Making Sense of the NHL’s New Compensation For Fired Coaches & General Managers Rule

Bylsma

Dan Bylsma was set to become the next head coach of the Buffalo Sabres earlier this week, but there was a roadblock preventing the finalization of the deal. The Pittsburgh Penguins, who fired Bylsma in June of 2014, were seeking compensation in the form of a draft pick for hiring him. The Penguins fired him, but essentially just “removed him from his duties” as he was kept him on the team’s payroll. Since he is technically still under contract, the Penguins can seek compensation under a new rule.

If you’re looking in the Collective Bargaining Agreement (CBA) for clarification on this rule, you won’t find it anywhere. In this new rule that was approved by the Board of Governors last summer and put into effect in March of this year, teams can now seek compensation from other team’s hiring their fired executives. The rule was sent out via a memo to all 30 NHL teams and the specifics have found their way online through different league insiders.

The specifics of this rule are as follows:

  • Only three positions warrant compensation: President of Hockey Operations, General Manager, and Head Coach.
  • If hired during the season, the compensation is a second-round draft pick.  If hired in the offseason, the compensation is a third-round draft pick. 
  • For a General Manager of President of Hockey Operations, the offseason begins after the NHL Entry Draft.  For a Head Coach, the offseason begins after his team plays their final game of the season.
  • The hiring team has a three year window to give up the draft pick.

The ambiguity of this rule comes into play when trying to determine if a fired executive warrants compensation. The rule was mostly intended to scare away poachers (ie. if the Toronto Maple Leafs tried to hire the Los Angeles Kings head coach Darryl Sutter), not punish teams for hiring fired executives.

If an executive’s contract was voided and he isn’t being paid by his former team, it is very unlikely that the team will be able to seek compensation. But, if a fired executive is still on payroll (if if he doesn’t have any role within the organization), the executive is likely going to cost a draft pick to acquire.

A similar rule had existed in the past but the NHL removed the rule  in 2006 after the Bruins and Senators got in a heated argument about compensation going to Ottawa when Boston hired Ottawa’s Assistant General Manager, Peter Chiarelli, to become their General Manager.

Many other teams are being affected by this rule as well this off-season. The Boston Bruins are seeking compensation for the Oilers hiring Peter Chiarelli as their General Manager. The Oilers will also owe the San Jose Sharks a draft pick for hiring Todd McLennan as their head coach.  The Detroit Red Wings and Toronto Maple Leafs have agreed on compensation for Detroit hiring Mike Babcock as their head coach. The Pittsburgh Penguins did not seek compensation for the New Jersey Devils hiring Ray Shero to be their General Manager but are receiving a 2016 third-round pick from the Buffalo Sabres hiring Dan Bylsma to coach their team.

Hopefully the league will clarify this rule soon, but until then, a fired executive will cost a draft pick for a new team to hire him as long as he’s under contract.

Update 6/3/15: Bettman addressed this issue at his annual press conference leading up to Game 1 of the Stanley Cup Finals saying while he doesn’t like the way this system is currently working, he won’t change anything before January 1st, 2016 when the General Managers get together to discuss the rule change that they wanted to implement. He also said, “What’s done is done” referring to all compensation agreements already made will be acknowledged. The rule stands for now.

Follow me on Twitter: @QuickkNess

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