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National Hockey League Salary Arbitration: Hockey's Alternative Dispute Resolution

By Daniel S. Greene

In the legal world, Alternative Dispute Resolution (ADR) is often used to settle disputes with the help of a third party, and without resorting to litigation. The world of professional sports has its own version of ADR. The National Hockey League (NHL) and Major League Baseball (MLB) have some form of an arbitration process to settle contract disputes between players and teams. While the rules and requirements are slightly different for each, the general purpose of the process is to have the contract conflict resolved by a neutral arbitrator for the upcoming season. This has been a very useful tool for both leagues, which see fewer contract holdouts and issues than in the National Football League and National Basketball Association.

July is when arbitration heats up for the NHL. By the July 5th deadline, 23 players filed for arbitration, including high profile players, such as New York Rangers forward Derek Stepan and Washington Capitals goaltender Braden Holtby. Each of the arbitration hearings will be held in Toronto between July 20th and August 4th. Filing for arbitration can end up either in settlement or with an arbitrator's decision. (http://www.usatoday.com/story/sports/nhl/2015/07/05/nhl-players-salary-arbitration-sunday-deadline/29745023/). Historically, most players settle a contract dispute prior to a hearing with one the eight members of the National Academy of Arbitrators, as the process can be costly and time-consuming. In addition, the process can be emotional, as management is pointing out the player's flaws and saying why he is not worth a certain amount of money, which can lead to an uncomfortable employer-employee relationship the following season (http://www.si.com/nhl/2015/07/06/nhl-salary-arbitation-stories-brendan-morrison-mike-milbury-tommy-salo). While the number of arbitration hearings has decreased over the past 10 years, players still file after every season and some, including superstars like Montreal Canadiens defenseman P.K. Subban, go through the entire process.

NHL Salary Arbitration Explained

The NHL's arbitration process is governed by Article 12 of its Collective Bargaining Agreement (CBA) (page 57, http://www.nhl.com/nhl/en/v3/ext/CBA2012/NHL_NHLPA_2013_CBA.pdf). This process is only available to restricted free agents, which are also known as Group 2 players. Eligibility for Group 2 players depends on the age of the player of when he signed his first Standard Players Contract (SPC) and the number of years of professional experience. The older the player was when he signed his first SPC, the fewer years of professional experience he needs to qualify as a restricted free agent (CBA, page 30). While the player and the franchise each has the right to file for salary arbitration, there are certain restrictions. A player can be taken to arbitration only once in his career and can never receive less than 85% of his previous year's salary. However, there are no restrictions on how often a player can file for arbitration or the size of the salary awarded to him (http://proicehockey.about.com/od/nhlfreeagents/a/arbitration.htm).

Once the hearing is scheduled and the arbitrator is assigned, each side exchanges briefs that include the proposed salary along with supporting evidence. Article 12.9(g) of the CAB specifies that only certain kinds of evidence can be offered. This includes official NHL statistics, overall contribution to success of the team, and special qualities of leadership. Certain evidence is not allowed, and includes qualifying offers made by the team, newspaper articles, and the financial condition of the team. (CBA, pages 63-64). In previous years, analytic statistics known as "fancy stats," such as Corsi, Fenwick, and PDO (explanation of each statistic: http://proicehockey.about.com/od/scoresandstat1/fl/Corsi-PDO-and-Fenwick-3-hockey-stats-you-need-to-know.htm) were not allowed in arbitration proceedings. However, these types of statistics have become more widely accepted in the NHL and, as of 2015, are generally allowed in arbitration hearings (http://www.sportsnet.ca/hockey/nhl/headlines-fancy-stats-ok-for-arbitration/). Each brief is due no later than 48 hours before the scheduled hearing. Further, the party against whom arbitration is filed gets to choose whether the arbitrator's final decision will encompass a one or two year contract.

