Addressing two new loopholes in the new CBA

January 15, 2013, by
Mmmm, loopholes.

Mmmm, loopholes.

It’s been less than 48 hours since the Memo of Understanding has been signed, and there have already been two loopholes identified in the new CBA. In his 30 Thoughts this week (one of my personal favorite columns), Elliotte Friedman of CBC identified these two loopholes, and asked Bill Daly about how they would be addressed.

The first loophole is one that’s been talked about for a while, and it’s the sign-and-trade loophole. Currently, teams can re-sign their own players for a year longer than they would get as a UFA, but this doesn’t stop the team from trading the player. This opens up the possibility for a player to re-sign with his own team, then the team can trade him to his eventual destination. This happens regularly in the NBA.

Per Friedman, Daly has recognized this as a loophole, but there are some restrictions:

22. Daly’s answer: Yes, provided the player was on a team’s reserve list as of the most recent trade deadline. Therefore, anyone acquired on that date is ineligible.

 That’s an interesting little clause right there. It doesn’t fully address the loophole, but it does issue some restrictions, as the player being signed would need to be acquired before the trade deadline. But not all trade deadline trades occur on deadline day itself. Daly’s response is just an attempt to cut down the sign-and-trade loophole, but it doesn’t do this entirely. A player can be acquired a day before the trade deadline, and still be involved in a sign-and-trade in the offseason.

The second loophole is one that hasn’t really been identified, unless you follow the NBA closely:

23. Second, a player says, “I’ll sign a one-year deal with your team as a free agent provided I get eight years next summer.” In essence, this guy gets nine years where he should have received seven.

24. Daly’s answer: You can do this, but we better not find a paper trail. Google “Joe Smith” and “Timberwolves.” NBA commissioner David Stern crushed Minnesota for that one.

This is a very interesting loophole, but it requires some real shady maneuvering by the team, the player, and the agent involved. It’s also a loophole that I don’t see many teams taking advantage of, unless it’s a prime player hitting the market at age 27.  This loophole creates the situation where a player and a team have a handshake agreement for nine years, but the CBA only allows for a seven-year deal, so the UFA signs that one year deal, and then the eight year deal immediately that summer. Since he’s re-signing with his own team, he gets eight years, not seven.

This loophole isn’t just limited to UFAs either. Technically an RFA at age 26 can sign a one year deal with the agreement to sign an eight year deal that summer. This player too gets nine years, but only instead of the eight allowed under the CBA. It’s a smaller loophole, and one that will probably be easier to swallow since the player will be with the same team his entire career, but it’s a loophole nonetheless.

These are two additional loopholes springing up in the league’s attempt to curb the back-diving contract loophole. But these aren’t the only two ways to circumvent the CBA. The bonus loophole –sign a player with a bonus which drives up the cap hit, trade him after most of the money has been paid to a low-budget team who needs to hit the cap floor– still remains, as bonuses were untouched in this current CBA.

With every CBA comes loopholes. It’s going to be interesting to see if the NHL attempts to add an amendment to the new CBA to address the sign-and-trade loophole (can’t address the second loophole, just not possible). The clause can state that a player signing a max-length contract must play at least one full season with the signing team. It’s doable, but only if it becomes a glaring problem, like the back-diving contracts.

Categories : Business of Hockey


  1. tomb says:

    I’m tired of talking business, I do hockey for fun.

    • Dave says:

      Well there are plenty of non-CBA posts under this one and coming up right after this one.

  2. Kris says:

    I’m still in interested if they left one loop hole open from the last CBA, which I believe they did. We all know you cant send a player down to the minors to get cap relief, but does his cap count if he is “loaned” to a Euro league or KHL. If you remember the Blackhawks did this with Huet, when they were in cap trouble.