THE EFFECT OF THE NHL’S CBA ON EUROPEAN PLAYERS AND INTERNATIONAL ICE-HOCKEY

THE EFFECT OF THE NHL’S CBA ON EUROPEAN PLAYERS AND INTERNATIONAL ICE-HOCKEY

written for and first published by LawInSport – http://lawinsport.com/articles/employment-law/item/nhl-cba-effects-european-players-and-international-ice-hockey

NHL’S CBA

Since the start of the National Hockey League (NHL) in 1917, the league has consistently attracted the best and most talented players from around the world. While the NHL has long been the premier hockey league in the world, they are cognizant of the fact that other leagues have been gaining momentum and popularity throughout the world. In an effort to ensure that NHL clubs retain the most talented players, the NHL recently extended the club exclusive rights period for European players who are selected in the NHL draft.

In January 2013 the NHL and the National Hockey League Players Association (NHLPA) came to an understanding on a new Collective Bargaining Agreement (CBA). A CBA is an agreement that employers and unionized employees have negotiated about wages, hours, and working conditions. Several changes were made to the CBA when compared to the previous agreement. One seemingly minor change may have a large impact on European players and the international game.

Amendment to the CBA

NHL owners and players agreed to make an amendment to section 8 of the CBA. Section 8 governs the entry draft process and has a subsection, §8.6(d), which governs “Players Drafted from a Club Outside North America.” This subsection was amended to extend the period that an NHL club retains the exclusive rights to a player drafted from Europe. According to the NHL CBA, “exclusive rights” refers to the drafting clubs right to negotiate for the services of a selected player, while this right is deprived of all other professional clubs.1

Despite the fact that the NHL has provided their clubs the exclusive rights to a player, competing leagues, such as the Kontinental Hockey League (KHL)2, do not always honor these rights. The process of enforcing these rights is very complex and has led to a great deal of conflict between the NHL and the KHL. Essentially, however, when the KHL violates the exclusive rights of an NHL club, the player who signs with the KHL is subject to a suspension3 from international competition.4

Despite the fact that the NHL has provided their clubs the exclusive rights to a player, competing leagues, such as the Kontinental Hockey League (KHL)2, do not always honor these rights. The process of enforcing these rights is very complex and has led to a great deal of conflict between the NHL and the KHL. Essentially, however, when the KHL violates the exclusive rights of an NHL club, the player who signs with the KHL is subject to a suspension3 from international competition.4

Amateur Players

The NHL draft is an annual gathering of the thirty (30) NHL Clubs, where each club is provided the opportunity to select an eligible amateur player. Amateur players, who meet the age requirements set out in the NHL CBA, are eligible to be drafted. European players become eligible for the NHL draft when they are at least the age of 18 at the time of the draft or will turn 18 by the following September. However, a player will not be eligible for the draft if they fulfill any of the criteria specified in Section 8.4, Eligibility for Claim, of the NHL CBA.5.

Generally, a player who is between the age of 18 and 21, who has not been selected in a previous draft or who has not signed a standard player contract with an NHL Club will be eligible to be drafted. Once an NHL Club selects a player in the draft, the team retains the exclusive rights to negotiate with the player for a period (discussed further below).

However, a player will not be eligible for the draft if they fulfill any of the criteria specified in Section 8.4. Eligibility for Claim, of the NHL CBA.5.

European Players

Both the NHL and the European leagues have recognized that a change was needed regarding how the NHL retains the rights to European players. In the past, the European leagues have claimed that many of the players transferred to the NHL ended up playing minor league hockey in North America, and it would be better for the players and the European game if the players stayed in Europe.6 To support this claim, the European clubs cited the statistic that,

“Of the 59 European players who signed NHL contracts before the 2007-08 season, only six were good enough to play there. Seven returned to European clubs while 46 were sent to North American minor leagues.”7

The change to section 8 of the NHL CBA may help to alleviate this issue.

