Free Agency From 1995-2004 – The Group II Cold War

I’m writing this in the early hours of July 7, 2016.  Considering what’s happened in the NBA over the last seven days, this timing is especially fortuitous.  Time will tell whether this NBA offseason and free agent period ends up being remembered as the time that everyone lost their heads, or that everyone ushered in a new era.

If you haven’t read Part I of this unplanned series (Free Agency Before 1995 – On “Equalization”), you may want to do so first.  If you have, let’s get right to it.

Out of the burning, charred remains of the old pre-1995 free agency system came a completely new way of doing things.  Since a good chunk of this website focuses on the teams that came into existence during the 1995-2004 period covered by the CBA from those years, it bears a closer look.

Equalization was gone, purged from the realm of reality to the depths of history.

Thankfully, the 1995 CBA is readily available, and will be heavily cited.

The pre-1992 CBA had Group III free agents defined as those age 31 and older, and provided the player’s previous team with either the right of first refusal on the new contract that he signed elsewhere or draft pick compensation.  The 1992 CBA dropped this age down to 30, causing more than a few headaches for GMs who were now faced with losing players they wouldn’t have otherwise lost with a more gradual phasing-in period.  The 1995 CBA completely overhauled Group III free agency.

From Section 10.1(a) – Group III Players and Free Agents:

  1. For (A) the 1994/95, 1995/96 and 1996/97 League Years, any player who is 32 years of age or older as of June 30 of the end of the 1994/95, 1995/96, and 1996/97 League Year, as the case may be, and (B) the 1997/98, 1998/99, 1999/2000, 2000/01, 2001/02, 2002/03 and 2003/04 League Years, any player who is 31 years of age or older as of June 30 of the end of the 1997/98, 1998/99, 1999/2000, 2000/01, 2001/02, 2002/03 and 2003/04 League Year, as the case may be, and in either case has four (4) Accrued Seasons or more on June 30 of the end of the applicable League Year, shall, if his Player Contract has expired, become an Unrestricted Free Agent. Such player shall be completely free to negotiate and sign a Player Contract with any Club, and any Club shall be completely free to negotiate and sign a Player Contract with such player, without penalty or restriction, or being subject to any Right of First Refusal, Draft Choice Compensation or any other compensation or equalization obligation of any kind.

  2. An Unrestricted Free Agent shall not be subject to any limitations on the period of time before which he may qualify as an Unrestricted Free Agent again, or to any limitations on the number of times he may become an Unrestricted Free Agent, except for a Group V Player, who may only elect to become a Group V Player once, but who may qualify to be another type of Unrestricted Free Agent in accordance with the terms of this Agreement.

The first part is pretty clear: a Group III free agent (unrestricted – UFA) had free and clear movement around the league.  No right of first refusal, no compensation, no equalization.  The second part removed old restrictions on the number of times that a player could become a UFA.  From here on out, a player could be a UFA as often as he wanted upon his contract expiring.

From Section 10.1(b) – Group V Free Agents:

Any Group V Player shall be entitled at the expiration of his Player Contract to elect to become an Unrestricted Free Agent by notifying the League and his Prior Club of such election on or before July 15 (or such other date as may be agreed in an applicable critical date calendar agreed to by the League and the NHLPA) of the League Year in which such player qualifies to become a free agent pursuant to this subsection. Upon making such election, such player shall be completely free to negotiate and sign a Player Contract with any Club, and any Club shall be completely free to negotiate and sign a Player Contract with such player without penalty or restriction, or being subject to any Right of First Refusal, Draft Choice Compensation or any other compensation or equalization obligation of any kind.

Eligibility for a Group V free agent was that a player had to have at least 10 seasons of experience and make less than the NHL average salary in his expiring contract.  Group V was an opt-in; the player had to notify the league and his prior team in order to actually become a Group V free agent.  If that was not done, he would fall under a different class of free agent.

Group V was created in the 1992 NHLPA strike as a mechanism for depth players to be able to move around the league, rather than live the sort of week-to-week instability that exists as a result of being at the bottom of a team’s depth chart while the years accumulate.

From Section 10.1(c) – Group VI Free Agents:

Any Group VI Player shall, at the expiration of his Player Contract, become an Unrestricted Free Agent and shall be completely free to negotiate and sign a Player Contract with any Club, and any Club shall be completely free to negotiate and sign a Player Contract with such Player without penalty or restriction, or being subject to any Right of First Refusal, Draft Choice Compensation or any other compensation or equalization obligation of any kind.

A Group VI free agent was a player who was 25 years old, had played three or more professional seasons, and had fewer than 80 NHL games by the time his contract expired (28 for goalies).  This specific mechanism was designed to prevent teams from acquiring prospects and then holding onto them indefinitely while seeing if they developed into useful players.  The message to the teams is fairly simple: shit or get off the pot.  If you haven’t made up your mind on a player by this point, let him go somewhere that could use him instead of tying him down until the end of time.

