Your Guide to Understanding NHL Salary Arbitration

NHL Salary Arbitration Explained
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NHL salary arbitration is a tool available to settle some contract disputes. The player and team each propose a salary for the coming season and argue their cases at a hearing. The arbitrator, a neutral third party, then sets the player's salary.

Arbitration History and Background

The current system for NHL arbitration was created after the 1994-95 lockout and is governed by Article 12 of the collective bargaining agreement between the NHL and NHLPA, notes Dan Greene writing on The Hockey Blawg.

Most players must have four years of NHL experience before they are eligible for salary arbitration (the term is reduced for those who signed their first NHL contract after the age of 20). The process is used by restricted free agents because it is one of the few bargaining options available to them. In 2017, 30 NHL players filed for salary arbitration, including Nate Schmidt, a defenseman on the Vegas Golden Knights, an expansion team that made it to the Stanley Cup Finals in 2018, says NHL.com

How the Process Works

The deadline for players to request salary arbitration is July 5, with cases heard in late July and early August. A player and team can continue to negotiate up until the date of the hearing, in hopes of agreeing to a contract and avoiding the arbitration process. Most cases are settled by negotiation prior to the arbitration hearing.

Teams can also ask for salary arbitration but must file within 48 hours after the Stanley Cup finals. Also, a player can be taken to arbitration only once in his career and can never receive less than 85 percent of his previous year's salary. There are no such restrictions on the number of times a player can ask for arbitration, or the size of the salary awarded. In 2013, players in team-initiated arbitration received the right to entertain an offer from another team through the end of business on July 5.

The arbitrator must make a decision within 48 hours of the hearing. When the decision is announced, the team has the right to decline or walk away from the award. If the team exercises this right, the player can declare himself an unrestricted free agent.

What Evidence Can Be Presented

The evidence that can be used in arbitration cases includes:

  • The player's "overall performance" including statistics in all previous seasons
  • Injuries, illnesses, and the number of games played
  • The player's length of service with the team and in the NHL
  • The player's "overall contribution" to the team's success or failure
  • The player's "special qualities of leadership or public appeal"
  • The performance and salary of any player believed to be comparable to the player in the dispute

Evidence that is not admissible includes:

  • The salary and performance of a comparable player who signed a contract as an unrestricted free agent
  • Testimonials, videos, and media reports
  • The financial state of the team
  • The salary cap and the state of the team's payroll

Only Two Major U.S. Sports Leagues Use Arbitration

Major League Baseball is the only other major sports league in the United States that uses the salary arbitration process. The NHL saw arbitration as a way to resolve salary disputes but also make unrestricted free agency harder to obtain.