Winnipeg Jets RFA Analysis: Clarifying the Anthony Stewart Qualifying Offer Issue

Posted by Richard Pollock in Columns,Features,Jets Columns,Roster Analysis,Winnipeg Jets,Winnipeg Jets RFA Analysis on July 5, 2011 — 5 Comments

Yesterday we touched on the Jets’ decision not to tender Anthony Stewart a qualifying offer and thereby allow him to become an unrestricted free agent.

Some readers provided commentary on the story (by the way, thank you for that).  One specifically touched on the fact that Stewart could have been tendered an offer and then signed to an offer sheet for below $1,034,249 and the Jets would not have been provided with any compensation had the organization decided not to match.

That is all true.  This restricted free agent (RFA) scale was detailed in our Zach Bogosian contract analysis piece last week.  For ease of reference, here is the RFA chart once again:

$1,034,249 or below None
Over $1,034,249 to $1,567,043 Third-round choice
Over $1,567,043 to $3,134,088 Second-round choice
Over $3,134,088 to $4,701,131 First-round and third-round choice
Over $4,701,131 to $6,268,175 First-round, second-round and third-round choice
Over $6,268,175 to $7,835,219 Two first-round choices, one second- and one third-round choice
Over $7,835,219 Four first-round choices

Originally, the 2005 Collective Bargaining Agreement (CBA) set forth that contracts below $660,000 did not require draft pick compensation.  However, the CBA has a clause within Article 10.4, which sets forth that the dollar amounts on the RFA scale will raise by the same percentage increase as the average league salary each season.  Thus, we see the NHL now have only contracts over $1,034,249 requiring draft pick compensation.

More after the jump.

Anthony Stewart was an RFA this off-season because he qualified as one under Article 10.2(a)(i)(A) of the CBA being over 24 years old with at least one professional year of experience (minimum 10 NHL games in one season).

Under Paragraph 10.2(a)(ii) the Winnipeg Jets had until the first Monday after the NHL Entry Draft to tender Stewart (amongst other restricted free agents) qualifying offers to allow the organization the right of first refusal or draft choice compensation when it came to the particular RFA.

Due to the fact that Stewart’s 2010/11 contract was $632,000 last season, under Article 10.2(a)(ii)(A) Stewart was due a qualifying offer of 110% of the prior season’s value.  This put Stewart’s qualifying offer at $695,200 for the 2011/12 season.  As mentioned in yesterday’s piece that does not mean the Jets could sign Stewart at that price; rather, that is the price the Jets needed to offer to retain his rights moving forward.

Stewart, had he been qualified, would have been qualified in the form of a one-way qualifying offer (not a two-way qualifying offer) because he played at least 60 games in the NHL last season (which satisfies Article 10.2(a)(iii) of the CBA).

If the Jets were looking to sign Stewart to a contract at approximately $825,000 or so, they could have attempted to sign him at that amount.  Alternatively, another team could have attempted to sign Stewart to an offer sheet below $1,034,249 and hope that Winnipeg would not match that contract.  If the team really wanted Stewart, they could have offered at least $1,034,249 thereby resulting in draft pick compensation of a 3rd round selection in the 2012 NHL Entry Draft.  Of course, that is based on the assumption that a team likes him enough to pay over $1,034,248 for his services and is willing to give up the appropriate compensation.

Alternatively, a team could have signed Stewart to an offer sheet between just over $695,200 and $1,034,249 and hoped that Winnipeg did not match—thus allowing them to sign Stewart for no compensation, aside from money.

One thing is for certain; the assumption that an offer sheet would be tendered is a stretch.  Offer sheets are hardly common in this day and age and are largely looked at as a slap in the face of an opposing GM (rightly or wrongly).  Maybe, just maybe, a GM would have tested new GM Kevin Cheveldayoff in this instance, but not likely.