The change to Section 8 of the NHL CBA was made possible, in part, due to the structure of the NHL. The NHL, like the majority of North American sports, operates on the principle of collective bargaining. 8 While the NHL is governed by a CBA, the rest of the hockey world is structured in a substantially different way.  The European clubs and leagues are organized in the typical structure for a sport in the Olympic Movement. As a recognized Olympic Sport, by the International Olympic Committee (“IOC”), the International Federation (IF) governs ice hockey internationally. The IF for Ice Hockey is the International Ice Hockey Federation (IIHF).

The European clubs and leagues are organized in the typical structure for a sport in the Olympic Movement. As a recognized Olympic Sport, by the International Olympic Committee (“IOC”), the International Federation (IF) governs ice hockey internationally. The IF for Ice Hockey is the International Ice Hockey Federation (IIHF).

International governance of Ice Hockey

One may assume that the IIHF would govern and control the game of ice hockey world wide, and set guiding bylaws and regulations, which would be followed by all leagues. While this assumption holds true for other IF’s, such as the Fédération Internationale de Football Association (“FIFA“), the IIHF has not enjoyed such power. In

In hockey, the most powerful body lives outside the scope of the IIHF. The NHL, arguably the most influential body in hockey, has developed completely outside the control of the IIHF.

Typically the IF for a sport will recognize National Federations (“NF”) for each country that participates in the sport. These NF’s have the power to create and manage the top-tier league in each country.9 Further, the NF’s typically govern and control the sport from the grass root level all the way to the top tier league.

In the world of Ice Hockey when an NF creates a top tier league, these leagues are referred to as IIHF member leagues. Some of the most prominent member leagues include Sweden’s Elitserien, Switzerland’s National League A, Germany’s Deutsche Eishockey Liga, the Czech Republic’s Extraliga, and Finland’s SM-Liiga.While Canada and the US do have NFs that govern those countries’ participation in international hockey competition, the NHL was created as an independently governed league in the early nineteen hundreds and is separate from the IIHF.

Differences

Another difference between the NHL and its European counterparts is the concept of an entry draft. Each year the NHL holds an entry draft for player’s ranging in ages 18 – 21years old.10  The draft order of the clubs is determined by a combination of the regular season standings, playoff results, and a weighted lottery.11

The best teams are not allowed to make their selection until later in each round. Whereas, the fourteen teams that fail to make the playoffs are entered into a lottery to determine the draft order for the first fourteen selections of the draft.12 During the draft, each club is allowed to select a player in each of the seven rounds, unless the club has traded away or acquired the rights for a particular draft selection, in agreement with another club.13

Each drafted player is added to the reserve list for the drafting club.14 The reserve list allows the drafting club to retain the exclusive rights to sign the player for a period that varies depending on several factors such as age, nationality, and playing experience.15 The exclusive rights period and the effect that these factors have on the period are codified in section 8 of the NHL CBA.

Section 8 of the CBA governs the entry draft process. In January 2013, the NHL Players Association and the NHL Owners agreed to modify Section 8 of the CBA. The relevant aspect of this clause is section 8.6(d), which is titled “Players Drafted from a Club Outside North America.”

2005 CBA

In the 2005 CBA, this section provided NHL Clubs with a two (2) year window, in which, they would retain the exclusive rights to sign a non-North American player on the drafting club’s reserve list.16 This two-year window was expanded to a four-year window in the most recent agreement.17 Another change in the new CBA removed the requirement of providing a European player with a “Bona Fide Offer.”

18 In the past when an NHL Club drafted a European player the club was required to extend a “Bona Fide Offer” after the first year to enjoy the exclusive rights for an additional year.19 Now when an NHL club drafts a player who has played for a non-North American club, the NHL Club will have the exclusive rights to that player for four (4) years regardless of whether the NHL club extends a “Bona Fide Offer” to the player.20

While the NHL club would retain the exclusive rights to that player in the NHL, the player may still be able to play for an IIHF member league. Often, players who are drafted by NHL clubs are not ready to compete at the NHL level. Therefore, it is common for NHL clubs to allow their players to play for a club in an IIHF member league.

