This post is part of our business of hockey series.
To understand how a team is constructed and why it keeps, trades, or signs players you have to understand the business side of hockey.
Today we will look at closer at what it means to be a restricted free agent.
What is a restricted free agent?
What is a restricted free agent? A restricted free agent (“RFA”) is the status given to a player whose initial entry level contract has come to an end but has yet to reach unrestricted free agency status. During this period of time their rights are still held by their team and their movement is severely limited .
Let’s look at the above definition more closely.Embed from Getty Images
When a player initially enters the league – usually through the NHL entry draft – they are signed to an entry level contract. Given the age of the player the entry level contract will be between 1 and 3 years. Most entry level contracts are of the three year nature.
A player who is drafted or signs an entry level contract with a team has their ‘rights’ held by that team for a minimum of seven years or until they are 25, whichever comes first.
Once a player has reached the seven year or 25 years old mark becomes an unrestricted free agent (“UFA”) if their contract expires. I’ll talk more about this below, but at this point the most important thing to know is that a UFA can sign with any team of their choice and the team they finished playing with cannot do anything to stop them.
So a RFA is the period between a player coming off his entry level contract, but before they have played in the league long enough to be considered an UFA.
Now, a common misconception is that a RFA is not allowed to sign with any other team. This is untrue.
Once a player becomes a RFA they are allowed to sign with any team, but (and this is a BIG but), the team that holds their rights is allowed to match any offer made to them. This ‘restricts’ the movement of the player to another team.
If the offer is not matched, then the team signing the player must give compensation in the form of draft picks based on the dollar value that the player is signed for.
I will talk about this more down below, but offer sheets are rare and virtually always matched. So, in the end, the player does not have much choice but to sign with the team that holds their rights.
The NHL system is heavily weighted against a player in their first seven (7) years of NHL service to play for any other team than the team that drafted them. If you are any good as a player, the only way to a different team is through a trade.
What is the difference between a restricted free agent and an unrestricted free agent?
After a player reaches the magical age of 25 or seven years service (whichever comes first) when their contract ends they will be considered an unrestricted free agent.
The difference between a UFA and a RFA it that the UFA is allowed to sign with any team and the team that held their rights cannot match any signed offers and does not get compensated when the player is signs with another team. There is nothing that ‘restricts’ their movement between teams.
Does a restricted free agent have to sign with his team?
The answer is not they do not have to sign, but they do not have many great options if they want to play in the NHL.
The options for the RFA who does not want to sign with his team are to sit out and not play, hope another team signs them to a contract and it is not matched by your current team, or to play in Europe.
Let’s look at these options more closely:
- Not play and sit out
They could sit out. They could simply not play.
Now, that is not a very appealing option for a player, but it does happen.
As a player sits at home and doesn’t play they make zero dollars when they could be making thousands (millions) playing.
A player will often hold out as leverage to get a larger financial contract from the team. If a player is a key part of the team this strategy will work better than if the player is down the depth charts.
Teams desperately want to win, and if they do not have a young superstar in the lineup then it will make it hard to compete – this gives the young player leverage to maximize their contract.
What if the players feel the team is lowballing them? Well, they are not forced to sign a contract and they can stay at home playing a game of chicken to see what side blinks first in their contract demands.
However, an important caveat in the discussion is that if a player who is a RFA is not signed by December 1st they will not be allowed to play in the NHL that season. This almost happened to William Nylander before he signed his RFA contract with about an hour to go and was able to still be added to the roster.
2. Play in Europe
Now, I said above that the player could sit at home and not play. This is not totally true. A player could go and play in Europe, if they cannot find an acceptable contract with the team that holds their rights.
A RFA may not be able to sign with another team in the NHL without matching, but they can sign with a league in Europe. The one major thing about this is that those leagues pay a lot less money.
So, this option gives them a place to play and stay sharp, but at a greatly reduced salary.
Jesse Pulijarvi is currently going through that situation. He is a restricted free agent. Another team has not attempted to sign him, and he does not want to play for the Edmonton Oilers. So, he went back to his native Finland to play until the Oilers trade him to another team.
Pulijarvi still wants to play in the NHL, he just does not want to play for the Oilers (insert Oilers joke here). The only way this is going to happen is if the Oilers trade him to another team. Now Pulijarvi was drafted 4th overall by the Oilers so they do not want to give him away for nothing, but other teams are looking to get cents on the dollar.
Pulijarvi will get traded, but it will take him a full year of sitting out until he gets his wish not to be an Oiler.
3. Sign with another team
The last option that a restricted player has of getting on another team is if another team signs him to an offer sheet.
A team cannot just go and sign another players RFA, but they can sign him to an offer sheet. An offer sheet is for a contract with a certain term (number of years) and dollar amount. However, the team that holds the restricted player’s rights are allowed to match the offer and sign that player to that exact contract.
How many players have got offer sheets from another team? There are one or two offer sheets in a decade, so not much.
How many teams have matched those offer sheets? Basically, every single one.
The offer sheet is going to be matched by the team. Every. Single. Time.
Reporters and talk show hosts will discuss at length how this year may be different, but it never is. This is simply talk to fill up time on the airwaves. Restricted free agents may get an offer sheet, but it will always be matched.
If a team did not match an offer sheet the team that held the rights to the player would get compensated in the form of draft picks.
I think part of it is that the offer sheeted player is a known commodity versus an unknown commodity in the draft picks. The draft is a real crap shoot, and most draft choices do not make it.
Qualifying Offers: Does a team have to sign their RFA
A team does not need to sign an RFA that does not have a contract.
When a player becomes an RFA after either their entry-level contract of RFA contract ends, a team has the option of making the player a qualifying offer.
A qualifying offer is the offer of a contract based on a small raise from the previous contract.
If a team does not value the player enough they do not have to send them a qualifying offer. However, if a player does not receive a qualifying offer they will become a UFA with the ability to sign with any team of their choice.
A team is only allowed so many players in their system, and needs to weigh whether a player is worth keeping over a less expensive and younger player.
Salary Arbitration: Does a RFA have any leverage to negotiate a contract?
If a player has four years of NHL experience (there are a few other technical exceptions) they can qualify for salary arbitration.
Salary arbitration is when both the team and player cannot come up with a negotiated salary for the contract and set their respective contract demands before a independent third party who will then decide upon what the salary will be.
The player and team can keep on negotiating a contract up to the point of the salary arbitration case, and often come to a contract before it gets there.
If it goes to salary arbitration, the third party will set the price of the contract. The team has either the option of taking the contract put forth by the arbitrator or letting the player walk away as a unrestricted free agent.
Can you sign and trade a restricted free agent?
Yes, you can sign and trade a restrickted free agent. There is nothing that stops a team from doing this, but it rarely happens.
What is more common is that a team who is trading a restricted free agent will give permission to the team who is going to acquire the player to discuss a contract extension. This gives both sides the ability to know if a deal will get done.
Then when the player is traded, the RFA immediately signs a contract with his new club.
As you can see the system is heavily weighted towards the NHL clubs versus the restricted free agents.
The only leverage a good RFA has against the club in signing a contract is to sit out and not play.
The only way a good RFA can get to another team is if the NHL team that holds their rights trades them.
So they do not have many cards to play. Hopefully, the like where they play!