In any event, Winnipeg would have had the right to match any offer between $695,200 and $1,034,249 but the catch is that Article 10.3(b) of the CBA sets forth that the matching team (Winnipeg in this hypothetical) would not be able to trade the RFA (Stewart) for one year from the date it exercises its right of first refusal.

The downside of that is that the Jets could then not trade Stewart, the upside is that they have him on a relatively affordable one year deal—for a player that was their most efficient power play scorer last season (albeit in a small sample size) and the team’s sixth most efficient even strength producer per 60 minutes of ice-time.

Obviously there are issues beneath the surface in this situation that we are not privy to.  The speculation is that character/attitude is a factor but the Jets did have the option of retaining his rights without fearing an offer sheet could be tendered devoid of the possibility of draft pick compensation.

The Jets could have offered Anthony Stewart salary arbitration under Article 12.1(a) of the CBA.  This clause sets out that any player over 24 years old (Stewart is 26) with over 1 year of professional experience (which Stewart has) is eligible for salary arbitration.

Article 12.1(b) further sets out that only players who qualify as RFAs (which Stewart does), who meet the qualifications of 12.1(a) (which Stewart does) and who have not signed an Offer Sheet are eligible either to elect salary arbitration or be subjected to a team’s decision to take the player to salary arbitration.

Under Article 12.2 of the CBA, a player’s agent must elect for the player’s salary arbitration by no later than 5:00 pm New York time on July 5 (today).

A team can elect salary arbitration under Article 12.3(b)(i) of the CBA which sets out that if a Group 2 RFA has not accepted the team’s qualifying offer and has not filed for arbitration himself, the club may choose to file for salary arbitration.

Article 12.3(c) further sets out that a player can only be subject to one club-elected salary arbitration in his career.  This is even the case if a club has opted for salary arbitration but has settled the contract negotiation prior to the arbitration hearing.

Additionally, Article 12.3(d) establishes that a team cannot exercise its right to elect salary arbitration more than twice per League Year.

Based upon Article 12.4(b), the Jets had to elect for salary arbitration with Stewart by July 6 (tomorrow) at 5:00 pm New York time.

The risk with respect to club-elected salary arbitration is that the Jets, had they elected for arbitration, would not have been entitled to walk away from any award as per Article 12.10(e) of the CBA.

On the other hand, the Jets would have had walk-away rights for player-elected arbitration for any one-year deal over $1,042,173 per season or a two-year deal with the same annual salary.  In this case, the club has 48 hours to make its walk-away decision.

That covers the legal wording of the CBA.

Now, let’s boil it down to “simple” (is anything simple with the CBA?) options the Jets management had:

  1. Qualify Anthony Stewart at $695,200, no teams tender him an offer sheet, and attempt to sign him to a one-year deal to play in Winnipeg.  If they could not come to an agreement, and neither party opted for salary arbitration, Stewart could sit out until a contract was reached;
  2. Qualify Anthony Stewart at $695,200 and risk that another team sign him to an offer sheet between that amount and below $1,034,249—resulting in no draft pick compensation if the team does not match;
  3. Qualify Anthony Stewart with him receiving an offer sheet from an opposing team of at least $1,034,249 and take the draft pick compensation (3rd round Entry Draft selection from signing team);
  4. Qualify Anthony Stewart at $695,200 and take him to salary arbitration—without the option of walking away from the arbitrator’s ruling;
  5. Qualify Anthony Stewart at $695,200 and risk him taking the club to salary arbitration—with the club having the option of walking away from the arbitrator’s ruling or accepting the ruling.  The possibility always exists that the club accepts the offer and then eventually trades Stewart (as Boston did with Blake Wheeler last season); and
  6. Not qualify Anthony Stewart (option they chose), without any compensation.

Of the options above, choice 6 was that of least resistance.  Maybe the team wanted a clean break.  Maybe the team wanted to let Stewart get a head start on negotiating with another team.  Regardless, it appears they had options and without any assurance that a team would sign Stewart to an offer sheet below $1,034,249, it appears they let an asset (more valuable asset than he is given credit for), get away for free.