The Cost of a Restricted Free Agent

I love this time of year. Change is in the air all across the NHL. Many teams, including our Dallas Stars, are positioning themselves for the best possible opportunities to capitalize on that change. With a quality GM at the helm in Jim Nill, Stars fans should feel fairly confident that the team will come out of this off-season looking better than it does right now. The major parts of the equation for off-season success are (in no particular order): re-signing the team’s current UFA’s and RFA’s, navigating the draft, trades with other teams (when applicable), and extending offer sheets to other teams RFA’s (if necessary).

It is this last point that I want to highlight here. Extending an offer sheet to a restricted free agent can be a pretty sticky situation for all sides involved (both teams and the player).

First, let’s talk about what makes a restricted free agent different from an unrestricted free agent. When a player enters the league and signs a contract with an NHL team, it is most typically an entry level contract. These contracts are small in face value and in term (usually less than 1 million dollars per year and usually ranging 2-3 years in length). When this player’s first entry level contract expires, and the player is younger than 27 or has less than 7 years NHL experience, then this player is considered a restricted free agent.

RFA’s are allowed to contact other teams during free agency and request offer sheets be made. An offer sheet is a contract, when it all gets boiled down. However, if another team offers this player a contract, the team holding his rights has a choice to match the contract in dollar and term, or let the player go and accept compensation in the form of draft picks.

The compensation is tied directly to average player salaries in the NHL. It is a sliding scale and changes every year as the average contract size and salary cap change. In 2012-2013 the scale looked like this:

· $1,110,249 or below - No Compensation

· Over $1,110,249 to $1,682,194 - 3rd round pick

· Over $1,682,194 to $3,364,391 - 2nd round pick

· Over $3,364,391 to $5,046,585 - 1st round pick, 3rd

· Over $5,046,585 to $6,728,781 - 1st round pick, 2nd, 3rd

· Over $6,728,781 To $8,410,976 - Two 1st Round Picks, 2nd, 3rd

· Over $8,410,976 - Four 1st Round Picks

This info provided by:

To be tendered an offer sheet, a player must:

1. Have at least one NHL contract expire.

2. 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).

3. Be younger than 27 on July 1 of that year.

4. Be without a contract for the upcoming season.

5. Be tendered a qualifying offer by the current team by June 25 or the Monday after that year's NHL Entry Draft (whichever is later)

If any of those conditions has not been met, the player becomes an unrestricted free agent' and cannot receive an offer sheet.

This info provided by:

An important note here is these compensation picks have to be the picks originally awarded to the team making the offer. Meaning if a team extends a qualifying offer to a player, then that player accepts the offer and then his original team lets him walk, the team making the deal must forgo their own draft picks (not picks received from other teams), even if they have already traded them. If the compensation is (2) 1st rounders, a second and a third, and the team making the offer no longer has their original 1st round pick (probably because they traded it), then they must trade (again) with whatever team has their pick and get it back.

You can see how this can get a tad bit sticky, huh?

So, how many times has this process actually occurred? Not a tremendous number, but certainly enough that there is a precedent should a team decide the price is right. The first instance of this occurring was in August of 1986 with Gary Nylund of the Toronto Maple Leafs accepting an offer to the Chicago Blackhawks. Since that time, there have been (35) instances of an offer sheet attempt, (13) accepted compensation, (20) matched contract, (1) dropped attempt and (1) invalidated (San Jose trying to get around a salary loophole, silly sharks).

Since 2006 there have been (10) instances of an offer sheet being proposed, and only (1) successful attempt to acquire that player. That was Dustin Penner of Anaheim going to Edmonton in July 2007 in exchange for Edmonton’s 1st, 2nd and 3rd round picks in 2008. The (9) other attempts were for Ryan Kesler, Thomas Vanek, David Backes, Steve Bernier, Niklas Hjalmarsson, Shea Weber, and Ryan O’Reilly.

Those are some pretty impressive names on that list and it is little wonder why their original teams gave up draft pick compensation to keep them on their roster.

When looking at the specific case of the Dallas Stars (who have never attempted a qualifying offer that I can find), would going after an RFA be worth it?

If we assume that the table above is in the same ballpark with this year’s numbers, and Gary Bettman doesn’t blow up the CBA and start all over again, then we can start to gauge the true (truer) cost of such an attempt.

On the list of many impressive RFA’s this off-season is P.K. Subban. He is a high profile player for the Montreal Canadians and most likely to command top dollar in his next contract. Is he necessarily going to demand something in the 8.5 million dollar a year range (compensation of (4) 1st round picks)? Probably not, but I’ll humor y’all and assume P.K. would fall in one of those top (2) groups (see chart above).

Let’s assume (2) things. First, this process occurs last off-season (that way we know what players drafted mean to our team and so forth). Second, the draft and its positions are unchanged (to make everything simpler on me).