The 1995 CBA thus created three entire classes of UFAs, free and clear of things like equalization, compensation, and right of first refusal.

Restricted free agency was completely overhauled as well, creating Group II as codified in Section 10.2(a) – Group II Players and Free Agents:

    1. Any player who meets the qualifications set forth in the following chart and (1) is not a Group I Player or a Group IV Player, and (2) is not an Unrestricted Free Agent, shall be deemed to be a “Group II Player” and shall, at the expiration of his Player Contract, become a Restricted Free Agent. Any such player shall be completely free to negotiate and sign a Player Contract with any Club, and any Club shall be completely free to negotiate and sign a Player Contract with any such player, subject to the provisions set forth in this Section. As used in this Section 10.2, “Age,” including “First Contract Signing Age” means a player’s age on September 15 of the calendar year in which he signs a Player Contract regardless of his actual age on the date he signs such Player Contract.

      First Contract Signing Age Eligible for Group II Free Agency
      18 — 21 3 years professional experience
      22 — 23 2 years professional experience
      24 or older 1 year professional experience

      For the purposes of this Section 10.2(a), a player aged 18 or 19 earns a year of professional experience by playing ten or more NHL games (regular season and/or playoffs) in a given season, and a player aged 20 or older (or who turns 20 between September 16 and December 31 of the year in which he signs his first Player Contract) earns a year of professional experience by playing ten or more professional games under NHL contract in a given season.

    2. Notwithstanding the foregoing, if a Group II Player requests salary arbitration pursuant to Article 12, such player will not be eligible to negotiate with any Club other than his Prior Club or sign an Offer Sheet pursuant to this Article 10 except as provided in Section 12.6.

  1. In order to receive a Right of First Refusal or Draft Choice Compensation (at the Prior Club’s option) with respect to a Restricted Free Agent, the Prior Club of a Restricted Free Agent must tender to the player, no later than June 30 of the final year of a player’s Player Contract, a Player Contract for one League Year which is subject to salary arbitration (if such player is otherwise eligible for salary arbitration in accordance with Section 12.1) (a “Qualifying Offer”) on at least the following terms and conditions:

    1. if the player’s Prior Year’s Salary is equal to or less than the Average League Salary for that League Year, 110% of the major league portion of his Prior Year’s Salary, provided, however, that the Prior Club shall have no Right of First Refusal for a player who is age 26 or older on the immediately following September 15 unless the Prior Club’s Qualifying Offer provided for a Paragraph 1 Salary of at least $400,000, which $400,000 shall be increased on an annual basis at the same percentage rate of increase as the Average League Salary, with the 1997/98 League Year being the first year such increase shall take effect. By way of example, if the Average League Salary on June 30, 1998 has increased by 10% from the Average League Salary on June 30, 1997, then the figure of $400,000 stated above shall be increased by 10% so as to equal $440,000 on June 30, 1998, and the Qualifying Offer made on such date in respect of such aforesaid player must be at least $440,000 for the Prior Club to maintain its Right of First Refusal with respect to such player. For each League Year thereafter, a similar comparison and adjustment shall be made.

    2. if the player’s Prior Year’s Salary is greater than the Average League Salary for that League Year, 100% of the major league portion of his Prior Year’s Salary, provided, however, that the Prior Club shall have no Right of First Refusal for a player who is age 26 or older on the immediately following September 15 unless the Prior Club’s Qualifying Offer provided for a Paragraph 1 Salary of at least $400,000, which $400,000 shall be increased on an annual basis at the same percentage rate of increase as the Average League Salary, with the 1997/98 League Year being the first year such increase shall take effect (see example in Section 10.2(b)(ii)(A)).

This represented a mammoth departure from the old system.  For Group II RFAs, teams were required to provide at least a 10% raise in order to maintain right of first refusal.  In the event that the team declined to match, they would be entitled to compensation only in the form of draft picks.  No cash, no equalization, just draft picks in accordance with a defined schedule.

I’m not going to post the text of the rest of Article 10 because it’s extremely long and mostly procedural, so I’ll hit the main points:

  • A valid qualifying offer (defined as “a Player Contract for one League Year which is subject to salary arbitration” [if the player meets eligibility requirements for arbitration]) must be a one-way contract if the player is a regular player.  This is defined as having played 180 games the previous three seasons, 60 games the most recent season, and not cleared waivers in the most recent season.  If these three requirements were not met, a qualifying offer could be a two-way contract.  (Section 10.2(a)(iii))

A quick note on one-way versus two-way.  A certain video game manufacturer made some changes to their NHL game a few years ago that has led to a significant amount of confusion over exactly what these terms mean.  I understand that their version defines “one-way” or “two-way” to have something to do with whether a player is eligible to play in the minor leagues.  In reality, all players under an NHL contract are eligible to play in the AHL; one-way or two-way simply deals with their salary if they’re in the minors.  A one-way contract means that a player makes the same amount whether he’s in the NHL or AHL, while a two-way contract means that a player has a different salary amount depending on which league he is in.  That’s all that it means.

Moving on.

