The CBA Explained: Waivers

Following some of the discussion surrounding the Matt Gilroy signing in NY, and specifically the one-way versus two-way contract debate, I thought I’d provide for you guys a look at how the NHL waiver process is constructed under terms of the current NHL Collective Bargaining Agreement.

NHL Collective Bargaining Agreement (pdf)

Waivers are discussed primarily in Article 13 of the CBA.

Here’s the general breakdown.

DETERMINING ELIGIBILITY

One of the great myths is that two-way contracts are exempt from waivers.  This is not entirely true.  Although players on two-way contracts are often not subject to waivers (most two-way contracts are Entry Level contracts), there are certain cases where a player on a two-way deal would have to clear waivers in order to be transferred between the NHL and AHL.   More on that below.

Whether or not a player is subject to waivers depends primarily on three factors:

• the player’s age
• the number of years removed from signing his first NHL contract
• the number of NHL games played

For two-way contracts, there are two additional factors used to determine waiver eligibility:

• the player’s minor-league salary
• number of professional games played (NHL, AHL, and ECHL)

When a player is signed, the following questions must be asked, to determine whether or not the player is exempt from the waiver process:

Step 1: Determine contract type

Q1.  What type of contract did he sign (one-way or two-way)?
Q2.  If signing a two-way contract, what is the player’s AHL salary?

Step 2:  Determine whether player has qualified for waiver exemption previously

Q3.  Is this the player’s first NHL standard player contract (SPC)?

Step 3: Determine player’s waiver exemption eligibility.  This step only applies if player is signing his first NHL contract.   Players who have signed previous NHL contracts will automatically be subject to any waiver exemption remaining from their first Standard Player Contract.

Q4.  What is the player’s age?
Q5.  How many NHL games has the player played (season and playoff)?
Q6.  If on a two-way contract, how many professional-level games has the player played (season and playoff)?

All of these questions must be answered to determine whether or not the player will be subject to waivers if moved between the NHL and AHL.

After determining the answers to the above questions, the information is then gathered and applied to a exemption scale that is provided in the CBA.   The player’s exemption from waivers is determined by one of two conditions:  the number of years removed from signing his first SPC, or the number of games played at the NHL level, whichever is satisfied first.

* IMPORTANT: If a player plays in 11 or more NHL games at age 18 or 19, the waiver exemption reduces to 4 years for goaltenders and 3 years for skaters, with the 11+ NHL games played counting as the 1st year of exemption.

* SPECIAL EXEMPTION:  In the case of injury, any player transferred from the NHL to the AHL on a conditioning assignment is not subject to the waiver process.  Players placed on LTIR (long term injury reserve) are also exempt from waivers.

Based upon the scale above, we can see that the player’s age at the time of signing his first contract determines the conditions of his waiver exemption. The actual length of the exemption period that the player is subject to is determined by the number of years since the player signed his first NHL contract, or the number of games he has played at the NHL level, whichever condition is satisfied first.

For example, a skater (forward or defenseman) who signs his first NHL contract at age 18 is exempt from waivers for 5 years or 160 NHL games played (including playoffs), whichever comes first.   If that skater plays 11 NHL games when he is either 18 or 19, the exemption changes to 3 years or 160 games.

TWO-WAY CONTRACT EXEMPTIONS

In general, the same rules outlined above apply to two-way contracts.    A player on a two-way contract who no longer qualifies for a waiver exemption under the rules outlined above must clear waivers in order to be sent from the NHL to the AHL.

However, players on two-way contracts may be exempt from re-entry waivers (recalled from AHL to NHL) depending upon their AHL salary, and the number of professional-level games played previously.

Any player signed to a two-way standard player contract (SPC), whose waiver exemption provided under terms of their first SPC no longer applies, is exempt from re-entry waivers if the following conditions have been met:

• The player’s AHL salary is less than $105,000
• The player appeared in less than 40 NHL games the previous season, including playoffs
• The player appeared in less than 80 NHL games the previous two seasons, including playoffs
• If the player is a goaltender, he has played in less than 180 professional (NHL/AHL/ECHL) games in his career, including playoffs
• If the player is a forward or defenseman, he has played in less than 320 professional (NHL/AHL/ECHL) games, including playoffs

PUTTING IT ALL TOGETHER

To make sense of all of this, let’s examine the Matt Gilroy situation.  Using the original questions outlined at the top of the article, we can determine the following:

• Signed to a one way contract
• AHL salary is the same as NHL salary
• This is his first SPC (no prior waiver exemptions)
• 25 years old
• No previous NHL games played

Since Gilroy is signing his first NHL contract, he qualifies for a full waiver exemption (there is no prior exemption already in place). Gilroy is 25 years old, which means that he is exempt from waivers during the first year of his contract only, and can be moved freely from the NHL to the AHL and vice versa.

Under terms of the one-way contract, the New York Rangers will be required to pay him his full NHL salary regardless of where he plays.  However, he will only count against the salary cap if on the NHL roster.

In all future years of his career, Gilroy will be subject to waivers if sent from the NHL to the AHL.   He will not be exempt from re-entry waivers if recalled from the AHL, as the one-way contract guarantees that he is paid his full NHL salary (and thus he would not meet the salary requirement of the exemption).

Looking at the rules for the waiver process, it becomes easier to understand why the Maple Leafs‘ management was unwilling to give a one-way contract to a free agent who is unproven at the NHL level.  In the first year of the deal the team would have the option to move Gilroy freely between the Leafs and Marlies, but would have to pay him his full NHL salary even if he was not yet ready for the NHL.   But in future years of the contract, if he were to struggle at all, they would not be able to send him to the AHL to develop his game without running the risk of losing him to a waiver claim.

In their offer of a two-way contract to Gilroy, the Maple Leafs were hoping to be able to satisfy the AHL salary component, so that GIlroy would not be subject to re-entry waivers if it turned out he was not yet ready for the NHL in his first season, was sent down to the AHL prior to playing 40 NHL games, and began his second season of the contract at the AHL level.   The Maple Leafs would not be paying an NHL salary for an AHL player, and if he proved he was ready for the NHL they could call him up without fear of losing him.

Now, you may feel that the particular scenario I just offered above is slightly unrealistic, but we actually do see this sort of thing with players on two-way contracts more often than not.   Tim Stapleton is a good example: he was only eligible for a one-year waiver exemption (25 when he signed his first SPC, which was two-way), but because he played less than 40 NHL games this season, he will be exempt from re-entry waivers next season. Unless of course he is signed to a one-way contract, which would void that exemption; however he is a restricted free agent so he will likely be tendered on a two-way deal again.

At the end of the day, it’s all about minimizing the risk of losing (a) money and (b) the player.    For the Leafs‘ GM Brian Burke, it simply wasn’t worth the risk to sign a player unproven at the NHL level, unless he would agree to an AHL salary and a contract that would minimize the risk of waiver exposure (in this case re-entry waivers) should he not make the team out of training camp in a given season.

Note that NCAA signing Christian Hanson was signed to a two-way contract, and is fully exempt from waivers for two more seasons due to his age (23) at the time he was signed.

Hope this helps clarify the waiver process.   Hat tip to nhlscap.com for their breakdown of the waiver process, and for helping to interpret some of the often-tricky language of the CBA.  Well done!

Those of you who are feeling brave can check out the full NHL Collective Bargaining Agreement over at nhl.com.

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