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Arbitration For Golden Knights: Good? Bad? Neither?

All three of… (Photo Credit: SinBin.vegas Photographer Brandon Andreasen)

The Golden Knights made “news” yesterday by confirming William Karlsson, Colin Miller, and Tomas Nosek have all filed for arbitration. In reality, this isn’t really news at all. However, based on the wide range of reactions we received on Twitter, Facebook, and face-to-face, it feels like a good time to explain how this all works and why the three Golden Knights filing for arbitration is not a good or bad thing for either the player or the team.

In the NHL, when a player reaches the end of a contract they are placed into one of three categories.

  1. Unrestricted free agent (UFA)
    • Any player 27 years old or older
    • Any player with 7 seasons in the NHL
  2. Restricted free agent with arbitration rights (RFA)
    • Younger than 27 years old
    • Meets experience requirement based on age when signed first contract. (10 NHL or AHL games = 1 year)
      • 24-27 years old when signed = 1 year of NHL experience
      • 22-23 years old when signed = 2 years of NHL experience
      • 21 years old when signed = 3 years of NHL experience
      • 18-20 years old when signed = 4 years of NHL experience
  3. Restricted free agent (RFA)

James Neal, David Perron, Luca Sbisa, and Ryan Reaves were all older than 27, so they all became UFA’s.

William Karlsson -20 y/o when signed + 5 years experience = RFA w/ arb
Colin Miller -20 y/o when signed + 5 years experience = RFA w/ arb
Tomas Nosek -22 y/o when signed + 4 years experience = RFA w/ arb
Shea Theodore -20 y/o when signed + 3 years experience = RFA
William Carrier – 20 y/o when signed + 3 years experience = RFA

…these guys scored pretty… (Photo Credit: SinBin.vegas Photographer Brandon Andreasen)

That brings us to the difference between the three categories. In short, the difference is how much freedom a player has to negotiate.

An unrestricted free agent (UFA), as the name suggests, has no restrictions. He can solicit offers from all teams and can sign with whichever one he pleases.

A restricted free agent (RFA) on the other hand can only negotiate with his current team and is not free to leave for a new team. If the team wants to retain the player, he will be extended a “qualifying offer” and must sign it if he would like to remain in the NHL. If the team does not extend the qualifying offer he then becomes a UFA and is free to sign with any team.

(The Golden Knights offered qualifying offers to all of their RFAs. William Karlsson, Tomas Nosek, William Carrier, Colin Miller, Shea Theodore, Teemu Pulkkinen, Philip Holm, Oscar Dansk)

An RFA with arbitration rights has one more step in leveraging a better contract. Rather than being forced to sign the qualifying offer, he can choose to file for arbitration. In other words, he can ask for a raise.

So, let’s go through the steps of the process for RFA’s without arbitration rights, like Theodore and Carrier.

  • Step 1: Team decides if they want to retain each player
    • If yes: Extend qualifying offer
    • If no: Do not extend qualifying offer (Player is released)
  • Step 2: Player signs qualifying offer

That’s it. The player has no negotiating power and is essentially stuck signing the offer. The dollar value of a qualifying offer is determined by the NHL’s Collective Bargaining Agreement (CBA). The team hands the player a contract and their either sign it or leave the NHL.

The process for RFA’s with arbitration rights, like Karlsson, Miller, and Nosek adds one more step, giving the player that bit of negotiating power. Rather than being forced to sign the qualifying offer, the player can file for arbitration. Arbitration means both sides will present how much they believe the player is worth and then a third party will decide the contract the team and player will sign. Of course, the player must remain with their original team, so the negotiating power is significantly less than that of a UFA who can negotiate with all teams.

600 words later we get to the point of this whole article, is the fact that three Golden Knights filed for arbitration good or bad for the team?

The answer is neither. It’s just the rational next step in the process. Instead of signing a contract that offers little to no raise (the qualifying offer) the player can ask for a raise.

big goals in the Stanley Cup Final. (Photo Credit: SinBin.vegas Photographer Brandon Andreasen)

Filing for arbitration gives up only one small option for the player. They can no longer sign an “offer sheet.” If you are interested, click here to read more about offer sheets. However, understand that not a single offer sheet has been extended since 2013 and no player has changed teams due to an offer sheet since 2007.

