Salary Arbitration Refresher Course

Via: jetsnation.com

The NHL free agency period has come and gone, with just a few second tier UFA's remaining on the market. At this time, most teams turn their attention towards getting those last few RFA's signed, and a very common practice for those young players looking for a new contract is salary arbitration. It's a process that isn't as cut and dry as normal contract negotiations, as it involves a third party and can occasionally get somewhat acrimonious. For many hockey fans the different nuances of arbitration can be a little bit confusing, but luckily I'm here to clear things up a bit. Let's take a look at how the process works, and some the players that have applied this year.


Generally salary arbitration is a way for young players to protect their rights against a hard-headed owner who is giving them a low deal that they don't think they are worth. In these cases, the player would file for arbitration. However, it works in the reverse as well, as a team also has the option to take a player to arbitration if he feels the players demands are unreasonable. 

Unlike UFA's who can take any deal with any team they want, RFA's are under the control of their teams. As a result, salary arbitration is a system that allows a compromise to be met when there is a stalemate in negotiations. It should be noted that a team can only take one of it's players to arbitration once in their careers, while the player can apply for arbitration as many times as he wants until he becomes a UFA (as long as a qualifying offer has been made by the team). 

Who is eligible? This is the part that is a little bit technical, but there's basically three criteria.
1. A player who signed his entry level contract at age 18 or 19 (but hasn't turned 20 during the year his contract was signed) who has played at least 10 NHL games and four such seasons of games accrued is eligible for arbitration. 
2. A player who signed his entry level contract at the age of 20 who has played at least 10 professional games and four such seasons of games accrued is eligible for arbitration.
3. A player who signed his entry level contract at the age of 21 or over, is eligible of arbitration at the end of that contract.

Since most entry level contracts are for three years in length, those players that were 18-20 when they signed their entry level deal generally don't get an opportunity to apply for salary arbitration until the end of their second contract (because of having to play at least 10 games in four seasons). 

This year, 21 players have filed for salary arbitration. The more high profile ones are:

Detroit Red Wings - Brendan Smith
Edmonton Oilers - Sam Gagner
New York Islanders - Josh Bailey
St. Louis Blues - Chris Stewart
Winnipeg Jets - Zach Bogosian, Brian Little

How does it work?
Hearings are set by the NHL between the team, the player (usually with his representative) and a third party arbiter. Usually these take place around the end of July and the beginning of August. Both sides of the contract negotiation present their case to the arbiter who then considers the evidence and awards a contract. This is where things can get a little dicey. 

A team wants to do anything it can to decrease the player's value to the arbiter, often in a way that is awkward or downright insulting with the player or his agent in the room. Conversely, the player will want to do everything he can to show why he feels he deserves the money he's asking for. Essentially arbitration is a battle ground, it leads to a solution, but there's always some emotional punches thrown during the process and more than a few relationships have been soured as a result. 

In the end, the arbiter looks at the two cases presented, but he also considers comparables. Both sides will present some comparable players in terms of seasons played, age, and various stats to determine the player's value. Let's use Winnipeg Jet Zach Bogosian as an example. 

Bogosian and his agent will likely want to compare him to a player such as Drew Doughty, who was drafted in the same year and makes $7 million dollars per season. Now, of course that's a bit of a stretch to compare the two stats-wise, but that's the high end of the spectrum the player will be shooting for. 

On the other hand, the team will likely compare Bogosian to a player like Karl Alzner, who is of similar experience and has slightly lower stats, but recently signed a contract for only $2.8 million per year. 

Results.
The arbiter will take all this information and come to a decision on a contract value and term. Generally the decisions end up being in the mid-range that both sides wanted for the dollar amount, and rarely does the term go beyond one season unless both sides wanted it. The arbiter's decision isn't necessarily final though. If the player requested arbitration and the awarded contract was more than $3.5 million, the team has a 48 hour window in which it can "walk away" from the decision. Basically, the relationship between the player and team is nullified, and the player becomes a UFA. If however the team elected arbitration, both sides must consent to the awarded contract, no matter it's value. 

In the end, it's unlikely that all 21 players will actually make it to their arbitration hearings. A few have already signed and avoided the process, while I'm sure more than a few of the rest will want to do the same. Sure, it gets a solution worked out, but it's just not worth it for the team to devalue a player in front of his eyes just to save a few bucks.