bargaining Agreement (CBA), there is often controversy that surrounds their use. 

Nevertheless, there have been a handful of prominent offer sheet signings around the NHL over the years. The Flyers have been involved in three such cases during their history. 

In Aug. 1997, the organization successfully acquired restricted free agent center Chris Gratton from the Tampa Bay Lightning via offer sheet (although the arrangement was, more accurately, turned into a de facto trade as two "separate" transactions made on the same day).  

Unable to afford to match the Flyers' heavily front-loaded five-year, $16.5 million offer sheet to Gratton, the Lightning agreed not to match the offer sheet and received four first-round picks (1998, 1999, 2000, and 2001) as compensation. The picks were then immediately flipped right back to the Flyers in exchange for right winger Mikael Renberg and defenseman Karl Dykhuis.

In Sept. 2006, the Flyers signed forward Ryan Kesler, then a struggling young player with the Vancouver Canucks but one with obvious high upside for the future, to a one-year, $1.9 million offer sheet. Although the Canucks and the Kesler camp were at loggerheads and the salary the Flyers offered was higher than Vancouver's "final offer" to their restricted free agent, Vancouver quickly matched the offer sheet. 

In July 2012, the Flyers signed restricted free agent Nashville Predators defenseman Shea Weber to a heavily front-loaded 14-year, $110 million offer sheet after attempts to work out a trade failed. Eventually, the Predators matched the offer sheet.

Since the time of the Weber sheet, only one NHL team has gone the offer sheet route in effort to acquire another team's restricted free agent. In 2013, the Calgary Flames attempted to acquire unsigned two-way center Ryan O'Reilly, then with the Colorado Avalanche. O'Reilly signed a two-year, $10 million offer sheet with Calgary. The Avalanche matched.  

League-wide, the last successful offer sheet was in July 2007, when the Edmonton Oilers signed Dustin Penner to a five-year, $21.5 million offer sheet, and the Anaheim Ducks declined to match. Anaheim received 1st-round, 2nd-round and 3rd-round picks in the 2008 NHL Draft.

After a six year absence of offer sheets, could there be one or more in the NHL this summer? 

That is difficult to predict but there are a handful of prominent restricted free agents around the NHL who play for teams that have salary cap issues to figure out before re-signing their own RFAs; a situation in which their hand could be forced by an offer sheet. 

Here are the rules for signing a restricted free agent to an offer sheet and the compensation levels that would be required if the RFA's current team declines to match the competing team's offer sheet.

Any salary to $1,395,053: No compensation owed
$1,395,054 to $2,113,716: one 3rd-round-pick owed
$2,113,717 to $4,227,437: one 2nd-round-pick
$4,227,438 to $6,341,152: one1st-round pick and one 3rd-round-pick
$6,341,153 to $8,454,871: one 1st-round, one 2nd-round, one 3rd-round-pick
$8,454,872 to $10,568,589: two 1st-round, one 2nd-round, one 3rd-round pick
$10,568,590 and up: four 1st-round-picks owed.

 

In order to sign a restricted free agent to an offer sheet, the following rules apply:

1) The unsigned player must be an offer-sheet eligible restricted free agent. Specifically, all the following conditions apply: 

  • a) He must have had at least one NHL contract expire; 
  • b) He must have played at least 80 NHL games if a forward or defenseman, or 28 NHL games if a goalie (applies only for players who have 3 years of NHL service). 
  • c) He must be younger than age 27 as of July 1 of that year; 
  • d) He must be without a contract for the next season; 
  • e) He must be tendered a qualifying offer by his current team (otherwise, he becomes an unrestricted free agent). 

2) The player who signs the offer sheet must be willing to accept the outcome, however it goes. In other words, he must go back to his original team if they match the offer and he must honor the offer sheet as a binding contract with a new team if the offer sheet is not matched.

3) The team utilizing the offer-sheet must have the CBA-required draft pick assets in hand before signing the player to the offer sheet. Specifically, the CBA requires that the compensatory Draft picks must be those originally belonging to the offering team. 

For example, let's say that a team has traded its own 2020 first-round pick but also acquired one that belonged to another team. Under CBA rules, this is NOT acceptable compensation for a offer sheet that requires first-round compensation. Additionally, even if the pick in question originally belonged to the offering team, it may not be traded and then reacquired for purposes of meeting offer sheet compensation requirements.

4) Once an RFA is signed to an offer sheet by another team, the player's current team may not trade him during their seven-day matching period. That includes a trade to the team that signed him to the offer sheet (however, as with the Gratton situation in 1997, teams are allowed to agree not to match the offer, accept the required compensatory draft picks, and then flip the picks and/or other assets to the offer sheeting team as a de facto trade). If the offer sheet is matched, the team that matches the offer subsequently may not trade the player for one season.

 

Stay tuned throughout the week as PhiladelphiaFlyers.com goes through rules, regulations and the history of other topics related to off-season transactions and the NHL Entry Draft.  Next Topic: The Free Agency Timeline

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