Following the business side of hockey is like following a whole other sport. There is a lot of lingo to figure out, and one of the terms you hear most often is unrestricted free agent.
What is an unrestricted free agent in hockey? An unrestricted free agent or UFA is a player that is not signed to a contract and is able to sign with any team of his choosing, and after the signing his previous team does not receive any compensation from the team that signed him.Embed from Getty Images
Let’s take a closer look what an unrestricted free agent in hockey is and how a player becomes one. To get a good idea of what it is we need go right to the start of a player entering into the league.
A player’s journey into the NHL
When a player is drafted by a team through the entry draft (most common way a player becomes part of an NHL team) or signs undrafted players younger than 27 the team owns their NHL rights.
This means that the player essentially becomes their property and it severely restricts their movement to another team.
Basically, a team will have ownership over where that player can play for the first seven years of their NHL career even if they do not have a contract signed with the team. This is where we need to discuss restricted versus unrestricted free agent.
Restricted vs unrestricted free agent
Both a restricted and unrestricted free agent are able to sign with any team of their choosing. However, the key difference is that with a restricted free agent the team that holds their rights is given a chance to match the contract or choose to receive compensation in the form of draft picks.
When a player first signs a contract with a team it is called an Entry Level Contract (“ELC”). The ELC is for three years and at the end of the three years the player will become a restricted free agent.
A restricted free agent means that a player can now sign with any team, but the team that holds their rights is allowed to match any offer made. And if the team does not match, the team signing the player must pay the team holding the rights compensation in the form of draft picks.
When a player becomes and unrestricted free agent they are allowed to sign with any team and their former team does not have the ability to match nor do they receive any compensation.
Just to clarify, both a restricted and unrestricted free agent are able to sign with any team of their choosing. However, the key difference is that with a restricted free agent the team that holds their rights is given a chance to match the contract or choose to receive compensation in the form of draft picks.
This essentially binds the player to the team as a restricted free agent, as it is very, very rare that a player will sign with another team. Teams will simply match the contract or the draft compensation is seen as too oppressive.
How do you become an unrestricted free agent?
Many players long to get to unrestricted free agency, because they are now allowed to sign with any team they want. As well, as they gain lucrative contracts because bidding wars develop for their services.
However, for players of lower profile unrestricted free agency can be a stressful time because they are trying to find a team that wants them. I’ll get more into this later.Embed from Getty Images
There are a number of different ways that a player can become an unrestricted free agent in the NHL. Let’s start with the most popular way and move down to the least common ways.
1) Play for seven years and/or be 27 years of age
If the player meets the following requirements they will become a free agent when their contract expires on June 30th of the contract year:
- If the player had accumulated 7 years of experience or;
- The player is 27 years of age
Analysis: The youngest a player will start playing in the NHL is 18 years old. If a player starts playing then and plays for 7 years they can become a UFA at 25 years of age if their contract has expired. However, if a player starts playing in the NHL at 23 they only need to play for another 4 years until they reach the age of 27 to become a UFA.
The average NHL player only plays 4 years so the majority who come into the NHL do not fit into the above category. The players who fit into the above category are the players that everyone is most familiar with – regular NHL players.
2) Group 6 UFA
A Group 6 UFA is a player who fits into the following criteria:
- The player is 25 years or older
- There are a total of 3 professional hockey seasons played that includes the NHL, but also minor or European leagues. No NHL games are necessary to have been played.
- The players has played less than 80 NHL games or 28 games as a goaltender
Analysis: The most common source for Group 6 UFA are players who have been playing in Europe or minor league players who have not caught on with an NHL team and are bouncing around the minors.
3) No qualifying offer
When a player’s contract ends and their rights are still held the team they must extend a qualifying offer to the player to maintain the rights to that player. A qualifying offer is an offer of a contract for the next season.