Thus, the drafting NHL club could allow the player to develop his skills while playing for an IIHF member league. However, if this were to occur, the NHL club would require that the player contract between the player and an IIHF club would include a termination clause. This termination clause will come into effect if the player and the NHL club agree to a player contract.21

NHL CBA

The new NHL CBA §8.6(d)(i) effectively extends the duration of this termination clause to four years. This extended period would seem to benefit the European leagues since the player will be able to stay in the Europe for a longer period before the NHL club is required to either offer a player contract or lose their exclusive rights to the player. Thus if this is the result of the change, the NHL will have found an effective away to alleviate the concerns of the IIHF member leagues.

However, the longer period also reduces the chances that a drafted European player receives an offer from an NHL club. During the four-year period, the player may sustain an injury or may prove not to be the quality player that he was first believed to be. Because of the increased risk and the lack of commitment from the NHL club, many agents are advising talented young Europeans to move to North America before they enter the draft.

A reduced exclusivity windowEuropean players and agents understand that section 8.6(a) of the NHL CBA entitles Clubs, who draft a player from a North American league, a substantially smaller exclusivity window. This window lasts for a maximum of two years.22 Further, the NHL club must provide a “Bona Fide Offer” to the player to enjoy the second year of the window.23

Therefore, if a European Player moves to the United States or Canada to play junior hockey, the NHL clubs are required to sign the player to a contract within a two year window.  If the same player were to remain in Europe for his junior hockey, the NHL clubs would not have to extend a contract for up to four years.

Illustrating this further is the case of Gabriel Landeskog who started playing junior hockey in the J20 (under 20 years old) SuperElit league in Sweden. After a year on the junior team, Landeskog was promoted to the Elitserien, the top tier league in Sweden, where he played for Djurgardens IF at the age of sixteen. After a season in the Elitserien, Landeskog left Sweden for the Ontario Hockey League (OHL), a junior league in Canada. Landeskog played for the Kitchener Rangers of the OHL for two years until he turned the age of 18 and was eligible for the NHL draft. In 2011, Landeskog was drafted 2nd overall by the Colorado Avalanche.24

If Landeskog were drafted under the current CBA rules, the Avalanche would enjoy the exclusive rights to Landeskog for a maximum of two years. This is because Landeskog left Sweden for the OHL before he entered the draft. However, if Landeskog remained in Sweden, the Avalanche would enjoy a four-year window to sign him.

Conclusion

The new regulations codified in section 8.6(d) of the NHL CBA provide a tremendous incentive for young European players to move to North America before entering the NHL draft. Players will likely be hesitant to stay in Europe when moving to North America can reduce the exclusivity period enjoyed by the drafting club.

Therefore, in the future it may be commonplace to see top Europeans playing in the best North American junior leagues.25 In sum, if a European player plays in the OHL, Western Hockey League, or the Québec Major Junior League before entering the draft, the player will receive a “Bona Fide Offer,” one year after being drafted and can only remain on a reserve list for a maximum of two years before signing a deal or becoming a free agent.

The change to section 8 of the NHL CBA could affect the international game of hockey in two primary ways. First, the European leagues are able to retain the services of players drafted by the NHL for a longer period of time (up to four years instead of two). Second, the European junior system may see the departure of their most talented fourteen to seventeen year old players. The departure of the top junior players may have a substantial detrimental effect on the IIHF member leagues ability to compete with the NHL. Thus, this minor change in language to the NHL CBA may prove to have a substantial impact on hockey internationally.

1 National Hockey League Collective Bargaining Agreement 2012-2022,

2

3 IIHF Statutes and Bylaws, (Sept. 2012) available at http://www.iihf.com/fileadmin/user_upload/PDF/The_IIHF/2012-2014_IIHF_Statutes_and_Bylaws.pdf

4 International Competition would include any competition where the player is eligible to play for their national team. This would include, for example, the World Championships, Olympic Games, and international friendly games.