  • If a team fails to tender a valid qualifying offer in a timely fashion, as defined in the CBA, the player becomes a UFA, and his prior team has no right of first refusal or compensation. (Section 10.2(a)(iv))
  • In the event that a new team signs a Group II RFA, it is in the form of a valid contract offer referred to as an offer sheet.  The prior team has seven days to either match the offer sheet as it is, or walk away and receive compensation.  The prior team is not allowed to trade the player once an offer sheet has been signed. (Section 10.3(a))
  • A team that matches an offer sheet to one of its players may not trade that player for a period of one year (Section 10.3(b))

The ban on trading a player with an offer sheet, thus transferring the right of first refusal to a new team, is because of a case where this actually happened.  In 1988, the Rangers signed Edmonton forward Geoff Courtnall to an offer sheet.  Edmonton then traded Courtnall to Washington for one of the two players in the league named Greg Adams, and Washington then matched the offer sheet and “kept” Courtnall.

I’ll also mention that an offer sheet is a binding contract offer, and as such is subject to exactly the same basic qualifications for what the very definition of a contract is.  Since “mutual assent” is necessary to have a contract, something without mutual assent cannot be a contract by any definition.

I only say this because there’s an idea that seems to pop up every year around July 1 that a team can simply impose an offer sheet on a Group II RFA, and that the fact that very few offer sheets get thrown around means that teams are colluding against a general collective of RFAs.  Although it’s impossible to say for sure, it is very likely that offer sheets are in fact far more prevalent than anyone really knows, but the RFA simply is not interested in signing it.  Maybe the terms are unfavorable, maybe he has no interest in playing for a certain team or a certain coach, maybe he doesn’t want to force his old team to cripple their salary structure to accommodate a massive spike in salary in the event that they match.

An RFA is free to negotiate a contract with any of the teams in the NHL.  As an RFA, he does not have a contract and thus is not bound to a specific team; his old team merely holds his rights (and right of first refusal) in reserve.  If you read Part I of this, you already know that reserve systems are not illegal despite what Brick and Big Hoss on sports talk radio may say.

Back to the CBA:

  • “Principal Terms” of an offer sheet are term, salary, signing bonus, and roster/report bonus.  A team cannot offer anything outside of a fixed amount of cash. (Section 10.3(e-f))
  • Once an offer sheet is signed and notice given to the prior team, the prior team notifies the league, which then places the necessary compensatory draft picks in an escrow of sorts.  If the prior team matches the offer sheet, the picks go back to the new team; if the prior team declines to match, they receive the picks.  (Section 10.3(h))

How much compensation is due to a prior team if they decline to match an offer sheet?  From Section 10.5 – Draft Choice Compensation for Restricted Free Agents:

Any Club that is entitled to but does not exercise its Right of First Refusal pursuant to Section 10.3 shall be entitled to obtain Draft Choice Compensation from the New Club. The number and quality of draft choices due to the Prior Club shall be based on the average annual value of the Compensation contained in the Principal Terms (as defined in Section 10.3(e) hereof) of the New Club’s Offer Sheet (determined by dividing such Compensation by the lesser of the number of years of the Offer Sheet or five), based on the following scale:

$400,000 OR BELOW NONE

The dollar amounts set forth in the scale outlined above shall be increased on an annual basis at the same percentage rate of increase as Average League Salary, with the 1997/98 League Year being the first year such increase shall take effect. By way of example, if the Average League Salary on June 30, 1998 has increased by 10% from the Average League Salary on June 30, 1997, then each of the dollar amounts stated in the table above shall be increased by 10% on June 30, 1998, and the basis for determining the number and quality of draft choice due to the Prior Club for the loss of a Restricted Free Agent signed after such date shall be adjusted accordingly. For each League Year thereafter, a similar comparison and adjustment shall be made. Clubs owing one draft pick must have it available in the next draft. Clubs owing two draft picks in the same round must have them available in the next three drafts. Clubs owing three draft picks must have them available in the next four drafts, and so forth. Clubs owing two draft picks in different rounds must have them available in the next draft. Clubs must use their own draft picks (being those awarded directly to the Club by the League for use by it in the Entry Draft, including any Compensatory Draft Selection pursuant to Section 8.3).

I’m skipping over Group IV free agency completely for the moment.  In very broad terms, Group IV free agents (defected players) were subject to the same type of offer sheet mechanism as a Group II, but without compensation due to the prior team if they declined to match the offer sheet.

In some ways, the great heyday of economic warfare in the form of offer sheets was about to begin.  And then, in a flash, it seemingly ended immediately.  What happened?

While UFAs were enjoying a type of freedom that was previously thought unfathomable, RFAs weren’t certain how they’d fit into the new NHL.  With the demise of the equalization system, and a clearly defined compensation schedule involving draft picks only, it put teams in an odd situation.  In order to acquire a Group II RFA would mean offering enough to actually get him to sign, and enough that his prior team wouldn’t want to match it, but not so much that the compensation would be disproportionate for a player of that caliber.  Although signing an enforcer to an offer sheet for $10 million a year was certainly possible, and certainly a way to get him to come to your team, it would also mean losing five 1st-rounders.  Obviously, the value isn’t there.