So now that you understand the process, let’s walk through showing why there are no winners, losers, low-ball offers, pompous GM’s, or any of the other garbage I’ve seen spewed about Karlsson, Miller, and Nosek filing for arbitration. The process is the same for all three, but Karlsson’s situation illustrates it best so we’ll use him as the example.

After the season ended the Golden Knights had to decide by June 25th if they wanted to keep William Karlsson or lose him for absolutely nothing. To do so, they are forced to extend him a qualifying offer worth exactly $1 million. Clearly, the Golden Knights want to keep Karlsson and from the team’s perspective, paying him $1 million sounds pretty good. So, they did that.

Karlsson then had two choices. Either sign for $1 million and be grossly underpaid or file for arbitration. Obviously, Karlsson believes he deserves a raise, so he filed for arbitration.

There is no backstabbing. There is not a winner or a loser. It’s simply a process and both sides are doing exactly what they should have done to this point.

So where does that leave us now? In the next few days, the NHL will set a date for Karlsson, Miller, and Nosek’s arbitration hearings. Here’s the key. Filing for arbitration does NOT mean the player is going to make it to the arbitration hearing. The team and the player are free to negotiate between now and that date to reach an agreement on their own. More than 90% of players reach an agreement before arbitration. Last year 30 players filed for arbitration, 29 of them reached deals prior to the hearing. The one was Nate Schmidt, but let’s try to ignore that elephant in the room for now.

Once the dates are set (between July 20-August 4) for Karlsson, Miller, and Nosek, the Golden Knights and each player will have a deadline to reach a deal. Like all negotiations, deadlines help get deals done.

Odds are the Golden Knights reach agreements with all three players prior to their arbitration hearing and no one is hurt. But, if for whatever reason one or more of them do reach the hearing, then we’ll have something to talk about. Then, there will be winners and losers. Then, feelings might be hurt. Then, you might (I emphasize might) be free to call George McPhee a cold-hearted son of a… nevermind.

But until then, go on with your day knowing the only important thing about the entire RFA process to this point; William Karlsson, Colin Miller, and Tomas Nosek are all guaranteed to be Vegas Golden Knights in 2018-19.

Unless of course they are traded.

Hockey is great.

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17 Comments

  1. Bobby Hull

    Good job laying out the details, Ken, and helping get some more folks educated on the process.

  2. Phil Esposito

    Curious though—-why you think the Schmidt case is the “elephant in the room” ?

    • Because I didn’t feel like getting into why it might have happened and detract from the point of this article.

      There were so many unknowns with VGK that is made more sense that a deal would get to arb. If it happens with Miller or Nosek then it might be something with McPhee. Karlsson’s is such an anomaly that it wouldn’t surprise me if that one got to arb.

    • Bent Hermit

      GM wanted more than 2 years, usual arbitration term. Everyone thought VGK would be the typical expansion team. So being that Nate will be 27 at end of the 2 year contract, eligible UFA, didn’t want long term.

  3. Ron Brasi

    Schmidt has mentioned arbitration as being the one lowlight of the season. Players are people, too, and when they have to sit there and watch as their stats and contributions or lack thereof are getting thrown at them, it sucks. The end result is usually pretty acceptable for both sides. If I were a betting man, I would guess they let an arbiter decide what Wild Bill is worth. When that happens, it’s a two year deal. If GMGM extends, it’ll probably be in the neighborhood of 5 years. WK is too unknown a quantity for that due to sample size.

  4. BL

    Great write-up. Was wondering why Shea and Carrier didn’t have ability for arbitration.

    Regarding arbitration, how do you know if the deal coming out of arbitration is for one year or two years? Just mutual agreement, where maybe go to arbitration again the next year if one year deal?

  5. How much is Wild Bill looking for, dollars and term? What are Golden Knights offering him? Interested in seeing how close or far apart their evaluations are.

  6. Jonathan

    I personally would be willing to risk on Karlsson, though I know not everyone would be. Life and business and sports are all about risk versus reward. I would see if Karlsson would take a Marchessault and Smith like deal at $5M per year for a 5 year term or something like that, with the understanding that if he performs like he did before this past season, he’s probably worth about $1.5M/year but if he performs like he did last year, he’s worth $10M/year for sure, so maybe he’d be willing to split the difference around $5M figuring that arbitration would probably give him less money for the next two years anyway, but this would guarantee a solid income on par with the other first liners for the next five years. I don’t love the idea that we have him for two years, even if it is $8M total or $4M per year, because I actually do believe he’s going to be worth a lot of money and will continue to be an elite player. Maybe not a 43 goal scorer, but a 30 goal scorer who plays great both ways. That’s not an easy player to find.