The situation is Dallas extends an offer sheet to P.K. Subban in 2013. P.K. accepts the offer sheet for 7.5 million dollars a year for 8 years. That puts the compensation at (2) 1st rounders (2013, 2014), a 2nd rounder (2013) and a 3rd rounder (2013). Montreal (assuming the draft is exactly the same) picks Val Nichushkin with Dallas’s 10th overall, Remi Elle 40th overall, and Connor Crisp 71st overall. As it turns out, Dallas, by this point last season, had traded this 3rd round pick (along with Michael Ryder) to Montreal to get Erik Cole. In a fantastic bit of irony, IF this had indeed played out last off-season, Dallas would have had to create a separate trade with Montreal to get its third round pick back from Montreal, just to trade it right back to Montreal when executing this qualifying offer.

Oh…and Montreal gets whoever Dallas picks 14th this year. Almost forgot.

If we humor ourselves and assume this offer sheet happened (4) seasons ago, and P.K. Subban was every bit the great player he is now back then, and he signed an offer sheet with Dallas requiring them to fork over the next (4) 1st round picks (2010, 2011, 2012, 2013), it would look like this:

2010: Jack Campbell (11th)

2011: Jamie Oleksiak (14th)

2012: Radek Faksa (13th)

2013: Val Nichushkin (10th)

Ouch, Right? I’ll concede this assumption is filled with egregious errors (A Dallas team with P.K. Subban doesn’t pick in the 10-15 range 4 straight years for starters, and #IAmValNichushkin is skewing this argument tremendously), but this example should represent a "worst case" scenario for Dallas in what they would be giving up to accept (1) phenomenal player.

It is more likely that Dallas would end up being presented a draft pick in the 20-25 range those (4) years, and if we assume that, here are some examples of players Montreal could get if this scenario had played out:

2010: Beau Bennett (20th)

2010: Mark Pysyk (23rd)

2011: Stefan Noesen (21st)

2011: Joe Morrow (23rd)

2012: Scott Laughton (20th)

2012: Olli Maatta (22nd)

2013: Kerby Rychel (19th)

2013: Hunter Shinkaruk (24th)

It is not an exact representation of the true value this process can bestow, but it does show just how steep the price is for acquiring someone who is listed as an RFA. Of course, on the other hand, you could argue that the draft is not an exact science and taking a chance on (4) players of varying talents (regardless of what round they are drafted in) doesn't measure up to the value (1) superstar player can provide. If you were to trade for P.K. Subban, you'd have to part with at least a couple of good solid players to gain his services. More so if you don't want to include draft picks. Perhaps (4) unproven players is a worth-while gamble to take to get a sure-thing.

Another point I have yet to touch on is the so called "gentleman’s code" in hockey. Part of the reason so few of these deals are even attempted is due to this thought that all general managers will have to go through this process of signing new RFA’s several times a year. The act of impeding on another GM’s attempts to resign his own RFA may invite that GM to return the favor, so to speak, making their job all that much harder. Listing offer sheets to other teams RFA’s may sour a general manager name in GM circles and may also limit their effectiveness in swinging trades with other teams. The unintended costs of one RFA offer sheet may have lasting ramifications that could follow them to the end of their careers in some cases.

GM’s need to be careful when considering extending an offer sheet to a player, and would be wise to pick their spots, as opposed to making the process an annual ordeal. The costs, both compensatory and unintended, may make the deal, assuming the deal could get done, seem less favorable.

This tie’s into my last article referring to the perception I have of Jim Nill and RFA signings:

Jim Nill doesn’t strike me as a guy who would attempt this sort of thing,
especially when he has made it clear over and over again how much he
values draft picks. The process is also contingent on the player accepting the
contract and the player’s old team not accepting the contract, leading me to
believe Dallas would have to offer an amount well
above market value for this player. This whole process of other teams going
after RFA’s isn’t set up to make the best business sense, and you can bet your
victory green pajama bottoms Jim Nill is aware of this.

This exercise (and by extension, your viewpoint) should provide insight into what type of GM you could make. Are you the type of GM who believes one phenomenal player can be the ultimate difference between success and failure? Are you the type of GM who believes that Quantity trumps Quality in most instances and the more first round talents you have on your roster is a better indicator of NHL success? Are you the type of GM that sees value in risky decisions and would pull the trigger on deals others would cower at the thought of? Or the type that plays the long game and doesn’t try to jump ahead of the game using bold foundation shaking moves?

We Stars fans have seen GM’s on both sides of this divide and seen our fair share of those "big" deals occur. Some work out (Seguin and Pevs), others maybe not so much…(The-trade-that-must-not-be-named).

What are your feelings about signing RFA’s? Should the Stars go after P.K. Subban (or some other RFA)?

This is a user-created FanPost and does not necessarily reflect the views of SB Nation or Defending Big D. FanPost opinions are valued expressions of opinion by passionate and knowledgeable hockey and Dallas Stars fans.

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