The first player to sign an offer sheet under the 1995 CBA was actually an enforcer.  Stu Grimson, previously a Detroit Red Wing, signed a five-year, $2.5 million offer sheet in August 1995.  The salary wasn’t necessarily the interesting part; the $500,000 annual salary meant that Detroit would receive a 3rd-rounder as compensation.  The fact that someone who was primarily an enforcer was going to be receiving a five-year contract was a big deal.  Ultimately, Detroit matched the offer sheet and Grimson remained a Red Wing.

Meanwhile, trade talks were heating up between Chicago and Winnipeg over unsigned RFA Keith Tkachuk.  Unable to broker a deal as 1995 dragged through August, then September, and into October, Chicago offered a front-loaded offer sheet to Tkachuk.  Five years, $17.2 million.  Tkachuk had balked at signing an offer sheet before since he had demanded a trade out of Winnipeg, and the Jets would have the ability to match the offer sheet and keep him there for at least one year (since he could not be traded within one year of an offer sheet being matched).

[Chicago GM Bob] Pulford called the offer sheet to Tkachuk “strong.” The Jets must pay Tkachuk $6 million this year, followed by seasons of $2.6 million, $2.8 million, $2.8 million and $3 million in the fifth year.

Fortunately for the Jets, they had to only match the $17.2 million offer in Canadian funds (roughly $12 million). The league must make up the difference from a fund to help small-market clubs stay competitive that was negotiated into the last collective-bargaining agreement. Ironically, the Hawks, as do all clubs, contribute to the fund.

“We constructed (the offer) with the idea that they wouldn’t match it,” Pulford said. “He’s probably the best power forward, or will be the best power forward in hockey.”

Sassone, Tim. “Hawks get their man, and then lose him.” Daily Herald 4 Oct. 1995,  Sports: 1

Pulford’s line about constructing an offer sheet so it couldn’t be matched was about to make things interesting to neutral observers, fun for large-market teams, and a colossal headache for smaller-market teams.

The next offer sheet would be tossed out the next July, in 1996.  Moribund Ottawa, tired of four years of shuffling through goalies, signed Washington’s Ron Tugnutt to a one-year offer sheet.  Tugnutt had backstopped Washington’s AHL affiliate, the Portland Pirates, during the 1995-96 season while youngsters Jim Carey and Olaf Kolzig led the Capitals.  Faced with the possibility of eating up six figures of their payroll on a third-string goalie, Washington declined to match Tugnutt’s offer sheet, and he went to Ottawa with no compensation due.

At the same time, Dallas attempted to shore up their goaltending by replacing longtime backup Darcy Wakaluk with Arturs Irbe.  Wakaluk signed with Phoenix, while Irbe was a Group II RFA who wasn’t pleased with his San Jose Sharks aggressively pursuing Kelly Hrudey as their starter.  Irbe signed an offer sheet for around the same amount as Tugnutt did, and when San Jose declined to match, he was on his way to Dallas for no compensation.

As it turned out, Tugnutt still had plenty of NHL hockey left in him.  Ottawa improved by 36 points in 1996-97 and went to the playoffs for the first time in franchise history.  They would lose to Buffalo in seven games on an overtime goal by Derek Plante, but Tugnutt stood on his head and frankly deserved a better fate than what happened.  Irbe, who had not fully recovered from a severe hand injury that included nerve damage suffered a year prior, wasn’t quite as impressive and was soon on his way to Vancouver.

As the 1997 free agent season dawned, there was the thought that Group II free agency was working as intended.  In two free agent seasons since the new system went into place, three players had signed offer sheets.  Two of them (Tugnutt and Irbe) were a case of a smaller market giving a new chance to a player who had fallen out of favor with his prior team, and the other (Tkachuk) saw his prior team match the offer sheet and keep their premier player.

Despite the staggering amount of talent – and more specifically prime talent – available in 1997, the prevailing thought was that teams would be conservative in free agency.  Group II RFAs included Joe Sakic, Sergei Fedorov, Chris Gratton, Mike Peca, Alexei Kovalev, Tony Amonte, Alexei Zhitnik, Derian Hatcher, and Tommy Salo.  No one could have expected the turmoil as The Year of the Vulture began.

Rest easy, Chris Gratton fans. Your hero is not going anywhere.

No, the Lightning haven’t re-signed Gratton. Not yet. As expected, he officially became a free agent Monday at midnight. So did Jason Wiemer, Patrick Poulin, Jeff Toms, Brantt Myhres, Bill Houlder, John Cullen, Rudy Poeschek and a handful of minor-leaguers.

But don’t let that bother you. Come next season the free agents the Lightning want back will be back. You can bet on it because in hockey the only thing more costly than gaining freedom is a player who has his freedom. Shopping at hockey’s free-agent supermarket is a lot like shopping on Rodeo Drive with a credit card. The prices are ridiculous to begin with. And then there’s the interest you have to pay. In some cases it’s downright ludicrous.

