With the announcement that Brock McGinn and Anton Forsberg (you forgot we had him, didn’t you?) received their arbitration hearing dates (July 20th and August 4th, respectively), there’s been a little confusion as to what this actually means, and how it affects the status of the players and the Canes. I got into this a little bit in my RFA and UFA post, but let’s dive in to arbitration a little deeper.

What Is Arbitration?

Simply put, arbitration is a little like a court hearing where both the team and the player (and his representation, like his agent) both stand in front of an unaffiliated third party (think: a judge) and plead their case as to how much money the player should make next season. A few days later, assuming a contract still hasn’t been signed, the third party announces how much the contract will be for. Unlike Major League Baseball’s arbitration system where the player and team both submit a salary and the arbitrator selects which one the player will get, the NHL’s arbitration system leaves the salary determination solely in the hands of the arbitrator – that level of uncertainty makes both teams and players less willing to get to that point. Once the arbitration has ruled on a salary, it is binding for the next season (or seasons – we’ll get to that), with some exceptions (we’ll get to those too).

Who can get arbitration?

Arbitration eligibility depends on what age1 a player was when they signed their initial contract. A player who was 18-20 when they signed their initial contract has to play four professional2 seasons before they’re eligible for arbitration, although if a player is 18 or 19, they have to play 10 or more NHL games in a season for it to count – the AHL doesn’t count there. Anyway, a player who signed at 21 needs three professional seasons, a player who signed at 22 or 23 needs two seasons, while a player who signed at 24 or older just needs one.

(Confused? CapFriendly has an excellent “arbitration calculator” that does the math for you.)

That said, a player elects to go to arbitration – it doesn’t come automatically. In the case of the Hurricanes in the 2019 offseason, four players were arbitration eligible. Two filed for arbitration (McGinn and Forsberg), while Trevor Carrick and Saku Maenalanen did not. It might be in a player’s best interest to potentially get a worse deal from an arbitrator than it would get from the qualifying offer the team made to the player to keep them a restricted free agent3.

And yes – a team can also file for arbitration on a player, but they can only due it once during a player’s career. It’s not done often (the last one was in 2016 – Petr Mrazek!) but it is available to teams. I’m not going to get into it though.

What happens next?

Well, just like any court case, both sides begin to prepare a case to be presented in front of the judge. Filing and getting awarded an arbitration date doesn’t prevent the two sides from continuing to negotiate and potentially signing a contract. Last offseason, 44 players filed for arbitration. Of those, only four actually reached the hearing stage.

Why so few? Well, as mentioned before, there’s the uncertainty of the arbitrator. You can recommend a number and put up comparables (we’ll get to that), but in the end, you’ll get a number that’s out of your control. At least if you can come to an agreement, both sides can begrudgingly accept that it works for them.

Then there’s the arbitration process itself. Imagine watching your boss stand in front of a judge and list all the reasons you’re not worth what you think you are. It can be demoralizing, and leave bad feelings between the player and the team. That, in turn, can make a player less loyal to the organization, and make it difficult to retain similar players in the future. It’s a lose-lose for both sides.

Finally, there’s term. Arbitration-awarded contracts can only be for one or two years in length, as determined by the opposite side of who filed for arbitration. So, if a player files for arbitration, the team makes the determination whether or not they want that contract to be for one or two seasons4. Because of the uncertainty, almost all of these contracts are for one year, and then the process happens again the following season.

Pleading Your Case

OK, so let’s ignore all this and assume we hit the hearing day. It’s showtime. Both sides get 90 minutes for their case, rebuttal, and closing arguments. Either (or both) sides can additionally ask for 10 minutes of “subrebuttal” if there is additional information that gets brought up that a side doesn’t get the opportunity to speak on. Basically, it’s an opportunity to rebut the rebuttal.

