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Why the NHL should embrace salary arbitration

Sam Gagner signed a three-year extension ($4.8 million cap hit) with Edmonton minutes before his salary arbitration hearing was to start. (Getty Images)

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Sam Gagner signed a three-year extension ($4.8 million cap hit) with Edmonton minutes before his salary arbitration hearing was to start. (Getty Images)

Despite what the NHL has historically thought of the arbitration process, the three-year deal Sam Gagner signed with the Edmonton Oilers is a perfect example of how well it actually works.

And make no mistake; the prospect of going through arbitration was a pivotal factor in getting this deal done. Had there not been an arbitration avenue for Gagner to pursue, the two sides probably would have remained entrenched in their positions for most of the summer and this whole thing may very well have dragged on into training camp.

Instead, with the looming arbitration hearing, the two sides were forced to get a reasonable deal done. At three years and $14.4 million – with a cap hit of $4.8 million per season – with a limited no movement clause, everyone comes out looking very good in this one. And this is the way it’s supposed to function. Both sides get a deal that works and they avoid taking it out of their hands and putting it into the hands of an arbitrator.

The Gagner case was the first of the 21 players who filed for arbitration earlier this month in which briefs were submitted. It was believed Gagner was looking for somewhere in the neighborhood of $5.5 million per year, while the Oilers were offering $3.5 million. So Edmonton came a little higher than in the middle for a player coming off two pretty promising seasons. The risk for Gagner, who would have been an unrestricted free agent after next season, is that he might be a little underpaid if he has a big year. But the contract is only for three years and he gets the security of not being moved.

The NHL has wanted to kill arbitration at almost every turn over the years, claiming it is a major salary inflator. But actually, you’d think the owners would love having it as a tool. It’s the only process in the business whereby a player is guaranteed to neither be over nor underpaid. That’s because both sides are forced to be reasonable and if they aren’t, the arbitrator will be reasonable for them.

Because arbitration is based on comparables, in theory no player should be paid significantly more or less than others whose on-ice performance is the same. So as long as the teams don’t get silly in giving out big contracts to players who don’t deserve them, they should really have nothing to worry about.

And with the owners now having the option to take players to arbitration and walk away from deals that exceed a certain value, it seems they have almost every safeguard in place to make arbitration a worthy exercise. Yes, it can be confrontational and feelings can get hurt – when Mike Milbury was GM of the New York Islanders, he apparently made former goalie Tommy Salo cry during his hearing – but it gets results.

So instead of shying away from arbitration, I wonder why the NHL doesn’t embrace it more readily. If I were the league, I would want to expand the scope of arbitration to include players coming off entry-level contracts as well as restricted free agents. As it stands now, players coming off their first contracts have no arbitration rights and are forced to either take the team’s offer on a second contract or sit out until a deal can be reached.

That’s exactly what Ryan O’Reilly of the Colorado Avalanche did last season. And we all know how that turned out. Had O’Reilly been able to take the Avs to arbitration or the Avs been able to take O’Reilly, it would have forced a contract on both parties and a young player who was at a crucial point in his development as an NHLer would have been on the ice where he belonged, instead of sitting and being poached by the Calgary Flames, whose offer was matched by the Avalanche.

Is arbitration perfect? Probably not. The Nashville Predators are probably paying Nick Spaling a little more than they’d like - $1.5 million on a one-year deal – because of the prospect of arbitration. But for the most part, the process has worked well for both sides.

And you can tell by the number of players who are actually going to arbitration these days. For example, 21 players filed for arbitration – while teams had zero filings this summer – and as of Monday morning, we were down to nine cases that were set to make it that far. It would be a surprise if any more than a handful of them actually went through the process.

It’s kind of strange, but the prospect of going to arbitration is what makes arbitration work. And that’s good for everyone.

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Ken Campbell is the senior writer for The Hockey News and a regular contributor to THN.com with his column. To read more from Ken and THN's other stable of experts, subscribe to The Hockey News magazine. Follow Ken on Twitter at @THNKenCampbell.

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