For example, if a team signs a Group II restricted free agent — which is what Gratton, Wiemer, Poulin, Myhres and Toms are — for $1.7 million a year, it must give up three first-round draft picks as compensation. And for every million dollars in salary over the $1.7 million a player signs for the team must give up an additional first-round pick.

That’s why only two Group II restricted free agents — goalies Ron Tugnutt and Arturs Irbe — have been signed by other clubs in the last two years. And that’s why the Lightning aren’t worried about losing Gratton.

Although other teams certainly will show some interest in Gratton, the Lightning’s plan is to match any salary offer he receives. Same goes for Wiemer and probably Poulin, two of Tampa Bay’s top three left wingers, and Toms, a promising center.

Cummings, Roy. “Major moves unlikely.” The Tampa Tribune 1 Jul. 1997, Sports: 6

Negotiations across the board were contentious and occasionally stagnant.  Of the group of premier players outlined above, Amonte was the first to sign, putting his name to a five-year contract with Chicago on July 29.  The Amonte signing came just a few days after Vancouver added Group III UFA Mark Messier to their team from the Rangers for three years, at a cost of over $6 million per season.

The large markets were about to toss a grenade into the proceedings, however.

The first part fell on August 1.  Vancouver had made defenseman Mattias Ohlund their top pick in the 1994 draft, but had not been able to actually sign him to an NHL contract as he blossomed into one of the best defenseman prospects in the world.  Negotiations turned contentious, and over time Ohlund converted from an unsigned draft choice to a Group IV free agent.  This meant that the rookie salary cap in place in the CBA no longer applied to him, and Toronto swooped in and signed Ohlund to a five-year offer sheet worth $10 million, with a $7.5 million signing bonus attached.  As a Group IV player, Vancouver would receive no compensation if they didn’t match.  They did, but Toronto faced criticism from their own media for not stacking the signing bonus into one lump sum; they instead had broken it down into yearly payments.  Had they loaded the bonus, Vancouver would have had a hell of a time matching the offer sheet with Messier having just been signed for big money.

The Rangers may have been taking notes.  Without their top center, and with contract negotiations at a standstill in Denver, the Rangers took the lessons of Chicago with Tkachuk and Toronto with Ohlund and went after a prime player.  Joe Sakic, who had just turned 28 and was in the prime of a terrific career, received an offer sheet that it probably took him about 10 seconds to sign.  Three years, $2 million per year in salary.  And $15 million as an up-front signing bonus.

Despite their success on the ice in the two seasons in Denver, the Avalanche were reported to be hemorrhaging money as a result of both an old arena and a weird lease structure.  Rumors swirled of exactly how much the team was losing, but it was widely agreed that it was eight figures annually.  As such, they were prime targets for a front-loaded offer sheet.

The breakdown was simple: $17 million in 1997-98, $2 million in 1998-99, $2 million in 1999-00.  If Colorado did not match it, they’d receive the Rangers’ 1st-round picks in 1998, 1999, 2000, 2001, and 2002.

[Colorado GM Pierre] Lacroix said he and Avs ownership were not caught off-guard by the Rangers’ offer. He said he was not at all surprised New York made one to Sakic, but he thought he would have been warned first by Rangers management.

“The surprise is the strategy the Rangers used. They could have called us and tried to trade for him, but it was not against the rules what they did,” Lacroix said. “But, as a guy who’s been around over 20 years, I could have expected some sort of call.”

Rangers president Dave Checketts replied, “That wakes them up to all possibilities. I’ve never seen that work.”

Rangers G.M. Neil Smith said the decision to make Sakic an offer sheet was a business decision, pure and simple. When asked about possible resentment from Lacroix and the Avs over the Sakic signing and the recruitment of Mike Keane, Smith shrugged it off.

“We’re the most resented team in the league, no matter what we do,” Smith said. “The only way anybody likes you is if we lose. I’m not concerned about resentment around the league. This deal is to bring Joe Sakic to the Rangers. This wasn’t done to hurt the parent group of the Avalanche.”

Dater, Adrian. “Lacroix says he’ll do right thing by fans.” The Denver Post 8 Aug. 1997,  Sports: D-01

The Rangers, meanwhile, indicated that the Colorado financial situation played exactly into who they went after and the structure of the offer sheet.

I’m itching to bet center Joe Sakic will be playing center for the Colorado Avalanche next season with a smile on his face, courtesy of a new $21 million contract.

Dave Checketts, the president of Madison Square Garden, is willing to wager Sakic will be wearing a Rangers sweater and working in New York for the next three years.

“I’ll bet you a dinner on it,” Checketts told me Monday, talking into his car phone on his way home from another day of trying to build a championship NHL team at the Avalanche’s expense.

“I’m not trying to snow anybody,” said Checketts, who briefly served as Nuggets president early in the 1990s. “The Avalanche’s arena situation and the comments they’ve made publicly about their financial situation definitely factored into our decision to make a bid for Sakic.”

