Expiring contracts are the missing piece of the NHL expansion draft puzzle

It’s clear that NHL expansion is right around the corner, and with the addition of new teams to the fold comes talk of the inevitable expansion draft. Essentially, an expansion draft allows the newly-constituted teams to take certain players off the rosters of existing teams, in order to fill their new ranks.

Of course, existing teams are allowed to protect their most important players in an expansion draft. But by the same token, it’s in the NHL’s best interest to force those teams into some tough decisions regarding which players to keep. After all, allowing for the expansion team(s) to be at least mildly competitive in their early years goes a long way in helping them to build a fanbase in a new market.

To that end, it became public knowledge this month that the league will allow current teams to protect a maximum of seven forwards, three defensemen, and one goaltender in the forthcoming expansion draft. Players that have completed two or fewer professional seasons in North America at the time of the draft are exempt, and do not need to be protected nor can be poached by an expansion team. This allows for prospects and still-developing young talent to stay with their current teams.

Still, most contending squads have at least nine valuable forwards and four or five respectable defensemen. The current rules would force those teams to expose at least a couple useful scorers and blueliners for potential poaching. Of course, this has set off a firestorm of speculation on the part of fans, wondering which players their favorite team might be in danger of losing. With the draft likely to occur in June of 2017, it’s become commonplace for fans to project which players would need to be protected now that the vast majority of rules have been released.

But one very important grey area remains. Because of the draft’s spot in the league calendar, it’s still unclear how expiring contracts will be treated in the expansion draft. Until that question is answered definitively by the league, making accurate projections regarding each team’s situation becomes a fool’s errand.

The timeline makes everything complicated

The NHL has indicated that they plan to hold the expansion draft in June, after the conclusion of the Stanley Cup Finals and before the normal entry-level Draft for upcoming prospects.

Intuitively, this makes sense. Holding the draft at that time would not only preempt the normal draft, but also the start of free agency, which occurs on July 1st each year. Expansion teams would have the core of their roster built via the expansion draft, allowing them to use the normal draft and free agency to fill any holes left.

The problem is where mid-to-late June falls in the league calendar. The reason why free agency starts on July 1st is because the league year ends on June 30th. At midnight that night, all contracts flip over to the next season, and players on expiring contracts officially become free agents.

What this means is that on June 20th (or whenever the expansion draft is held), a player on a soon-to-be expiring deal is technically still the property of his old team, even if that team has no intention of re-signing him. Still, at first glance, this doesn’t seem to be much of an issue. If a team has no interest in re-signing a player, they could just choose to leave him unprotected in the expansion draft. The player doesn’t waste a coveted “protection” spot, and the team can move on in a couple weeks.

Unfortunately, two other expansion draft rules throw a wrench into that line of thinking.

The no-movement clause debate

A key point of contention in the expansion draft discussion is how to deal with no-movement clauses. Clearly, a player with an NMC would not want to be exposed to the expansion draft — the reason why he negotiated the clause into his contract in the first place was to avoid leaving his current team. At the same time, the NHL does not want to reward teams with lots of NMC contracts by essentially giving them extra protection slots.

The current line of thinking is that all players with no-movement clauses in their contracts are required to be protected by their teams. For some franchises, this isn’t a big deal. For example, in June of 2017, the New York Islanders will have John Tavares and Johnny Boychuk under contracts with NMCs. Obviously, the Isles would protect both players anyway, as Tavares and Boychuk are key members of the team’s core.

For other teams, the rule could be quite painful. It’s easy to see the Columbus Blue Jackets wanting to expose Nick Foligno, Scott Hartnell, David Clarkson and Fedor Tyutin, but they would not be permitted to do so because all four possess NMCs in their contracts.

But that still seems fair. Columbus is basically getting punished for poor long-term contract negotiating. But what about players whose contracts expire after the 2016-17 season but contain no-movement clauses?

As we noted, the league year does not end until June 30th. The expansion draft would be held a week in advance of that date. Per the letter of the law, teams with contracts ending on 6/30 that contain NMCs would be forced to waste protection spots despite possibly having no interest in re-signing the players.

Travis touched on this here last week regarding R. J. Umberger’s contract and how it could be an issue for the Flyers, but this isn’t an isolated issue. There are a whopping 13 players that fall into this category, on both big market and small market teams.

