Offer sheets: How they work, the cost, and restricted free agents who could be targetted

The NHL has several rules to allow teams to retain players they’ve drafted.

Entry-level contracts can be extended if a drafted player doesn’t see a significant amount of professional action in the first few seasons after he's selected. Once that contract expires, a team can still retain the player’s rights, provided they extend a new offer prior to the start of the next season, called a qualifying offer. The player can choose to sign that offer, but the team buys time to work out a new deal after the player’s legally binding pact expires whether he signs it or not.

Players can elect for arbitration, and have their previous performance reviewed by an independent party, who then awards a salary that he feels is fair. While that can see a player get paid more money, he will be required to continue on as a member of the original team.

There is a rule that allows a player to find a new team that will give him a better chance to play in the NHL than he feels his current team is giving him. Other teams can offer contracts to players whose contracts are up, and those players are able to sign them and get a change of scenery.

It’s not quite that simple. The original team that holds the players rights can veto the signed contract, with a Right of First Refusal, within seven days. If the player's current team does choose that option, it has to pay the player at least what the other team offered, and is unable to trade the player away for the next season.

Only players who have received a qualifying offer can sign an offer sheet, and only if they haven’t elected for arbitration. If the arbitration was chosen by the team, players can still sign offer sheets up to 5 PM on July 5 and have a chance at moving to a different organization.

Offer sheets have been presented in the past, but not as often as you may think. Since the previous lockout in 2004-05, only eight offer sheets have actually been signed, and only one of those has not been matched by the player’s original team.

If the player moves to a new destination as the result of signing an unmatched offer sheet, the original team is compensated with draft picks, and the number and quality of draft selections is predicated on how much the player was signed for.

For the purposes of annual salary determination, the total dollar amount of the deal is divided by either five or the length of the contract in years, whichever is lowest. If the offer sheet was for a contract of longer than five years, that calculated number will be higher than the actual average salary of the contract.

(You can see the teams that have the necessary draft picks to present offer sheets here.)

For the 2016-17 season, any player signed to an offer sheet worth an average of less than $1,239,266 will require no compensation for the original team.

A contract equal to the bridge deal signed by Alex Galchenyuk a season ago, at $2.8 million per season for two years, would cost the offering team's assigned second-round pick in the 2017 Entry Draft.

Andrew Shaw’s contract, at six years, $23.4 million, carries an actual annual value of $3.9 million, but would have come out as (23.4 / 5 =) $4.68 million under the offer sheet rules had that been the method used to acquire him, and would have required the Canadiens to give up their first- and third-round picks.

A select list of restricted free agent forwards (as of Thursday night) who have received qualifying offers and are eligible to sign offer sheets follows:

For all your salary cap and contract details on this busy start to the free agency period, be sure to visit General Fanager and CapFriendly.