The Rangers had considered making a run at Anaheim winger Paul Kariya, a free agent who’s younger and more talented than Sakic. But stealing Kariya would’ve meant picking a fight with the big-bucks muscle of Disney, the mighty owner of the Ducks.

It required far less chutzpah for New York to woo Sakic and anger Ascent, a lightweight among sports owners. Lyons’ young company is bleeding red ink; Ascent is in a tougher spot than Harrison Ford faces in “Air Force One.”

“If it comes down to making a bid on a free agent from the Mighty Ducks or a free agent for the Avalanche, you do consider the financial situations of both teams,” Checketts said.

Kiszla, Mark. “Pepsi to you, Sakic isn’t leaving now.” The Denver Post 12 Aug. 1997, Sports: D-01

There were a couple of outspoken opponents to the Rangers’ tactic, primarily New Jersey Devils owner John McMullen and Philadelphia Flyers GM Bobby Clarke.

“Disastrous, and not just for the Avalanche. This will hurt every team in the league,” Devils owner John McMullen said when asked for his reaction to the Rangers’ bid for Colorado center Joe Sakic, which managed to break two National Hockey League taboos in one fell swoop.

“I’m amazed,” McMullen said. “This is exactly like baseball 10 years ago.”

Not only did New York sign a high-profile Group II restricted free agent to an offer sheet only the third time that’s ever happened and never to a player as highly regarded as Sakic but Smith and Checketts structured the deal to cause the greatest possible harm to another franchise.

The Rangers’ offer is for three years at $2 million per year, with a $15 million signing bonus. The Avalanche have the right to match the offer, but that means cutting a $15 million check, payable immediately to Joe Sakic, no later than Friday.

The Rangers are owned by Charles Dolan’s Cablevision, which was already printing money before it gobbled up Madison Square Garden and all of its lucrative properties. The Avs are owned by Ascent Entertainment Group, which has a small equity stake in the blockbuster film “Air Force One.” Ascent hopes the profits from the Harrison Ford vehicle will begin to offset an accumulated $57 million in losses over the past two years, $16 million of which it attributes to the hockey club.

The outrageously front-loaded contract is a message from the Rangers to the Avalanche and every other NHL club without an unlimited war chest, and it reads straight out of the Charles Darwin primer: “Nuts to you, chums. This is no place for small-timers.”

Remember, the only salary cap in the NHL, other than the one for rookies, is the one franchises place on themselves, in the name of fiscal sanity. With Sakic in the fold for $17 million this season and other deals yet to be done, the Rangers payroll could be heading toward $60 million.

Who knows, they might even have to raise ticket prices.

“The New York Rangers are vultures,” Philadelphia Flyers general manager Bob Clarke remarked this week. “They look at an opposing team and know it can’t match their money. This had nothing to do with intelligence. It doesn’t take intelligence to know Joe Sakic is a great player. It just means you have more money.”

“If you can just throw money at any situation and solve it, you’ll only have two teams left in the end,” McMullen said. “Originally sports were put together by groups of people that had some sense of camaraderie. The further you move away from private ownership, the more disastrous it becomes. When you’re in a partnership with other parties, this sort of thing is really destructive.”

Hirsch, Steve. “N.Y. Under Attack – Rangers Seen As ‘Vultures’.” The Record (New Jersey) 10 Aug. 1997, Sports: s01.

A lot of pieces came together quickly for Colorado, including finalizing a deal on a new arena, plus some very lucrative sponsorship and partnership deals.  Now with the cash in hand, the Avalanche matched the offer sheet to Sakic.

While Colorado was putting the parts together to retain Sakic, another small market in Tampa was faced with the prospect of losing one of their top young players.  Chris Gratton, frustrated over sluggish contract negotiations that included the possibility of trading him elsewhere, signed a front-loaded offer sheet with Philadelphia.  That’s the same Philadelphia run by Bobby Clarke, who just two days prior had blasted the Rangers for being “vultures”.  An up-front $15 million signing bonus on Sakic, a $9 million up-front signing bonus on difference.

Obviously, getting Gratton would make the biggest, most talented team in the East even better. But just last week, Clarke decried the New York Rangers’ signing of Colorado restricted free agent Joe Sakic to an offer sheet, saying the ability to write a check didn’t require a lot of managerial talent.

Last night, Clarke acknowledged he had joined the crowd.

“Once the Rangers did it, it looked to us like the reins were off,” he said.

Then Clarke tried to draw a distinction – he said Colorado had no thought of moving Sakic, its captain, but Tampa had tried to trade Gratton, to the Flyers and other teams.

“They were actively trying to trade him, and all their deals included rather large amounts of cash going to Tampa,” Clarke said. “We tried to make a deal . . . [Finally], rather than give them the cash, we thought we’d just try to sign the player.

“It’s similar to the Rangers in that he is a Group II, but Tampa was trying to trade him.”