The team cannot simply offer them any contract but the amount will be based on the previous contract and has to at least be between 100% to 110% of the previous years contract. The player does not have to sign the qualifying offer contract, but can choose to negotiate a different amount – this can be higher or lower.
If the team does not make a qualifying offer, they will lose the rights to that player and they will become an unrestricted free agent.
Analysis: This is often seen if a player is making, for example, $2 million and is playing on the fourth line or is being scratched often. Is it worth it to keep that player for $2 million when you can replace them with someone from your farm system for the league minimum who can get the same amount of points?
There were roughly 100 players in the NHL who do not receive qualifying offers each year and then become UFAs. A few of them will find another team in the NHL to play with, but most will end up signing minor league contracts.
4) A team who walks away from an arbitration case
If a player who is a restricted free agent and a team cannot come to an agreement on the terms of a new contract, the player and team may go to salary arbitration.
Salary arbitration is where both parties will present their case for a new contract to an independent third party who will then decide on the salary for the player. For example, a player may want $3 million and the team wants to pay $1.5 million and the arbitrator will award $2 million.
After the arbitrator makes his decision as to what the player should make the team has 48 hours to accept the decision. If they do not accept the decision, the player can then declare themselves an unrestricted free agent and sign with any team of his choosing.
5) Get your contract bought out
There is a mechanism for a team to buy out a player’s contract so they are no longer part of the team.
Each team in the NHL has only a certain amount of money they are allowed to spend on players salaries each season (around $80 million). If they are having trouble signing all of their players to contracts that fit under that amount one strategy they can use is to buyout an expensive contract, which frees up room under the salary cap.
The player that gets their contract bought out gets 2/3rds of their salary, and will automatically become an unrestricted free agent.
Analysis: Often players who get their contracts bought out will sign on with another team at a substantially reduced rate from their previous contract. Often these are aging stars who signed large long-term contracts who are no longer providing nearly the production that their contract dictates they should.
In a bizarre scenario the Calgary Flames bought out Michael Stone to save a few million dollars in salary cap space only to sign him as an unrestricted free agent a few weeks later to a league minimum contract.
When can unrestricted free agents sign with another team?
For players who are unrestricted free agents they become eligible to sign with another team on July 1st of the year that their contract expires. The only exception to this is the buyout or walking away from an arbitration decision that happen after July 1st.Embed from Getty Images
For the majority of players the timeline would look like this:
The season ends:
When a players season ends after the regular season, if they do not make the playoffs, or at the end of their Stanley Cup playoffs journey and they are in the last year of their contract status the contract does not expire until July 1st.
This period of time between seasons end and July 1st still belongs to the team that holds the players rights for that period, and is seen as a negotiating window for that team before they become an unrestricted free agent.
But the NHL does allow an 8 dayl courting period for other teams prior to July 1st to talk with upcoming unrestricted free agents.
Free Agency interview period:
The free agent interview period is a total of 8 days before July 1st where teams are allowed to contact players with expiring contracts and talk to them about potentially signing with their team.
Teams and players are not allowed to talk contract details, but, in reality, this definitely happens.
Free Agency starts July 1st at 12 pm Eastern Standard Time
On July 1st at 12 pm EST, players are allowed to officially sign with any team of their choosing. And, on this day, the contacts will start coming in fast and furious.
The biggest prize free agents will be signed and delivered by the end of the day (and most often at the very start).
Teams tend to overpay players in both the amount they pay them and for how long they pay them. There are not a lot of bargains to be had on this day.
However, the players who do not get signed in the first few days of free agency often have a long summer trying to find somewhere to play, and getting a decent contract secured.
Depending on how good of a player you are unrestricted free agency can be fantastic or it can be terrible.
If you are a regular NHL player or better then unrestricted free agency will be very good for you and your family as you will get signed to a very lucrative contract in a place of your choosing.
If you are a borderline NHL player then unrestricted free agency will be a very stressful time where you hope that you can catch on with another team and continue your career in the NHL.