    • Andy

      Karlsson is an interesting one. His situation reminds me of Mike Cammalleri in 2007, fresh off his first 80 point season. He didn’t have the track record prior just like Karlsson but went into arbitration asking for $6 million per season, the Kings offered about $2.5 which was in line for his salary progression at the time but still a little low. The end result was a 2 year/$6.7 million, $3.1 million in 2007 and $3.6 million in 2008. Needleed to say he was very bitter and disappointed but he also overachieved and asked for the moon which is not realistic. Curious to know what Karlssons camp thinks he’s worth. Personally, I don’t think he is worth more than $4 million at this stage of his career based on his history.

  7. Andy

    Good write up, just a few things to add:
    1. Arbitration terms are 2 years max unless the player will be a UFA within those 2 years in which case it will be a 1 year term no matter what.
    Nosek for example will be 26 in Sept but his UFA year will be 2020 because he will not have turned 27 before July 1 2019. He will almost be 28 when he us eligible for UFA status so they will opt for a 2 year term if they feel he is worth it. If not it’ll be a 1 year term, he is an RFA with arbitration rights next summer and the process repeats unless they reach a long term deal covering some of his UFA years.
    2. There is team elected arbitration and player elected arbitration. In team elected the player picks the term, in player elected the team picks the term.
    3. A player can only go to team elected arbitration once in his career.
    4. MQOs (Minimum Qualifying Offers) are simply to retain the player’s rights, they don’t have to sign that contract. If the MQO is $1 million, but the player thinks he’s worth $1.5 million, they can work on that. It isn’t a take it or leave it offer. The MQO simply locks them in and negotiations continue. This is true for both RFAs with and without arbitration rights.
    5. Only players going to arbitration (player or team elected) are exempt from Offer Sheets, MQO tendered RFAs can still get them no matter what (arbitration rights or not).

  8. D Patrick Stark

    DP

    Arbitration my be a necessary evil in the Golden Knights case of Karlsson and Miller. In karlsson‘s case he has only one year of high production, what is that worth? The team will need to protect itself from a bad long term contract, as GMGM has already done that by given Ryan Reaves a $5.5 M contract over two years, a big mistake. A prove it contract would be the best for the team. Miller put up big points and also gave up big points, he needs to become a better defensive player, as he is a third pairing defenseman at best at this time. He did improve this year but has a long way go to catch Schmidt, Englland and McNabb. The coaching staff made a big mistake by skating Miller and his third pairing partner an average of 16 minutes a game. This will come to haunt them in arbitration. The team should go for a contract under $2 Million a year for two years as the term has the choice of team.

    In the Schmidt case the Golden Knights offered less then $1 M per year on a two year contract, while he asked for $2.75 for a one year contract. The arbitrator ruled $2.15M and $2.3M. After watching him this year the Knights got a deal. GMGM said after the ruling, that there is no hard feelings this is just business. I think the Golden knights wanted to show that they would play hardball and go to arbitration as a new team. Mr. Schmidt has done everything they asked of him and more. Now I hope they make an effort to sign him to a long term contract by the end of November of this year or he my be gone. I guess it would now cost more than $4M a year. Remember its just business

  9. ray K

    Karlsson is 1 for 1. He was given a role at 22 & 23 and filled it as a an NHL player. Not in the minors but in the NHL. When given his first opportunity at 24 to be what he now is look what happened! He had more ice time and the toughest matchups on the team playing every game on the pp & pk and then was huge in the postseason! without the emergence of Wild Bill the Knights have an OK year but miss the playoffs do NOT win division and certainly don’t win 13 playoff games! This guy deserves 5 x 8 = 40mil!

  10. ray K

    Golden Knights Best Player! Without a doubt! Pay him. Don’t crap on him!

  11. ray K

    I had been a Duck fan and really thought William Karlsson was a huge talent until they gave him away. I only started watching the Knights because of Wild Bill and Shea Theodore. It was an awesome thing to behold the talent he showed Knight after Knight! Amazing player with or without the puck. Completely unselfish making a great offensive or defensive plays throughout the course of almost every game! This guy is “THE REAL DEAL” and I believe he will exceed his 2017-18 season this coming year! He is a dynamic first line center with great speed and his best is in front of him!
    How many top line offensive centers are also the best defensive center on their team?

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