Compensation (NHL)
When a player accepts an offer sheet and his team declines to match the value of the contract, his former team is entitled to draft pick compensation in the next upcoming draft or drafts based on the averaged yearly salary of the contract. This averaged annual salary is determined by dividing the total compensation by the lesser of the number of years of the Offer Sheet or five years (the latter clause has potentially come into play with one offer sheet---offered to Shea Weber in the 2012 offseason). These values were originally set for the 2005 offseason to coincide with the new NHL Collective Bargaining Agreement, with percentage increases annually equal to the same percentage increase in the average salaries of all NHL players. The 2005 and 2012 offseason values are as follows:
| 2005 Averaged Salary | Current Averaged Salary | Draft Pick Compensation |
|---|---|---|
| $660,000 and below | $1,110,249 and below | No compensation |
| $660,001 to $1,000,000 | $1,110,250 to $1,682,194 | Third-round pick |
| $1,000,001 to $2,000,000 | $1,682,195 to $3,364,391 | Second-round pick |
| $2,000,001 to $3,000,000 | $3,364,392 to $5,046,585 | First- and third-round pick |
| $3,000,001 to $4,000,000 | $5,046,586 to $6,728,781 | First-, second-, and third-round pick |
| $4,000,001 to $5,000,000 | $6,728,782 to $8,410,976 | Two first-round picks and a second- and third-round pick |
| $5,000,001 and above | $8,410,977 and above | Four first-round picks |
A team may not have two different players sign offer sheets at the same time if the value of the offered contracts would involve any of the same draft picks as compensation. For example, if a restricted free agent accepts a contract with a yearly salary of at least $8,410,977, the team can only offer to other restricted free agents contracts less than $3,364,392 per year, since those would not require any first round pick as compensation. In addition, if a team does not have a pick in the next upcoming draft available for compensation, they may not make a contract offer in the certain range where that pick is needed for compensation. Teams may not use draft picks acquired in trades with other teams, but extra acquired draft picks can influence a team's decision to submit an offer sheet.
Read more about this topic: Offer Sheet
Famous quotes containing the word compensation:
“The only compensation which war offers for its manifold mischiefs, is in the great personal qualities to which it gives scope and occasion.”
—Ralph Waldo Emerson (1803–1882)