Monday, January 21, 2013

New NHL CBA: Could We See Sign-And-Trade?

by Fraser Mackinnon Blair (@fmblair)

Although the NHL season has only just begun, some are already looking forward to seeing how the new CBA will effect this summer’s free agent period.

We know that one of the NHL’s main requirements for the new CBA was a term limit on player contracts. The NHL and the NHLPA agreed to impose a general contract limit of 7 years, with the exception that a team may re-sign its own player to an 8 year contract. The rule is there to give teams an advantage in negotiating contracts with their home-grown stars.

However, it’s possible that the contract limits add an additional layer to the new CBA: the sign and trade. The sign and trade is very popular in the NBA. Not so long ago, both Lebron James and Chris Bosh were acquired by the Miami Heat via the ‘sign and trade.’ 

A sign and trade occurs where a pending free agent signs an extension with his current team on the understanding that he will be immediately traded to another team. It became popular in the NBA as the rules allowed a free agent to sign a longer and more expensive contract extension with his current team than he could with another team.

It made sense for the Cleveland Cavaliers to entertain the possibility of a sign and trade when they knew that LeBron James was going to sign with another team and that they were otherwise going to lose him for nothing. Given that there were many teams interested in James, including the New York Knicks, the Cavaliers were able to obtain a couple of draft picks from the Miami Heat in exchange for their superstar. A small pittance, but a pittance nonetheless.

Let’s take this back to the NHL.

Corey Perry and Ryan Getzlaf of the Anaheim Ducks headline the list of potential unrestricted free agents this summer. At 27 years old, Perry and Getzlaf are likely to receive a maximum length contract, whether they sign with the Ducks or elsewhere. The question is whether another team (say the Leafs) would approach the Ducks with a sign and trade offer.

Assuming that Perry or Getzlaf will not re-sign in Anaheim and are happy to play for Toronto, then the sign and trade is a win for all sides. The players get their 8 year contracts and move to a preferred location. The Leafs get their players and the Ducks get some form of compensation.

But not so fast.
According to the Summary of the CBA that has been posted on the NHLPA’s website (we’re using a summary because the final document hasn’t been completed), a team’s 8-year rights cannot be ‘traded’ after the trade deadline of the previous season. As a result, the Leafs could not trade for the rights of Perry/Getzlaf during the exclusive negotiating period between the end of the season and July 1st and subsequently sign the players to 8-year contracts.

In addition, the 8 year contract rights in the case of a UFA expire on July 1st. So such a deal would have to be constituted between the end of the season and the beginning of free agency. By design, this is also the period during which teams have exclusive negotiating windows with their pending UFAs.

So what does this all mean?

The sign and trade in the NBA has created this weird situation where the new (Heat/Leafs) team negotiates with the player (James/Bosh/Perry/Getzlaf) through the old team (Cavaliers/Raptors/Ducks). This may look like tampering, but the fact that it has gone on for this long in the NBA suggests otherwise.

This also seems like a blatant circumvention of the CBA but the summarized CBA doesn’t speak directly to whether the sign and trade is forbidden. Given (1) this silence, (2) the known history of the sign and trade in the NBA and (3) the fact that the same law firm (Proskauer Rose) has handled the CBAs of both leagues, the presumption would likely be that they are allowed.

At this point we don’t know for sure, but I expect that savvy teams with pending UFAs will reach out to potential suitors for their UFAs, and potential suitors will look to get a jump on their competitors prior to July 1st. The end result will be fewer UFAs available at-large on July 1st.

Of course, this could all be meaningless if the final CBA outlaws these maneuvers. But at this point it appears that the sign and trade will be allowed and will impact the way teams approach free agency.

1 comment:

Fuad_Blogger said...
This comment has been removed by the author.