A few of these would be easy to swallow for their respective teams. Detroit likely wouldn’t have an issue spending a protection slot on Pavel Datsyuk, and same with San Jose and Joe Thornton. But imagine a scenario where Arizona has to “protect” Chris Pronger despite the fact that he hasn’t played since 2011. What if Tampa Bay loses young star Andrei Vasilevskiy because the team can only keep one goalie and Ben Bishop’s no-movement clause requires it be him?

Now, there’s a logical fix to this ridiculousness. The NHL could come out and say that only players with no-movement clauses applicable to the season after the expansion draft must be protected. But no such assurances have come from the league offices or national reporters. Until then, we have to assume that this bizarre possibility remains on the table.

But there’s another, mind-bending reason why the expiring contract question needs to be answered as soon as possible.

The “25 Percent” Rule

In Elliotte Friedman’s always fantastic ’30 Thoughts’ weekly article, the Sportsnet reporter dropped this tidbit yesterday.

20. In all of the discussions about potential expansion draft rules, a couple execs warned the “25 per cent rule” did not get enough play. If you spend to the projected ceiling of $74 million, you’ll have to expose at least $18.5 million of unprotected salary. That’s not going to be easy, especially if players with no-move clauses can’t be exposed.

Like many of the other expansion draft rules, this makes sense at first glance. The “25 percent rule” is clearly intended to force teams to expose established veteran talent to the new teams, deepening the available talent pool.

But without clarification on the status of expiring contracts, the question becomes obvious — 25% of what? The team’s salary obligations from the previous season? The team’s salary obligations for the following season?

Let’s use the Flyers as a case study. First, we’ll put together a fairly realistic guess at Philadelphia’s roster and salary cap obligations for next season, assuming no free agency signings.

Here’s the problem with the 25 percent rule. If teams are required to expose 25% of their cap hits from the previous season, most teams will achieve that threshold simply by the usual loss of pending unrestricted free agents. Looking just at the Flyers, their pending free agents after next season amount to 42.74% of their 2016-17 total cap spend.

Even if they retain certain players (Gostisbehere, Del Zotto, Mason, Laughton and Cousins are likely candidates), Philadelphia probably would still adhere to the “25 Percent Rule” simply through usual roster turnover. No tough decisions would need to be made. Technically, the players on expiring contracts would be left “unprotected,” so Philadelphia would be following the rules. But it does nothing to expand the talent pool for expansion teams, since those players were hitting free agency anyway.

The NHL could also choose to require teams to expose 25% of their 2016-17 cap spend but mandate that expiring contracts not be included in the 25%. Considering Philadelphia’s $71.87 million projected cap obligation, that would mean that they would be forced to expose a shade under $18 million worth of non-expiring contracts.

Of course, $18 million is just under half of Philadelphia’s current obligations for the 2017-18 season — quite a high percentage of their future salary. As more players are signed to long-term extensions over the next twelve months, that obligation will almost certainly rise, cutting down on the overall percentage. But it still invites a scenario where a team with a large number of expiring contracts will only be able to meet the 25 percent threshold by exposing some truly essential players on their roster.

Basically, the 25 percent rule doesn’t make sense until there’s clarification on how expiring contracts will be treated. If the NHL plans to treat expiring contracts as part of the expansion draft pool, then players like Pronger and Umberger will have to be protected by their teams, and the 25% rule will be totally ineffective in achieving its goal of increasing the talent pool. But if expiring contracts are exempt, then it’s unclear what 25 percent truly even means, and whether it could unfairly punish teams with high-priced players about to hit the open market.

Conclusion

The NHL expansion draft promises to be an intriguing period for teams and fans alike. The prospect of significant, unpredictable roster turnover should have the speculation train running wild, and will be a boon for mainstream media sites and blogs alike.

Unfortunately, the lack of clarification on the question of expiring contracts makes informed speculation basically impossible at this point. Not only does the presence of no-movement clauses on expiring contracts threaten to penalize teams that have no intention of retaining those players, expiring contracts also call into question the viability of the so-called “25% Rule” that the NHL seems so excited to enforce.

It seems like more information about the expansion draft is being released by the week, as reporters continue to ask more and more questions of league insiders. A resolution on the status of expiring contracts is the perfect next topic to explore.