Bowen, Les. “Flyers, ‘Hawks Claiming Gratton .” Philadelphia Daily News (PA) 13 Aug. 1997, Sports: 93

This particular situation took a weird turn when Chicago and Tampa Bay both claimed that Gratton had been traded to Chicago before the offer sheet was signed.  Once the offer sheet was in, Gratton would have to stay in Tampa Bay for a full year if the team matched it.

Ultimately, Tampa would decline to match and would receive four 1st-round picks from the Flyers.  Those were packaged and sent right back in exchange for Mikael Renberg and Karl Dykhuis, plus the Flyers retaining at least part of Renberg’s salary.

According to Tampa’s then-GM, Phil Esposito, the trade was originally to send the picks back to Philadelphia for Renberg, Dykhuis, and Rod Brind’Amour; this was agreed upon by him and Bobby Clarke.  At some point, Flyers owner Ed Snider called Lightning president Steve Oto and changed the deal to replace Brind’Amour with Dan Kordic.  Esposito blew up, wanting nothing to do with Kordic, and eventually the salary retention was the compromise.

Meanwhile, negotiations on the other prime RFAs continued to drag on.  Small-market teams now lived in fear of losing their top players to the large markets and receiving late 1st-round picks as the entire compensation for drafting and developing a player into a star.  But over the coming two months, everyone was back into the fold with their prior team.  All except one.

Sergei Fedorov was widely regarded as one of the best players in the world.  He’d begun his NHL career with Detroit in 1990-91, and won the Hart Trophy as league MVP in his fourth year (1993-94).  He could take over a game in every imaginable way, and combined superlative offensive skill with excellent defense.  He was a major part of Detroit’s record-setting 1995-96 team and Stanley Cup-winning 1996-97 team, after which his contract expired.  And negotiations with Detroit were going nowhere.  The regular season began, Thanksgiving came and went.  So did Christmas, and New Year’s, and Valentine’s Day.  Fedorov was still out of action with no contract.

Into the breach stepped the Carolina Hurricanes, owned by Peter Karmanos.  There had been rumors of a Carolina/Detroit trade for Fedorov as far back as November 1997, but the two sides – as was typical when it came to Karmanos and Detroit owner Mike Ilitch – could not agree on a deal.

Looking at a floundering team playing in front of sparse crowds in their temporary home in Greensboro, Karmanos and GM Jim Rutherford signed Fedorov to an offer sheet that can conservatively be described as “creative”.  Six years, $2 million per year in salary.  Add an up-front $14 million signing bonus.  And then, for good measure, add in a provision that if the team made it to the conference finals in 1997-98, Fedorov would receive an additional $12 million bonus.  If the team did not make the conference finals, the $12 million bonus would be spread out over the first three years.

Remember, an offer sheet is a binding contract offer that, once signed, can only be matched as it is by the player’s prior team.  Carolina was dead last in the Northeast Division when the sheet was signed, while Detroit was 2nd in the Central and tied for second overall in the NHL.  That Carolina stood little chance of making the playoffs at all was hardly the point; if Detroit matched the offer sheet as it was signed, they were on the hook for that additional $12 million bonus one way or another.

The arms race was on.

Sergei Fedorov says he doesn’t want to play for the Detroit Red Wings, and a special clause in the offer sheet he signed with the Carolina Hurricanes might grant his wish.

On the surface, the six-year, $38 million offer Fedorov agreed to Thursday, which included a $14 million signing bonus, would normally be matched by the Red Wings. But there reportedly is a clause in the contract that states an additional $12 million bonus, to be paid over four seasons, must be paid in full if the team Fedorov plays for reaches the conference finals this season.


That has to make Detroit general manager Jimmy Holland think about matching the offer sheet by Wednesday’s deadline. If the Wings reach the Western Conference finals, which is quite possible, they would be paying Fedorov $26 million to play 24 regular-reason games and the playoffs.

“Offer to Fedorov kicks up a storm – Hurricanes upsetting Red Wings, NHL GMs.” Star-Ledger, The (Newark, NJ) 23 Feb. 1998, Sports: 57

The NHL took a major step toward alleviating the headache, voiding the offer sheet as invalid.  But Carolina fought back.

The Carolina Hurricanes’ $38 million, six-year offer sheet to Detroit center Sergei Fedorov was rejected by the NHL.

“The league did reject the contract because we did not believe it was in compliance with the Collective Bargaining Agreement,” NHL spokesman Gary Meagher said.

Red Wings general manager Ken Holland said only that he received a fax from the NHL informing him of the decision and declined additional comment.

The Red Wings had until 10:30 p.m. tomorrow to match the contract, work out a trade or decline to match it and accept five first-round draft picks.

The contract calls for Fedorov to receive a $14 million signing bonus, $2 million in salary and $12 million if his team makes it to the conference finals this year. That means he could receive $28 million in four months.

