Derek Marr is a self-proclaimed salary arbitration “expert”. Armed with a law degree and previous experience working on NHL arbitration cases, he wrote “The Puck Stops Here: Analysis of Salary Arbitration in the National Hockey League.”

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There are a lot of misconceptions when it comes to the NHL’s arbitration process. It’s not often mentioned by the media, but when it is, I am usually left shaking my head. There is a lot of confusion over what players are eligible, what statistics arbitrators consider, what players can be compared, and what values are assigned to players. To alleviate some of this confusion, I’m going to explain the process really freaking simply. If you want the complicated version, check this out. Warning, it’s almost 70 pages.

So who is eligible? Any restricted free agent player who is NOT coming off his entry level contract. That’s pretty much it. There is a whole chart in the CBA for this based on age at the time the ELC was signed, but it really only serves to make a simple answer convoluted. Now, there are a ton of RFA’s who don’t end up in arbitration, partly due to players signing extensions before they become RFA’s, and also because not every player who is eligible files. Both the player and team have the option to file or not. Generally the player ends up filing more often than the team, and you can often predict if a player will file or not based on who their agent is (some agents LOVE to file for every player they represent). Arbitration is useful for teams for two reasons: 1) they can be used to block offer sheets (ala Shea Weber last offseason), and 2) when a qualifying offer would be for more than the player is worth (like Mason Raymond this offseason).

Once a player or team has filed, there is usually a month before the arbitration hearing. Most arbitration cases will end up being settled before it’s heard. Six of this year’s seventeen filings have already settled, and many cases settle on the day of the hearing. Teams and players tend to know the approximate range where the arbitrator will decide, unless the arbitrator decides to do something stupid.

Unfortunately, the CBA gives very little instruction as to what arbitrators use to make their decision. Basically, they can use any NHL tracked statistic as well as several relevant off-ice factors. That’s it. Over the years, the arbitrators have nailed down some standards, but they aren’t held to them. What usually ends up happening is the team and player each submits a list of comparable players. The arbitrator then decides which comparable players are the closest match and then awards a similar salary.

Using comparable players is where most media members and bloggers tend to get into trouble. There is really nothing in the CBA governing what players can be considered, how they are compared, and what value is given to their contract. In general, a comparable player:

  •           Signed their contract in the current offseason, or occasionally in the previous offseason.
  •           Signed as a restricted free agent.
  •           Signed their contract in the last year or two.

Usually only one-year deals are used, but with so few of them being handed out these days, people need to include some two-year deals as well. If a two-year deal is used, the actual salary is what will be considered, not the cap hit. So if Sam Gagner tries to use Steve Downie as a comparable, they would use $2.55M instead of $2.65M for the contract value.

The biggest problem is how players are compared. To debunk one common mistake, plus-minus has been abandoned by arbitrators. As have hits, blocked shots, giveaways and takeaways. Basically all the stats we mock for their inconsistency are not even considered. How the actual comparisons work is crazy simple. For forwards and offensive defensemen, arbitrators will usually just rank the players based on points per game. For defensive defensemen, they rank them based on time on ice. This sounds dumb, but by the time they get to this part, the list of players has been narrowed down to five or six players. To get this list of players, they will use a filter to get the closest matches. It’s usually players around 10-25% of that player’s points per game the last season, time on ice, penalty minutes, and career games played. Occasionally shorthanded time on ice and powerplay time on ice will be used as well.

The filter setting is where the teams and players can get creative. For example, Nikolai Kulemin will want Chris Stewart ($3M) as a comparable, so they will make sure that he fits into the filters, while Nick Bonino ($700K) is kept out. The standard points per game filter will keep both players, so additional filters will have to be used. In this case, a career games played filter would rule out Bonino (85 games played) and keep in Stewart (271 games played, Kulemin has 303).

After the award is handed out, the team then has to decide whether to agree to keep the player, or walk away from the award and let the player go (like Antti Niemi in 2010). Occasionally, a team will not even contest the player’s request in arbitration, guaranteeing that player will become a free agent. This is what happened with Clarke MacArthur a couple years ago, and Chicago did it again last offseason with Chris Campoli. This seems dumb, but if the team looks at the comparable players and knows they will be getting a huge contract, it’s better to let them go if they can be replaced for cheaper.

It’s going to be interesting to see what happens with arbitration in the next CBA. In the paper I linked above, I recommend some changes that would help improve the process. However, the owners included eliminating arbitration in their first list of demands. My guess is that this is a ruse, only included so the owners have something to give back to the players in negotiations. Hopefully if arbitration is in the next CBA, they will fix some of the guidelines. For example, it’s ridiculous that time on ice is such a big factor for defensemen. There is a big difference between being the fourth defenseman on the Avalanche (Ryan O’Byrne in 11-12) versus the fourth defenseman on the Rangers (Marc Staal). It’s messed up that arbitration doesn’t really differentiate. So hopefully the powers-that-be will provide specific guidelines regarding what statistics should be considered, how much emphasis should be put on each stat considered, and specify all other elements that are currently up to the arbitrator’s whimsy. That would go a long way in clarifying this somewhat convoluted process. Although “the experts” will likely still get it wrong.

Comments (5)

  1. The process basically has no decent way to reward defensive play because they don’t rely on any metrics that evaluate defensive play. So you can have a really weak defensive player who had one great offensive season and they can hit a home run in arbitration.

    Can see why ownership may be frustrated with a system like that.

  2. That’s insane. You basically have to win a Selke for defense to become relevant?

    • Defensive play is judged by shorthanded time on ice, total time on ice, with a slight adjustment for the quality of the team the player plays for. For example: defensemen with a lot of points will be filtered out, then dmen who barely play at even strength would be filtered out, leaving only the guys who play a lot of minutes and don’t put up points. Those guys would then be ranked based on the amount of pktoi they have, although you might see guys jump around a bit if they play less minutes for a good team or more minutes for a bad team, etc. It’s pretty bad, but probably not as terrible as you would think.

  3. Great article. Keep em coming as players file and settle.. would be interested in your take.. Arbitration will definitely be allowed in the next CBA IMO

    • I agree that arbitration will likely be allowed in the next CBA, and if they manage to increase the age/years threshold for UFA status, that would mean even more players would be arbitration eligible every summer.

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