The arbitration hearing's procedure is governed by Article 12.9(k) of the CBA. At the hearing, each side gets 90 minutes, between its affirmative case and rebuttal, to argue its case. Whomever elected for arbitration brings its case first, which is then followed by the case of the opposition. Each party is then offered the opportunity for a rebuttal. There is also the possibility for a 10 minute surrebuttal if there are new issues or comparable players that/who need to be addressed and can't be used in the closing arguments. The arbitrator's decision must come within 48 hours of the hearing. The decision includes the award and brief summary. While the arbitrator's decision is binding, teams can "walk away" from an award of over $3.5 million if arbitration was filed by the player, but cannot do so if the team itself filed. If the team "walks away," the player then becomes an unrestricted free agent. Historically, team owners have opposed arbitration, since they feel that it gives the players too much leverage, but, when the parties do end up going through the process, the contract is generally seen as a fair outcome, especially since the term of the contract does not exceed two years.

Example: Josh Jooris

One of the 23 players to file for arbitration this summer is Calgary Flames forward Josh Jooris. The former Union College (NY) star just finished his second season in the Flames organization, but spent this past season with the NHL club. Jooris was a relatively unknown prospect coming out of college as an undrafted player. He spent his first professional season with Calgary's minor league affiliate, but with a decent season in the minors and a very strong showing in training camp, Jooris surprised many and played in 60 games with the big club in 2014-15, notching 12 goals and 12 assists in 60 games.

Since the Burlington, Ontario native signed his first SPC when he was 22 years old, he only needed two years of professional experience to be eligible for salary arbitration. Jooris' arbitration process could be very interesting, considering that he is a somewhat obscure player. The Uptown Sports client will be turning 25 years old on July 14th, and is due a decent raise from his two-year entry level deal, where he earned $70,000 for playing in the minors and $925,000 for playing in the NHL (http://www.generalfanager.com/players/374).

What could make Jooris' arbitration process interesting is the now accepted use of "fancy stats." While his 24 points don't jump off the page, it's Jooris' intangibles and "fancy stat" numbers that really show his worth. However, it is not a guarantee that these stats will be seen as valuable to the arbitrator, who is usually an older or retired attorney or judge, and may not understand or respect the value of these statistics. Regardless, I'd expect Jooris' representation to bring up as many of these non-traditional statistics as possible (examples: http://www.matchsticksandgasoline.com/2015/5/15/8589905/josh-jooris-and-why-his-upcoming-contract-is-important; http://flamesnation.ca/2015/6/4/2014-15-by-the-numbers-86-josh-jooris?utm_source=dlvr.it&utm_medium=twitter; http://flamesnation.ca/2015/6/9/rfa-profiles-josh-jooris-micheal-ferland-and-drew-shore).

It should also be noted that Jooris was nice contributor to an over-achieving Flames team that made the playoffs for the first time since the 2008-09 season, while also being a good citizen and a fan favorite. On the other hand, I'd expect the club to rely mainly on Jooris' traditional stats (goals, assists, points, face-off percentage, etc.), which for the most part projects him as a respectable "bottom six" forward," as well as being held out of the lineup in the playoffs and his limited NHL experience.

Player comparison will also play a major role in deciding Jooris' contract. Comparable players could include Carolina Hurricanes forward Riley Nash and Columbus Blue Jackets forward Matt Calvert. Both are around the same age as Jooris, 26 and 25 years old, respectively, while each putting up similar numbers this past season (Nash: 25 points in 68 games; Calvert: 23 points in 56 games). In addition, each player signed a new deal this summer, as Nash signed a one-year, $1.15 million deal, and Calvert signed a three-year contract worth $6.6 million (receiving $1.5 million in 2015-16, $2.2 million in 2016-17, and $2.9 million in 2017-18). While there are definitely more detailed and closer comparisons to be made, in my non-expert opinion, I'd predict Jooris to receive a deal worth somewhere in the neighborhood of $1.4 - $1.6 million per year. However, there is no true way to know what effect the "fancy stats" will have on the arbitrator's decision, so Jooris could expect a few hundred thousand dollars more or even a little less than my projected value. No matter what, this versatile, productive, and valuable player will receive a raise whether or not he settles before the hearing.

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This page contains a single entry from the blog posted on July 12, 2015 2:05 PM.

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