NHL CBA Changes: What’s Coming, Impact on Current Contract Talks, and Potential Future Trends

September 15 marks the final implementation of the new NHL CBA changes, which will have varying consequences for the league. With changes to qualifying offers, E-Bug rules and player salaries/ signing bonuses, it’s a lot to process; even for an NHL GM.

The first big change will be the end of eight-year contracts. Max-term contracts for player extensions will be reduced from eight to seven years, while max terms for players signed as free agents or extended without being on that team’s reserve list as of the most recent trade deadline will go from seven years to six years.

The second big change will be tighter rules on how money is distributed throughout a contract. Teams will have less flexibility to create large salary swings from one season to the next, with a 20% limit tied to the first year and a 71% minimum compared to the contract's highest-paid season.

The third major change restricts signing bonuses to no more than 60% of the total value of an NHL contract over the life of a deal.

These changes have already affected some of the decisions made on players this summer and will also affect some of the discussions going on right now until September 15.

“It’s normal that teams see the cap rising and want to sign guys for as long and as quickly as possible to avoid dealing with the increases and player salaries on the horizon,” said a well-placed NHL source. “Just look at Vancouver. If they would have signed Quinn Hughes to an eight-year deal instead of a six-year deal, would he still be in Vancouver? Players are betting on themselves with a little more confidence though. Those five-year deals are becoming more popular. Getting a little more security would be nice for players, but at what price for teams? That’s the dance going on right now.”

And that’s the internal discussions going on with many teams right now trying to get their pending unrestricted and restricted free agents signed before these changes come in.

Here’s the gist on the big changes managers are trying to get ahead of.

Outside of Ivan Demidov’s sweetheart, eight-year extension with the Montreal Canadiens, most of the top youngsters in the game signed between five and six-year deals.

The likes of Macklin Celebrini, Connor Bedard, Pavel Mintyukov, Simon Nemec, Jamie Drysdale, Trevor Zegras, Dan Vladar, Bowen Byram, Brandt Clarke and more signed mid-term deals when they would have been locked down to seven or, more likely, eight-year deals during or immediately following the Flat Cap era.

The biggest factor for this change? The cap is set to increase in such a way that players would be missing out on some big money, more so than those long-term deals signed between 2018 and 2023, if they were to go to max term now.

Unless it’s for a player who is nowhere near established, like Pittsburgh’s Ville Koivunen, or a cultural team-based trend like Ivan Demidov, teams are using the eight-year contracts as a negotiation tactic from now until September 15.

But it’s no longer as attractive a venture as it once was for top NHL players.

The Cale Makar and Quinn Hughes situations are perhaps the best examples of what's to come on the UFA side of things. Both players aren’t expected to go to max deals in their negotiations, opting more likely for short-term or, if lucky, mid-term deals; despite their teams pushing for longer.

“Would the Colorado Avalanche want to get Cale Makar signed to an eight-year deal? Absolutely. That’s something they would love to do, but it’s very unlikely that Cale does that right now. Same for Hughes,” said another NHL source. 

“Both signed six-year deals at a time where everyone was signing for eight. They’re the two best defencemen in the game. They can sign short or medium term at upwards of $18M now, and get a final kick at the can at age 30 or 31 for more than what the max salary is today.”

Even sportsbooks like 5Gringos online sportsbook have no idea how it's going to turn out.

When you think of it that way, getting $18M over three or four years, and then potentially signing a longer-term deal in their early 30s over $20M does make sounder financial sense for players look to maximize their short career earnings window.

But then there are still cases of players that would prefer that security, like Drake Batherson in Ottawa. According to Bruce Garrioch, Batherson’s clan is looking for an eight-year deal before the September 16th deadline.

Part of it is the eight-year deal and being able to get that long-term security, but another aspect potentially pushing his clan to seek out a deal now would be the structure of his prospective new deal as well,

The term is only just part of the equation.

For general managers, one of the most valuable tools in building an NHL roster has always been leveraging term. Signing a player in his late 20s or very early 30s to a long-term contract can allow a team to lower the average annual value of the deal by spreading the money over more seasons.

It’s sound logic. A player may be worth $12 million a year when he is 30, but the expectation is that his production will decline as he moves into his mid-to-late 30s. If the team can structure a long-term contract with more money paid while the player is at his peak and less money in the later years, everyone can get something out of the arrangement. The player gets security and guaranteed money, while the team gets a lower cap hit and control of the player for many seasons.

“Front-loading contracts was a normal feature dating back to the start of the salary cap era with those 12 or 13-year contracts we saw,” said an NHL executive. “It either allowed youngsters coming off their entry-level contracts to cash in right away, or get players in their primes paid quickly while getting theme security on the backend.”

The most recent contracts signed by Alex Tuch and Nick Schmaltz provide a good look at how this strategy has worked. Tuch, who was 30 this summer when he signed his eight-year, $84 million contract, carries a $10.5 million cap hit.

But his actual compensation starts at $15.7 million in the first season, falls to $11.775 million in the second, $9.425 million in the third and then settles at $9.42 million for the final five seasons. Schmaltz, also 30 when he signed his eight-year, $64 million deal, carries an $8 million cap hit while earning $10 million in each of the first three seasons, $8 million in the next two and $6 million in each of the final three.

There is an important reason these two contracts are useful examples. They were signed just before the new CBA's contract structure restrictions are set to take effect. They show the type of flexibility that GMs had immediately before the rules changed.

Tuch's deal, for example, has a $15.7 million first season compared with $9.42 million in each of the final five. Schmaltz's contract drops from $10 million at the beginning to $6 million at the end.

That is where the new CBA closes one of the more creative avenues available to NHL front offices: heavily front-loaded deals.

The difference between any two years in a contract is now restricted to 20% of the first year's compensation, while the lowest year cannot be less than 71% of the highest year. In practical terms, a GM can still use long-term contracts to spread out a player's cap hit, but cannot make the salary curve nearly as dramatic.

The old strategy was to pay a player more while he was expected to be at his best and gradually reduce the real salary as he aged. The new rules force the money to remain much more consistent from beginning to end.

That could fundamentally change how GMs approach contract negotiations.

“When someone says Drake Batherson is looking for $10-$11M similar to how Alex Tuch just signed, it also has to do with how that deal was structured. It’s not all about AAV,” said a well-placed Eastern Conference source.

Consider a hypothetical 30-year-old worth $12 million per season on a four-year contract. Under the old thinking, a team might have been able to offer eight years at something closer to $9.5 or $10 million per season, knowing that the player would be earning less during the final years when his performance was expected to decline.

The player gets an extra four years of security, while the team gets a lower cap hit and eight years of control.

Under the new rules, that trade-off still exists, but it is less advantageous to the team because the back half of the contract cannot be discounted as heavily. For the player, front-loading also allows the player to access a significant amount of his contract earnings, if not the majority, earlier.

Long-term contracts remain a powerful tool, but the NHL has taken away much of the financial creativity that made those contracts so attractive in the first place.

But wait, there’s more!