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CBA FAQ, Chapter 4: Salary Arbitration

Finishing up with Restricted Free Agency, this chapter will cover the process of Salary Arbitration for RFAs.  

Special Definition for Article 12:

From Section 12.1.c:
As used in this Article, "age," including "First SPC Signing Age," means a Player's age on September 15 of the calendar year in which he first signs an SPC regardless of his actual age on the date he signs such SPC.

What are the eligibility requirements for salary arbitration?

Only Restricted Free Agents who meet the experience requirements in the table below are eligible for player-elected or club-elected salary arbitration.  From 12.1.a:

(a) A Player is eligible for salary arbitration if the Player meets the qualifications set forth in the following chart and in Section 12.1(b) below:

First SPC Signing Age           Minimum ... Experience Required ... for Salary Arbitration
18-20                                        4 years professional experience
21                                            3 years professional experience
22-23                                        2 years professional experience
24 and older                              1 year professional experience

A Player aged 18 or 19 earns a year of professional experience by playing ten (10) or more NHL Games in a given season. A Player aged 20 or older (or who turns 20 between September 16 and December 31 of the calendar year in which he signs his first  SPC) earns a year of professional experience by playing ten (10) or more Professional Games under an SPC in a given season.

How can a player elect salary arbitration?

A Player can elect arbitration by notifying their club, the NHLPA, and the league's Central Registry no later than 5:00 pm New York time on July 5th.  (Section 12.2)

How can a club elect salary arbitration?

A club can only elect salary arbitration if a) the player meets the eligibility requirements and b) the player has never been subjected to club-elected arbitration in the past.  If either of these conditions are not met, the club's election is null and void.  Assuming that the club has the right to elect arbitration, there are two possible ways they can do so.

For a player making $1.5 million or more the previous year (salary + bonuses), the club can skip giving the player a qualifying offer and elect arbitration to determine the player's salary for the upcoming league year.  In these cases, the player's awarded salary cannot be less than 85% of the previous year's salary (Section 12.3.a.i and ii).  The deadline for a club to elect arbitration in this manner is 5:00 pm New York time on the later of June 15th or 48 hours after the conclusion of the Stanley Cup Finals (Section 12.4.a).

If the club does extend a Qualifying Offer, and the player does not accept it or elect arbitration by his deadline of July 5th, the club may elect to take the player to arbitration.  In these cases, the player's awarded salary must be greater than or equal to the previous year's salary (Section 12.3.b.i and ii).  A club can only choose to take a player to arbitration in this manner between 5:00 pm New York on July 5th and 5:00 pm New York time on July 6th; a 24 hour window after the player's deadline to elect arbitration (Sections 12.2 and 12.4.b)

No club may elect to take more than 2 players to arbitration each year.  (Section 12.3.d)

How does salary arbitration affect RFA contract negotiations?

Regardless of whether the club or the player elected to go to arbitration, the player is taken off the market immediately.  They are no longer eligible to receive offer sheets or negotiate with any other clubs.  This is why a player can never been subjected to club-elected arbitration more than one time, because by electing arbitration the club effectively takes away the player's right to free agency.  (Section 10.2.a.i.B)

When may a club walk-away from a player after the arbitrator has made his decision?

If the club elected to take the player to arbitration, they have no right to walk-away from any award granted. (Section 12.10.e)

When a player elects arbitration, the club can only walk-away from the award and choose not to sign the player if the salary award is over a certain threshold. This dollar amount is adjusted upward ever year, consistent with the percentage increase of the league's average player salary.  In Section 12.10 below, you will see the original dollar amount listed in the CBA replaced with the adjusted amount for the 2011 offseason.  There is also a limit to the number of awards a club can walk-away from in a given year, depending on the number of arbitration cases they have. 

(a) If ... the award issued is for $1,555,243* or more per annum, then the Club may, within forty-eight (48) hours after the award of the Salary Arbitrator is issued (or, if a Club has any other Player ... for whom a decision has not been rendered by a Salary Arbitrator ... forty-eight (48) hours after ... that Player's arbitration case is settled), notify the Player ... that it does not intend to tender to the Player an SPC based on the award as determined by the Salary Arbitrator. Upon receipt of that notice, the Player shall automatically be deemed to be an Unrestricted Free Agent.
...
(c) ... a Club may exercise the walk-away rights referred to therein not more than one (1) time in a League Year in which the Club has only one (1) salary arbitration award, one (1) time in a League Year in which the Club has two (2) salary arbitration awards, two (2) times in any League Year in which the Club has three (3) salary arbitration awards, two (2) times in any League Year in which the Club has four (4) salary arbitration awards, three (3) times in any League Year in which the Club has five (5) salary arbitration awards and so on...

