With a number of teams considered as being ripe for potential offer sheets this off-season - including Ottawa - it's time to dig back in to the CBA to figure out all of the ins and outs of the rules regarding them.
What is an offer sheet?
An offer sheet is a contract offered to another team's restricted free agent.
Who can be given an offer sheet?
Any unsigned restricted free agent can receive an offer sheet.
When can offer sheets be given?
As soon as free agency starts, July 1st at noon.
However, RFAs can speak to other teams starting the day after qualifying offers are due. That happens either the 26th of June or the Tuesday after the draft, whichever is later. For 2015, that date is June 30th.
What can a team do about an offer sheet on their RFA?
Assuming the player accepts the offer sheet, the team has two options. They have 7 days to make their choice.
The first option is to exercise their "Right of First Refusal". This means that they match the salary, term, signing bonus and reporting bonus of the offer sheet, and the player is considered signed. Additional terms such as no trade/no move clauses or performance bonuses are NOT included, but they can be negotiated separately. If a team exercises this right, they cannot trade the player for one year (to the day).
The second option is to let the player walk, and collect their compensation from the team that submitted the offer sheet.
What is the compensation?
The compensation is draft picks. How many picks, and what round, depend on the total value and term of the offer sheet. It is not as simple as using the average annual value, aka cap hit, even though the breakdown of the different compensation levels looks like it is by AAV.
|Offer Sheet (original)||Offer Sheet (2015-16)||Compensation|
|$1,110,249 or less||$1,205,377 or less||None|
|$1,110,250 to $1,682,194||$1,205,378 to $1,826,328||Third Round|
|$1,682,195 to $3,364,391||$1,826,329 to $3,652,659||Second Round|
|$3,364,392 to $5,046,585||$3,652,660 to $5,478,986||First and Third Round|
|$5,046,586 to $6,728,781||$5,478,987 to $7,305,316||First, Second and Third Round|
|$6,728,782 to $8,410,976||$7,305,317 to $9,131,645||Two First Rounds, Second and Third Round|
|$8,410,977 and up||$9,131,646 and up||Four First Rounds|
In reality, the Offer Sheet value is determined by taking the total value (salary, and signing/reporting bonuses), and dividing it by either the number of seasons the offer is for or five - whichever is lower. This means that the offer sheet value is the same as the AAV if the offer is for five years or less, but for six and seven year offer sheets the offer sheet value will be significantly higher than the actual AAV. The value increases each year, based on the growth in the league's average salary.
For example, a seven year contract with a cap hit of $7 million would have an offer sheet value of $9.8 million ($49m total value divided by 5) - worth four first round picks instead of a first, second and third like a five year, $7m per year contract would be.
A few extra restrictions to note:
- The picks must be a team's own, original draft picks
- If a team has traded their pick previously, they can trade to get it back
- All draft picks must be for the next draft, with the exception of multiple first round picks
- When having to give up multiple first round picks teams get an extra year, but they are the next draft picks available when the offer sheet is submitted so no picking and choosing
- A team can have more than one offer sheet outstanding, as long as they aren't using the same picks/
How can you avoid an offer sheet?
Easiest way is to sign your RFAs before they can start talking to other teams.
Players that have elected to go to salary arbitration cannot be given an offer sheet, though there are a few days to get one if they wait to the deadline to file.
A player being taken to arbitration by a team has limited opportunity to sign an offer sheet - it has to be done before 5pm (New York time) on July 5th.
How often are offer sheets made?
It's difficult to say exactly, since there only seem to be numbers on offer sheets that were accepted by the player. Presumably there were more that weren't accepted by the players involved, but the information just isn't there.
Accepted offer sheets are fairly rare - there have been 35 of them in 29 years, only 13 of them going unmatched. During the salary cap era, only eight have been accepted with only one (Dustin Penner) going unmatched. We can dream that this might be the year that things change, though.
How likely is Ottawa to submit an offer sheet?
Under Bryan Murray?