Parsing the CBA: The 27-or-7 Rule

by Garrett Bauman on August 7, 2011 in Free Agency - 68 Comments

MLHS reader Charlie posed an interesting question this morning:

“Why is [Shea] Weber a RFA after this contract? [Zach] Parise, same draft year, is UFA next year.”

On the surface, it does seem a bit odd – two players, same draft year, both went to arbitration, yet one will be a restricted free agent in a year while the other will be unrestricted. How exactly does that work?

The answer to that quandary lies in a sliding condition in the CBA which is currently known as the “27 or 7″ Rule.

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NHL Collective Bargaining Agreement, July 22, 2005- September 15, 2011

Section 10.1 — Unrestricted Free Agents

(a) Group 3 Players and Free Agents.

” (i) For (A) the 2005-06 League Year, any Player who is 31 years of age or older and has four (4) Accrued Seasons as of June 30 of the end of the 2004-05 League Year, (B) the 2006-07 League Year, any Player who either has eight (8) Accrued Seasons or is 29 years of age or older as of June 30 of the end of the 2005-06 League Year, (C) the 2007-08 League Year, any Player who either has seven (7) Accrued Seasons or is 28 Years of age or older as of June 30 of the end of the 2006-07 League Year, and (D) the 2008-09, 2009-10, 2010-11 League Years, any Player who either has seven (7) Accrued Seasons or is 27 years of age or older as of June 30 of the end of the 2007-08, 2008-09, 2009-10 League Year, shall, if his most recent SPC has expired, with such expiry occurring either as of June 30 of the applicable League Year or June 30 of any prior League Year, become an Unrestricted Free Agent. Such Player shall be completely free to negotiate and sign an SPC with any Club, and any Club shall be completely free to negotiate and sign an SPC with such Player, without penalty or restriction, or being subject to any Right of First Refusal, Draft Choice Compensation or any other compensation or equalization obligation of any kind. “

In a nutshell, the 27-or-7 Rule states that players are eligible to become unrestricted free agents if they qualify for one of two conditions: (1) the player is 27 years of age on June 30th of the year his contract expires, or (2) the player has accrued 7 seasons of service time.

(Note: The CBA refers to these players as Group 3 free agents, which is the most common type of unrestricted free agent. Although there are other, less-common conditions under which players can become Group 4, 5 and 6 free agents, I won’t get into those here. As a point of interest, restricted free agents are classified as Group 2.)

Applying this rule to Shea Weber and Zach Parise, we see that Weber (b. Aug 1985) will be just over a month shy of his 27th birthday on June 30 of 2012, whereas Parise (b. Jul 1984) will be just shy of turning 28.

But what of the service requirement? In Parise’s case, service time won’t matter because he satisfies the age requirement. Weber, on the other hand, will fall just short of satisfying the 7-year service requirement (will be at approximately 6.5 by July 2012).

With the CBA set to expire following this season, it should come as no surprise that the service time aspect of this rule has played a large role in negotiating RFA contracts this offseason — any contract is subject to the rules of the CBA under which it was signed throughout its duration.  The 5-year contract signed by Steven Stamkos is a perfect example: even though he will be 26 at the time it expires, he will have accrued 8 years of service time and thus be eligible to become a UFA regardless of any rule changes in the new CBA.

There is little doubt this rule will be a central factor in the ongoing negotiations between Drew Doughty/LA Kings and Luke Schenn/Toronto Maple Leafs, both of whom were playing in the NHL at age 18.   Both Doughty (Dec 1989) and Schenn (Nov 1989) are only 21 with already 3 years of service time each; theoretically, both could sign 4-year deals and be unrestricted free agents by the time they are 25 due to the service time component of the rule.  The term to which each is eventually signed will — as was the case with Stamkos — tell a very interesting story.

Looking forward to your thoughts as always,

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