5 National Hockey League Collective Bargaining Agreement 2012-2022, §8.4 (2013): Section 8.4 states that a player is not eligible if they are: “(i) a Player on the Reserve List of a Club, other than as a try-out; (ii) a Player who has been claimed in two prior Entry Drafts; (iii) a Player who previously played in the League and became a Free Agent pursuant to this Agreement; (iv) a Player age 21 or older who: (A) has not been selected in a previous Entry Draft and (B) played hockey for at least one season in North America when he was age 18,19, or 20 and shall be eligible to enter the league as an Unrestricted Free Agent pursuant to Article 10.1(d); and (v) a Player age 22 or older who has not been selected in a previous Entry Draft and shall be eligible to enter the League as an Unrestricted Free Agent Pursuant to Article 10.1(d).”

6 NHL will no longer pay transfer fees to European teams, (2008)http://sports.espn.go.com/nhl/news/story?id=3447121

7 Id.

8 National Labor Relations Act, 29 U.S.C. §§ 151-169; In the United States, the concept of collective bargaining was codified into law by  the passage of the National Labor Relations Act in 1935. The passage of this act has allowed Unions to negotiate the terms, wages and working conditions of their employment. The United States Congress recognized the benefits of collective bargaining, and thus provided a statutory exemption to the anti-trust laws, in order to allow for the collective bargaining process among multiple employers. (Clayton Act, 15 U.S.C. 17) This collective bargaining process typically governs most North American sport Leagues. The NHL also utilizes this structure.

9 IIHF Statutes and Bylaws, (Sept. 2012) available at http://www.iihf.com/fileadmin/user_upload/PDF/The_IIHF/2012-2014_IIHF_Statutes_and_Bylaws.pdf

10 National Hockey League Collective Bargaining Agreement 2012-2022, §8. (2013)

11 Id.

12 The lottery is subject to regulations, which govern a team’s ability to move up to a higher selection. Further the odds of winning the lottery are greater for the team who finishes the regular season in last place.

13 Id.

14 Id.

15 Id.

16 For a player between the ages of 18-19; National Hockey League Collective Bargaining Agreement, (2004) available athttp://origin.agilitycms.com/nhlpacom/PDF/nhl_nhlpa_2005_cba.pdf.

17 National Hockey League Collective Bargaining Agreement 2012-2022. (2013)

18 Id.

19 National Hockey League Collective Bargaining Agreement, (2004) available athttp://origin.agilitycms.com/nhlpacom/PDF/nhl_nhlpa_2005_cba.pdf.

20 Id.

21 It is also possible, through the use of a loan transfer, for a player who has signed a NHL contract to play for an IIHF club. A loan can take the form of either a “limited or unlimited transfer.”A limited transfer occurs when a player is currently under contract and desires to play in another league for a limited amount of time. The length of the limited transfer is defined by the contract terms that are agreed to by all interested parties.

Another type of loan is known as an unlimited transfer.The major difference between a limited transfer and an unlimited transfer is the designated length of the transfer. Unlike a limited transfer, the duration of an unlimited transfer is not a material aspect of the transfer and therefore, does not need to be included in the terms of the contract. If the duration of the transfer is not specified under an unlimited transfer the regulations state that, “the transfer will automatically terminate on June 30th for the Northern Hemisphere and August 31st for the Southern Hemisphere of the current season, returning the player to his former member national association on that date.” Regardless of whether the loan is limited or unlimited, an important aspect of the regulation is that the player’s contract with the NHL does not terminate.

22 Id.

23 Id.

24 Gabriel Landeskog, available at http://avalanche.nhl.com/club/player.htm?id=8476455

25 The OHL, Western Hockey League, and Quebec Major Junior League recently announced that European Goaltenders will not be eligible to be selected in the import draft after 2013.