Offer sheet

In the National Hockey League, an offer sheet is a contract offered to a restricted free agent by a team other than the one for which he played during the prior season. If the player signs the offer sheet, his current team has seven days to match the contract offer and keep the player or else he goes to the team that gave the offer sheet, with compensation going to his first team.

The National Basketball Association uses the term offer sheet to refer to an offer made by another team to a restricted free agent who has received a qualifying offer from his current team. However, unlike NHL offer sheets, NBA offer sheets do not require a team to relinquish a draft pick.

Time period

Restricted (Group 2) NHL free agents can discuss new contracts with other teams beginning on the day after that season's entry draft, which is also the deadline for a team to make a qualifying offer. Discussions must cease if a player accepts a contract from his own team or is confirmed to go into arbitration with his team, be it player- or team-filed.

Compensation

When a player accepts an offer sheet and his team declines to match the value of the contract, his former team is entitled to draft pick compensation in the next upcoming draft or drafts based on the averaged yearly salary of the contract. These values were originally set for the 2005 offseason to coincide with the new NHL Collective Bargaining Agreement, with percentage increases annually equal to the same percentage increase in the average salaries of all NHL players. The 2005 and 2011 offseason values are as follows, the latter based on an average NHL player salary of $2.3 million:^[1]

2005 Averaged Salary	Current Averaged Salary	Draft Pick Compensation
$660,000 and below	$1,034,249 and below	No compensation
$660,001 to $1,000,000	$1,034,250 to $1,567,043	Third-round pick
$1,000,001 to $2,000,000	$1,567,044 to $3,134,088	Second-round pick
$2,000,001 to $3,000,000	$3,134,089 to $4,701,131	First- and third-round pick
$3,000,001 to $4,000,000	$4,701,132 to $6,268,175	First-, second-, and third-round pick
$4,000,001 to $5,000,000	$6,268,176 to $7,835,219	Two first-round picks and a second- and third-round pick
$5,000,001 and above	$7,835,220 and above	Four first-round picks

A team may not have two different players sign offer sheets at the same time if the value of the offered contracts would involve any of the same draft picks as compensation. For example, if a restricted free agent accepts a contract with a yearly salary of at least $7,835,220, the team can only offer to other restricted free agents contracts less than $3,134,089 per year, since those would not require any first round pick as compensation. In addition, if a team does not have a pick in the next upcoming draft available for compensation, they may not make a contract offer in the certain range where that pick is needed for compensation. Teams may not use draft picks acquired in trades with other teams, but extra acquired draft picks can influence a team's decision to submit an offer sheet.

Effect of the salary cap

Prior to the 2004–05 NHL lockout, teams could spend as much or as little as they wanted, therefore most offer sheets were matched. This caused offers to restricted free agents to be rare to avoid ill will amongst general managers; there were no offer sheets made in the six years prior to the lockout.^[2] Currently, under the rules of the 2005 NHL Collective Bargaining Agreement, teams have a salary cap ceiling and floor, so teams must spend money more wisely. This means it is more likely that general managers will offer a contract to a younger player with potential that their team does not see as much value in matching, rather saving money for other players.^[3] This also leads to teams signing their own players to long-term contracts before they are eligible for restricted free agency, possibly locking them in at a lower rate than they will have to pay later, depending on each player's future performance; contracts cannot be renegotiated under the current CBA.^[4][5] A potential benefit to a player whose current team matches an offer sheet is that the player cannot be traded for the next calendar year.

Since the lockout, six restricted free agents have signed offer sheets, and only one player has changed teams as the result of an offer sheet: Dustin Penner before the 2007-08 season. Penner is also the only player since 1997 (Chris Gratton) to change teams via an offer sheet).^[6] The risk invested in real and cap dollars along with the negative reaction to an offer sheet has led to the act of signing an offer sheet becoming rare under the current CBA.^[7]

Players signing offer sheets

Main article: List of NHL players who have signed offer sheets

Footnotes

1. ^ Custance, Craig (2011-05-25). "Compensation adjustment could lead to more offers for restricted NHL free agents". Sporting News. http://aol.sportingnews.com/nhl/story/2011-05-25/compensation-adjustment-could-lead-to-more-offers-for-restricted-free-agents. Retrieved 2011-05-25. 
2. ^ Allen, Kevin (2006-07-06). "Sabres keep Vanek by matching Oilers' $50M offer". USA Today. http://www.usatoday.com/sports/hockey/nhl/sabres/2007-07-06-vanek_N.htm. Retrieved 2011-05-24. 
3. ^ Brehm, Mike (2007-08-02). "Ducks irked as Penner lands big deal with Oilers". USA Today. http://www.usatoday.com/sports/hockey/nhl/oilers/2007-08-02-penner-oilers-contract_N.htm. Retrieved 2007-11-13. 
4. ^ Burnside, Scott (2007-08-13). "Lowe's offer sheet tactic could soon become the norm". ESPN.com. http://sports.espn.go.com/nhl/columns/story?columnist=burnside_scott&id=2958884. Retrieved 2007-11-13. 
5. ^ Allen, Kevin (2007-10-11). "Time for teams to lock up players, prevent raids". USA Today. http://www.usatoday.com/sports/hockey/columnist/allen/2007-10-11-allenfreeagents_N.htm?csp=34. Retrieved 2007-11-13. 
6. ^ Colligan, Mike (2010-07-13). "Hjalmarsson Fallout, GM’s to Trust, and Should Penguins Retire Jagr’s Number?". http://thehockeywriters.com/hjalmarsson-fallout-gms-to-trust-and-should-penguins-retire-jagrs-number/. Retrieved 2011-05-24. 
7. ^ Wyshynski, Greg (2009-07-26). "Is the restricted free-agent offer sheet becoming extinct?". Yahoo! Sports. http://sports.yahoo.com/nhl/blog/puck_daddy/post/Is-the-restricted-free-agent-offer-sheet-becomin?urn=nhl,178746. Retrieved 2009-08-28. 

References

• 2005 NHL Collective Bargaining Agreement