*Not a published number, but I calculated the increase to the best of my ability.

What is the procedure for the arbitration hearing?

In December of the previous league year, the NHLPA and the league will jointly appoint the 8 arbitrators.  Each arbitrator will then provide 7 dates on which they are available for arbitration hearings.  All 56 possible hearings will be scheduled between July 20th and August 4th.  (Sections 12.6, 12.7, and Exhibit 15) The hearings will be scheduled so that no team has more than one hearing per day and no agent has more than one client with a hearing per day. (Section 12.7).

The party who did not elect arbitration will have the right to decide whether to arbitrate a one year SPC or a two year SPC.  So the player will choose the term if the club elected arbitration, and vice versa.  If the player is only 1 year away from qualifying for Group 3 UFA status, only a one year term can be arbitrated. (12.9.c)

The club and the player each compile a brief of no more than 40 pages (not including tables) to present the evidence they want considered by the arbitrator. (12.g.b)

The following items are admissible in the brief, from Section 12.9.g.ii:

(A) the overall performance, including official statistics prepared by the League (both offensive and defensive), of the Player in the previous season or seasons;
(B) the number of games played by the Player, his injuries or illnesses during the preceding seasons;
(C) the length of service of the Player in the League and/or with the Club;
(D) the overall contribution of the Player to the competitive success or failure of his Club in the preceding season;
(E) any special qualities of leadership or public appeal not inconsistent with the fulfillment of his responsibilities as a playing member of his team;
(F) the overall performance in the previous season or seasons of any Player(s) who is alleged to be comparable to the party Player whose salary is in dispute; and
(G) The compensation of any Player(s) who is alleged to be comparable to the party Player, provided, however, that ... the Salary Arbitrator shall not consider a Player(s) to be comparable to the party Player unless a party to the arbitration has contended that the Player(s) is comparable; ...

In contrast to the above, the following will not be allowed as evidence in the hearing, from Section 12.9.g.iii:

(A) Any SPC the term of which began when the Player party to such SPC was not a Group 2 Player;
(B) Any SPC entered into by an Unrestricted Free Agent, including SPCs signed by Players after the Player's Club has exercised a walk-away right pursuant to Section 12.10;
(C) The SPC of any Player who is not being offered as a comparable Player to the party Player;
(D) Qualifying Offers made by the Club pursuant to Section 10.2(b);
(E) Any prior offers or history of negotiations between the Player and the Club;
(F) Testimonials, videotapes, newspaper columns, press game reports or similar materials;
(G) Any reference to actual or potential walk-away rights;
(H) Any award issued by a Salary Arbitrator as to which a Club exercised its walk-away rights pursuant to Section 12.10;
(I) The financial condition of the Club or the League;
(J) References to a Club's Upper or Lower Limit, or to the Players' Share;
(K) Any salary arbitration award issued in 2005-2006; or
(L) Any reference to any salary or other compensation information in any salary arbitration opinion that took place prior to the execution of this Agreement... 

The Arbitrator will then issue his decision with 48 hours of the hearing.  Their decision must include the player's salary, any minor league clauses (if applicable), and a brief statement explaining the reasons behind the decision.  (Section 12.9.n) 

Once the arbitrator's decision has been received, the player and club must finalize an SPC, with the effective date of the contract being the day the arbitrator's decision was rendered. The terms set by the arbitrator cannot be modified.  The only exception would be if the club decides to exercise its walk-away rights, if they have them, within 48 hours of the decision.  (Section 12.5)

What happens when the club is forced to sign an SPC that puts them over the salary cap?

The club needs to make any moves necessary to get back within the off-season payroll range (including the 10% overage) when the SPC based on the arbitrator's decision is finalized.  To help the team prepare to be under the Upper Limit when the Regular Season begins, the team will have a 48 hour window, beginning 3 days after the decision from their final arbitration hearing is received, in which they may buy-out another player on their contract list.  No player making less than $1 million can be bought out under this clause. (Sections 11.18 and Exhibit 1's Paragraph 13).  The details of the buy-out process will be covered in a future chapter.  

 

Disclaimer:  The content in this CBA FAQ is based on my own interpretation of the wording in the NHL Collective Bargaining Agreement, unless a link to the source of another person's interpretation is explicitly provided.  The full PDF document of the 2005 CBA is available for public download from the CBA section of NHL.comI will do my best to ensure the accuracy of each article, but I welcome any comments, feedback, and discussion to improve and/or correct each section.

This item was written by a member of this community and is not necessarily endorsed by <em>Broad Street Hockey</em>.

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