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Understanding NHL Contracts


Courtesy of Steph Chambers/Getty Images

NHL contracts are the backbone of every player's professional career in the league. Whether it's a rookie's entry-level contract or a veteran's multi-million dollar extension, these agreements dictate the terms under which players compete in the league. Understanding the intricate details of NHL contracts is essential for fans who want to grasp the financial side of the sport.


The Basics:

Term: The length of a contract, usually ranging from one to eight years.

Salary: The player’s annual salary, which can be a fixed amount or vary from year to year.

Bonuses: Players may earn performance-based bonuses, which are often tied to statistical achievements or team success.


Types of Contracts:

Entry-Level Contract (ELC):

ELCs are mandatory for players who are younger than 25 as of September 15 during the first year of their NHL contract. These contracts are typically one to three years long, depending on the player’s age upon signing. All ELCs are also two-way contracts. This means that a player can play at the NHL level or with the club’s minor league team in the American Hockey League (AHL).


Standard Player Contract (SPC):

This is the most common type of contract in the NHL. SPCs are typically multi-year contracts, with the maximum length varying based on the player's age and experience. This type of contract also complies with the NHL’s Collective Bargaining Agreement (CBA). The CBA is an agreement between the NHL and the National Hockey League Players' Association (NHLPA) that outlines the terms and conditions for all players playing in the NHL.


Restricted Free Agent (RFA):

RFAs have certain rights that belong to their NHL team, even after their contract expires. This means that their NHL team from the previous season gets first dibs on them and is the only team that can sign them to an SPC. If another team is interested in an RFA, they must submit an offer sheet. The player's current team can match any offer sheet to retain the player or let the player sign with a new team.


Unrestricted Free Agent (UFA):

A player whose contract expires and is over 27 or has played seven or more seasons in the NHL becomes a UFA. UFAs can sign with any team without any restrictions. These contracts often involve more significant financial and term flexibility for players.


Salary Cap:

The NHL operates under a hard salary cap system, which limits the total amount of money that a team can spend on player salaries in a given season. This keeps larger market teams with more revenue from signing all of the top players.


Each player's contract contributes to the team's salary cap, which is calculated as the "cap hit." The cap hit is usually the average annual value (AAV) of the player's contract, even if the player's actual salary varies from year to year.


During the pandemic, when the NHL was not operating, players were still getting paid, creating a $1.5 billion escrow debt. Since the NHL has resumed, the salary cap has been flattened in order to allow players to pay off the debt. This has made it challenging for teams to afford all of the talent that they want. However, the salary cap should increase by $4 million in time for the 2024-25 season.


Clauses:

No-Move Clause (NMC): An NMC is an element that can be added to a player’s contract after they have played in the NHL for seven years or are over the age of 27. NMCs essentially prevent an NHL team from trading, waiving, or assigning a player to the minors without the player’s consent. This gives the player more control and security over their career and signifies the team’s commitment to the player.


No-Trade Clause (NTC): An NTC is another element that can be added to a player’s contract after they have played in the NHL for seven years or are over the age of 27. NTCs essentially restrict an NHL team from trading a player to a different team without the player’s consent. NTCs allow the player to veto or approve any trade offers, ensuring that they have a say in their future destination. NTCs are a key aspect of contract negotiations and can significantly impact a player's career and the team's ability to make roster changes.


Three of the NHL’s Most Recent Mega Deals:


Nathan MacKinnon

Colorado Avalanche forward Nathan MacKinnon signed an eight-year contract extension right before the start of the 2022-23 NHL season. This contract is worth $100,800,000 and carries an AAV of $12,600,000. MacKinnon has played 10 seasons in the NHL and has a total of 859 points in 786 career games.


Auston Matthews

Courtesy of Claus Anderson/Getty Images

Toronto Maple Leafs’ star center, Auston Matthews, signed a four-year contract extension at the end of August. This contract is worth $53 million dollars and carries a $13.25 million AAV, making Matthews the highest annually paid NHL player. Matthews had 40 goals and 45 assists in 74 regular season games during the 2022-23 NHL season.


Erik Karlsson

Over the summer, defenseman Erik Karlsson signed with the Pittsburgh Penguins. Karlsson has four years left on his eight-year contract that he originally signed with the San Jose Sharks. This contract carries an AAV of $11.5 million, which San Jose will retain $1.5 million through 2027. Karlsson has played in 987 games and has a total of 814 points.


Understanding NHL contracts is essential for fans looking to follow their favorite players and teams closely. For players, it's a critical aspect of their professional careers, affecting their earnings and career trajectories. As the NHL continues to evolve, so too do the complexities of player contracts, making it an intriguing aspect of the sport to follow.




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