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NHL decision to go back to compensation system makes a lot of sense

The Detroit Red Wings won't receive any compensation if they lose coach Mike Babcock this summer because he'll be a free agent. They didn't receive any for losing Steve Yzerman either, but that has changed with the league's recent decision.
The Hockey News

The Hockey News

Detroit Red Wings GM Ken Holland has lost a lot of good people over the years – Steve Yzerman, Jim Nill, Todd McLellan and Paul MacLean to name just a few – so he’s obviously pleased the NHL reversed its stance on providing compensation for teams who lose executives to their rivals. Even if it means that if he loses his head coach this summer, nothing will be coming back the Red Wings way.

As first reported by Pierre LeBrun of, about eight months ago the league quietly reversed itself on the issue of compensation. Any team hiring someone from another organization who is under contract to be a GM, coach or president, must now compensate the team losing the staffer with a draft pick. If the hiring is done in the off-season, the team hiring the new man must surrender a third-round pick. If it’s done mid-season, the pick becomes a second-rounder.

The NHL did have a compensation system until 2006 when Peter Chiarelli, then the assistant GM of the Ottawa Senators, was hired by the Boston Bruins. The way the story goes, Boston asked then-team president Roy Mlakar for permission to speak to Chiarelli, which was granted. Once owner Eugene Melnyk learned that Boston wanted to hire Chiarelli, things became complicated. The league awarded the Senators a third-round pick, which they put to good use by taking Eric Gryba – and decreed there would no longer be compensation going the other way when teams give permission to speak to people under contract. And under the rules, as soon as permission was given to speak to an employee, that also meant permission was given to hire him if the team wanted to do that.

But that was a little like throwing the baby out with the bath water. Meanwhile, Holland watched as a conga line of good hockey people, into whom the Red Wings had invested millions of dollars and all sorts or managerial resources, left the organization for nothing. He was one of the GMs who lobbied hard to have the rules changed and it worked. The way Holland sees it, a draft pick is a reasonable price to pay for someone who is under contract.

“Every year at the trade deadline, we go after players whose contracts are expiring and we have to give up compensation for them,” Holland said. “Why wouldn’t it be the same for GMs and coaches? I don’t get it.”

Unfortunately, that doesn’t go for people who are not under contract, which means if Mike Babcock leaves the Red Wings for another team after his contract expires this season, the Wings will get nothing. But what the Red Wings were growing a little weary of seeing was teams wanting to talk to people such as Jeff Blashill, the Red Wings minor league coach in Grand Rapids. The Red Wings will need Blashill if Babcock leaves and had Holland allowed a team to speak to him last summer, that would have given a team carte blanche to also hire him. And if that had happened and Babcock left as well, the Red Wings would have lost two NHL-caliber coaches for nothing.

That’s why when teams came calling last summer, Holland refused to give them permission to speak with Blashill. This is all a rather prickly area for executives. They don’t want to stand in the way of their people moving up the hockey food chain and they know doing so often creates resentments and hard feelings, which is why they allow other teams to speak to their people. But teams also have to protect their front-office assets the same way they do their players.

After all, the guys we’re talking about here are in on all facets of the organizations, from the year-end meetings to the draft to important player personnel decisions. When they leave, they take a lot of secrets with them and they take a philosophy of that organization to their new job. Just look at the playoffs this year. There’s a good chance the Red Wings will meet the Tampa Bay Lightning in the first round. And if the Lightning wins that series, a large part of it will be because Yzerman did such a good job with the rebuild, presumably basing much of his expertise on the things he learned from Ken Holland.

And if you really want someone that badly, giving up a second- or third-round pick isn’t an onerous price to pay. These are people who will potentially have a far bigger impact than most of the players on the roster. Good call by the NHL on this one.


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