If you’re a recent hockey fan or otherwise never followed the business end of things, this will serve as a basic primer for how things used to be. It’s important to read this first, because the actual analytical side will refer to certain types of free agents and a free agent cap without explaining. This is the explanation of what all of that means.
The 1998, 1999, and 2000 expansion drafts all took place under the 1995 collective bargaining agreement (CBA), which governs the structure of the league. It bore little resemblance to the later 2005 and 2013 CBAs, both of which resemble each other quite a bit.
Since 2005, the NHL has operated under a hard salary cap and team payroll floor. Neither of these existed previously; teams in the last round of expansion could have a payroll of less than $10 million if they wanted, or as high of a number as one could fathom.
There also used to be five groups of free agents: Group II, Group III, Group IV, Group V, and Group VI. Group I used to exist, but was eliminated years prior and was removed completely from the CBA. Group V, for all intents and purposes, does not exist today but is still listed in the CBA. Group V existed back when these expansion drafts were taking place.
Group III, Group V, and Group VI free agents were all unrestricted, meaning that they were free to sign with a new team when their contract expired and their previous team would receive no compensation of any type from the new team. The NHL did have compensatory draft picks at this time, which would be created and allocated based on a number of factors for the player’s new contract. A team losing a prime free agent could get up to a 2nd-round draft pick, and go as low as an 8th-rounder. Oh yeah, the draft used to have nine rounds instead of the seven today.
The eligibility for each of Group III, V, and VI were vastly different; frankly, this isn’t too terribly important to get into any detail on. The important thing is that they’re all unrestricted.
Group II free agents, on the other hand, were restricted. When their existing contract expired, they could sign an offer sheet with a new team, which was a binding contract offer that gave the previous team seven days to match it. If the previous team matched it, the player stayed with that team under those terms. If the previous team did not match it, the player would go to the new team, and the new team would have to provide compensation to the previous one in the form of future draft picks. The number and quality of picks was based on a scale set against the average salary of the new contract, with a maximum compensation of five 1st-rounders.
The expansion draft took place after the end of a particular season, but before the existing contracts expired at 11:59 PM on June 30. To prevent the expansion teams from putting together a garbage team and loading up on draft picks, the NHL mandated that of the 26 picks in the expansion draft, no more than six could be pending free agents. And specifically, they could only choose no more than one free agent goalie, no more than three free agent defensemen, and no more than three free agent forwards.
The 2005 CBA cleaned up a bit of the qualifications for how long a drafted player’s rights could be held. The old one, which these expansion drafts operated under, allowed teams to hold drafted European player rights (theoretically) in perpetuity. Calgary, for example, exposed Esa Keskinen in all three expansion drafts. By the time the 2000 expansion draft rolled around, he’d played 15 years in the Finnish League after being drafted and actually retired, but was still available and on their list.
The other big variables were that there used to be option years and mid-contract renegotiations, neither of which exist any more. A player option gave a player the right to void his existing contract by a certain point and become an unrestricted free agent, and a team option game a team the right to void a player’s contract by a certain point, which would also make him an unrestricted free agent. Option years were not automatic, but could be built into the player contract if necessary. Since it was in a contract, everything had the force of law under the CBA.
On the other side, not part of any contract, were mid-contract renegotiations. These were specifically outlawed in the 2005 CBA, which eliminated something that had become a massive headache in the previous years. It was all too common for a player signed to a multi-year contract to outperform his going rate, then hold out until his contract was renegotiated. Years could be cut off or added, but the big thing was a salary hike. Multiple players missed parts of a season by refusing to play under their existing contracts, and a couple would miss entire seasons in contract disputes with their team.
This was the landscape in 1998, 1999, and 2000. Four new teams entered the league under this particular setup, but it wouldn’t be too long before the entire landscape changed quite dramatically.