Under the current NHL Collective Bargaining Agreement, the tactic of signing a team’s Restricted Free Agents to an offer sheet has already become as prevalent in the most recent two years as the final ten years of the previous agreement. The reasons are probably somewhat debatable, though I would argue it has to do with a combination of: 1) the fact that the unrestricted free agency age has been lowered, creating a more rational salary structure with respect to a player’s output. Younger players are more often signed to long-term, lucrative contracts (cf. Kovalchuk and Nash), which has contributed to the elimination of the cheap “second contract.” Offer sheets are a way of teams extinguishing other teams’ hopes of signing their RFA’s on the cheap. 2) team payrolls are capped at a fixed number, creating a more uniform salary structure across the league and increasing the competition for players. 3) the compensation for acquiring a team’s RFA, draft picks, has been devalued. The mantra coming out of the lockout from hockey executives and writers has been that drafting well is more important than ever. I think this is incorrect. The NHL Entry Draft remains the prime way NHL teams acquire players (free agency and trades coming in way behind), and I’m not suggesting that drafting well isn’t the single most important way to create a good hockey team (of course it is). It’s just less important now than under the old CBA where you kept players until they were older and less effective (31) and where you got to underpay young players coming out of their entry level deals (look at the second contracts signed by Lecavalier and Gaborik and compare them to what Getzlaf and Perrey are making now). The great thing about drafting and developing a player like Patrik Elias, besides having a great player, is that you could sign him for relatively cheap and you kept him throughout his best years. Under the current CBA, it’s still important to draft players like Jeff Carter, but you certainly will not receive a discount when signing him (unless you're Bob Gainey and you have the lure of playing with your brother, and in the greatest city in North America, but I digress), and it’s not totally clear how long you’ll be able to keep him. The first round selection that was used to draft Caeter is probably worth less than now than the second round selection used to draft Elias. This decrease in compensation value makes the offer sheet a more attractive tool for teams to use.
So far, however, while the threat of the offer sheet has had an effect on contract negotiations, Mike Green’s late night June 30th deal for $21M over four years being a good example, the offer sheet itself has seen only limited use under this CBA: Ryan Kesler (matched), Tomas Vanek (matched), Dustin Penner (not matched), David Backes (matched), and Steven Bernier (matched). The last two examples are particularly interesting and I think the fallout could have important implications as to how teams approach the offer sheet process.
The Vancouver Canucks signed St. Blues RFA David Backes to a 3-year/$7.5M offer sheet on July 1st. Backes was coming off a fairly solid season with the Blues as an intimidating power forward (he ranked fifth in the league in hits). He spent most of his even strength time on the second line and saw regular power play action as well. The Blues immediately, and quite predictably, matched the Canucks’ offer sheet, as they were not going to give up a promising forward who is just becoming an effective regular NHL’er for a mere second round draft selection. It’s unclear if Canucks’ GM Mike Gillis actually believed there was a chance he could acquire Backes, or was simply trying to drive up the salary structure of a Western Conference opponent. The Blues kept a player they certainly wanted in the fold, but at a higher price than they wanted, or even felt they needed, to pay. The Blues got their chance for payback less than a week later when the Canucks acquired similarly skilled power forward Steven Bernier from the Buffalo Sabres. St. Louis promptly signed Bernier to a 1-year, $2.5M offer sheet, which the Canucks were forced to match. Let’s look at the counting numbers for the two players, as well as those from other similarly aged power forwards around the league:
It is remarkable how similar Backes and Bernier’s stats are. Their even strength and power play scoring and ice time numbers are almost identical. Backes played against slightly better competition but with better teammates, likely because Bernier was on a deeper San Jose Sharks team and thus saw more third and fourth line duty. Neither player saw much penalty killing time. That their cap hits should be identical ($2.5M) seems appropriate, but the Blues did something very clever in their offer sheet: they signed him to a one-year deal. This means that Bernier will be an RFA again after this year, and with a strong season in Vancouver (where he will likely get top-6 minutes) he could stand to gain a significant raise through either arbitration or the threat of another offer sheet. The Canucks will have to tender a qualifying offer equal to his $2.5M salary and, barring a backwards step in his development, it seems likely that Bernier will get a raise going forward. This is certainly more than what the Canucks would have liked to pay for Bernier. Statistically, Bernier (and Backes) have very similar numbers to Brooks Laich and Andrew Ladd. Laich has better PP scoring numbers than Bernier and Backes, and Laich has shown an ability to effectively kill penalties. Ladd has an edge on even strength scoring statistics over Bernier and Backes. Yet both Laich and Ladd both recently signed contracts at significantly reduced rates compared to the offer sheet duo, Laich for 3-years at a cap hit of $2.07M, and Ladd for 2-years at a hit of $1.5M.
The Canucks’ poaching attempt and the inevitable quid pro quo action by the Blues resulted in an escalation of each team's salary structure, as well as the diminished value of assets in Backes and Bernier (in that their salaries are infalted). Had the Canucks not signed Backes to the offer sheet, Vancouver and St. Louis would have likely retained their players at a significantly reduced cost. I think there’s a lesson to be learned by other GM’s around the league from these actions and their results. Unless a team is up against the salary cap (Anaheim last year), or in some other way financially constrained (needing to hit the midpoint for revenue sharing purposes), teams are going to match any offer sheet for a mid-level player, that is, one in which compensation will be, let's say, a first round selection or less. When Edmonton signed Vanek to a wildly inflated offer sheet, the Sabres had at least a legitimate decision to make in light of the cap space (and real money in their case) required and the fairly significant compensation they would have received (four first round selections). However, offer sheet signings outside these contexts seem only to drive up the costs of retaining players league-wide, with the prospect of eliciting retaliatory moves by other clubs. The Canucks gained nothing from their offer sheet attempt except an inflated price for their own player. Interestingly, they traded away a second and third round selection, yet they would have only received a second round selection had they not matched the Blues offer. Not only did Mike Gillis learn a valuable lesson from this process, one has to imagine other GM’s around the league took note as well. Though I cannot imagine there exists at this point any type of 'unwritten code' around the League that prevents teams from signing RFA's, GM's are going to have to be weary of making moves that may elicit a delterious equivalent retaliation, as this episode demonstrates.
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