Both sides are limited as to what they can (and can’t) talk about. They can talk about:

  • The player’s statistics
  • How many games the player has played and any injuries that caused him to miss games
  • How long the player has been in the league
  • How much the player contributed to the success (or failure) of the team the previous season
  • Any kind of special qualities that the player brings to the team, such as leadership or popularity with the public
  • The performance of any comparable players
  • The compensation of those comparable players

That’s it. Things they can’t bring up:

  • Contracts that were awarded before the player became a restricted free agent
  • Contracts that were awarded to unrestricted free agents
  • A contract of anyone who is not a comparable player5
  • The club’s qualifying offer to retain the team’s RFA rights
  • Any reference to prior negotiations
  • Testimonials, press clippings, articles, or media of that nature
  • The financial situation of the team or the league
  • References to the cap (how close the team is to the floor/ceiling, what percentage the player’s contract would be of the cap, etc)
  • Any mention of walk-away rights6

So, comparable players. By June 5th of each year, the NHLPA and the NHL comprise lists of players and contracts that can be used during the arbitration process as comparable players. They can go back and forth on who they want to include, but the list gets formalized about a week later. THIS IS WHY THE NHLPA WANTS TO STRANGLE KEVIN LABANC. Labanc’s discount $1 million contract after a 56 point season is going to get used as a “comparable player” next offseason, hurting players’ cases.

Once both sides have made their case, the arbitrator will return a decision within 48 hours. Negotiation can still take place during this time! As long as the arbitrator hasn’t announced a decision to both parties, they can still negotiate and get a contract signed that doesn’t involve the arbitrator. During the 2017 offseason, two players (Viktor Arvidsson and Tomas Tatar) had hearings but signed long-term contracts before the arbitrator ruled – Arvidsson for seven years, Tatar for four.

Don’t Go Away Mad (Just Go Away)

I mentioned “walk-away” rights earlier. This is essentially an “out clause” for an arbitrator-awarded contract that a team feels is too much. Currently, if an arbitrator awards a player a contract worth more than $4,397,8327 a year, a team can say “nope” within 48 hours, nullifying the contract and making the player an unrestricted free agent, free to sign with any team. If the contract awarded happens to be a two year contract (remember, that almost never happens), the team can walk away from the second year only, with the player then getting a one-year contract and then becoming an unrestricted free agent. If the arbitration process was initiated by the team instead of the player, it cannot walk away from the contract, regardless of the dollar amount.

There is one other hiccup to this. Teams that have arbitration filings are able to use a second buyout window that allows them to buy out players after the initial June 30th deadline. This is unrelated to the player in arbitration, but gives the team an opportunity to make some cap room, especially if that arbitration contract is high. This second buyout window takes place three days after the team’s last arbitration case is completed, whether it’s a hearing to a conclusion or a settlement reached before then. There are two requirements for a player to be bought out during this window:

  • The player has to have been on the team’s roster at the previous season’s trade deadline
  • The player must have a cap hit of at least $3,455,438 for the 2019 offseason

So while the recently acquired James Reimer checks the second box, he doesn’t check the first, so his buyout window has passed.

That’s it?

…he says, 1500 words in. I hope this gave you a little insight into the arbitration process and what to expect. I can’t see the future, but I’d assume that both McGinn and Forsberg get deals before their hearings come up, but if they don’t, now you have a little idea of what they’re dealing with.

Footnotes

  1. by which we mean what age the player was on September 15th of the year they signed their initial contract, unless they were going to turn 20 between September 16th and December 31st of the year the player signed their first contract, in which case they’re considered 20 when they signed
  2. professional meaning NHL or AHL
  3. I talk about qualifying offers in the RFA/UFA post I linked earlier.
  4. unless that player is only a year from becoming an unrestricted free agent, in which case the contract can only be for one year.
  5. I know, I’m getting to it
  6. the ability for a club to say “no thanks” to an arbitration-awarded contract, making the player an unrestricted free agent
  7. this number changes each season, starting initially at $3,500,000 for the 2013 offseason, then increasing by the same percentage that the average league salary increases.