“I do not understand why our offer sheet to Sergei Fedorov was rejected as we have followed all of the guidelines of the Collective Bargaining Agreement,” Hurricanes general manager Jim Rutherford said. “We will take all the proper steps to ensure that our offer sheet is valid. The initial step is to immediately bring the issue to an outside arbitrator and we anticipate a quick response.”

Compiled From Wire Reports. “NHL Rejects Fedorov, Hurricanes Contract.” Akron Beacon Journal (OH) 24 Feb. 1998, Sports: C2

There was in fact arbitration, pitting the Hurricanes against the NHL.  Since the time to prepare for and then actually conduct the hearing cut into Detroit’s seven-day to match or decline to match the offer sheet, arbitrator John Sands was also given the power to grant an additional time frame to Detroit depending on his ruling.

The Carolina Hurricanes’ offer sheet to Sergei Fedorov was upheld today, meaning the Detroit Red Wings must now decide whether they want to try to keep their star center.

Arbitrator John Sands said the NHL should not have invalidated the Hurricanes’ $38 million, six-year offer sheet.

Sands held an arbitration hearing Wednesday night regarding the offer sheet by the Hurricanes to the Russian star, who has not played all season because of a contract dispute with the Red Wings.

Under league rules, Detroit must choose between matching the deal, working out a trade or declining to match it and taking five first-round draft picks. The Red Wings have two days to match the offer.

”We are obviously pleased with the arbitrator’s decision because his ruling supports our belief that our offer sheet was made within the guidelines of the collective bargaining agreement,” Hurricanes general manager Jim Rutherford said.

Mooneyham, Scott. “Arbiter: Offer for Fedorov Was OK.” Associated Press News Service, 26 Feb. 1998, Sports.

Detroit wasted little time making up their minds on what to do.

The Detroit Red Wings matched Carolina’s offer to Sergei Fedorov on Thursday, less than an hour after an arbitrator sided with the Hurricanes on the validity of the six-year, $38 million offer.

Fedorov, who helped the Red Wings win the Stanley Cup last year but hasn’t played this season, said he would take the offer and play for Detroit

Arbitrator John Sands ruled that Carolina’s offer sheet did not violate the National Hockey League’s collective bargaining agreement.

Associated Press. “NHL NOTES – Fedorov staying put – Detroit matches offer after arbitrator backs Carolina.” Milwaukee Journal Sentinel 27 Feb. 1998, C Sports: 8

Detroit did in fact make it to the conference finals, meaning that Fedorov garnered the additional $12 million bonus for that year.  All told, he played 21 regular season and 22 playoff games en route to Detroit’s second consecutive Stanley Cup.  For those 43 total games, he collected a cool $28 million.

But the ramifications of the Fedorov deal went way beyond a single transaction.  For one thing, the arbitration established a precedent that such uniquely-structured bonuses were not in violation of the CBA.  Since courts and arbitrators tend to rely heavily on prior precedent, this could have meant open warfare on the large-market teams and their Group II RFAs.

So what really happened was that the Fedorov deal restored equilibrium.  The Tkachuk, Sakic, and Gratton deals all involved large-market teams waging a form of economic warfare on small-market teams, banking on their deep pockets to give them the heaviest hammer.  The Fedorov offer sheet, and that it was upheld despite a direct challenge from the NHL itself, shifted a heavy hammer back to the smaller-market teams.  Instead of being forced to withstand a huge financial hit if they signed an RFA, there was the chance that they could structure a deal so that if things went sour, they weren’t even on the hook for much of anything.  And that was whether in form of money (via bonuses) or compensation (via draft picks, if the bonuses were not reached and the total money laid out fell into a lower strata).

In theory, there was now nothing that prevented a small-market team from pursuing a big-market team’s top RFA and offering him an offer sheet that called for $1 million in salary, but an enormous additional bonus if his team hit a certain attendance mark that year.  Or if the team finished in the top four spots in its division.  Or if the player suited up for a certain number of games within a given state or province, which would be the ultimate poison pill.  The large-market teams would have to match some very onerous contract terms, or else risk losing a premier player for absolutely nothing in terms of compensation.

This free agent year was as if the small market teams were having a party on July 1, 1997.  Suddenly, a group of armed bandits from the large markets came in and crashed the party, raiding the kitchen and the meticulously-prepared dessert table.  While the smaller markets cowered in the corner, the large markets lived it up.  Meanwhile, Carolina slipped out the side door, only to come back in with a cannon and an itchy trigger finger.

Yes, tensions were raised over the coming years.  But it was that all teams were living in a sort of tenuous fear of each other, rather than the balance of power resting exclusively with the large markets.  That’s what the Fedorov deal ultimately was all about.

About ten years ago, I referred to this time period as The Group II Cold War.  Frankly, I don’t know why I didn’t keep that label, since it certainly fits.  Every team lived with the day-to-day knowledge that there was a very tense peace, and that all it would take was one single action by one single renegade to blow everything up…but also with the day-to-day knowledge that no one would dare take that action since it would take them down at the same time.

In the remaining seven free agent seasons of the 1995 CBA, not a single offer sheet was signed.