Last night, NBC Wednesday Night Hockey discussed the Anaheim Ducks’ re-signing of Jakob Silfverberg. While it appears that Silfverberg has re-signed to a 5-year extension worth $5.25 million per season, the deal cannot be fully completed at this time because of a Collective Bargaining Agreement issue known as “tagging.” “Tagging” is something that the broadcast did not want to discuss last night because it was too complicated to be explained on-air—a fair point. For anyone curious, here’s how “tagging” works:
Under Article 50.5 of the 2013 NHL Collective Bargaining Agreement, any team that is trying to re-sign a player to a multi-year contract after December 1 needs to have “Payroll Room.” Basically, Payroll Room is the difference between the cap ceiling and the total amount of all Average Annual Values (“AAV”) and bonuses for the team’s one-way contract players, any deferred bonuses applicable during the current season, any buyout amounts, any outstanding offer sheets, any qualifying offers, or any money earned from two-way players while those players are playing in the NHL.[1]
So, if a team wants to re-sign a player, the difference between the team’s Payroll Room and the cap ceiling must exceed the amount of the AAV of the player’s contract. For those who keep up with NHL Free Agency, this isn’t a hard concept: you have to have cap space for the player to acquire him.
But in the world of extensions, it gets a bit trickier. In order to sign a player to an extension, the team needs enough of that difference to be able to afford his AAV this season. However, if the team does not have enough cap space from this difference, then the team may pull from any available cap space received from the expiration of the AAVs of its other players’ contracts at the end of the season so long as the cap space received would accommodate the player’s AAV after re-signing after the space is added to the existing difference in cap space.
For example:
If a team has $2 million in current cap space after Payroll Room is calculated, and that team wants to re-sign a player to a 3-year extension worth $3 million AAV, then it can do so if the team has at least one other player whose contract is worth at least $1 million, and that player’s contract expires at the end of the season. Thus, $2 million in current space + $1 million in expiring space = enough for the new $3 million AAV of the player. This $3 million would then be “tagged.”[2]
If the team is trying to extend multiple players, it works exactly the same, except that the total amount of money available from the current cap space and the total amount of expiring contracts will also have the amount of AAV from previous players’ extensions subtracted from it.
Darren Dreger has noted that on March 1 of each year, every team gets 10% more tagging room,[3] which is stated in Exhibit 16 of the 2013 NHL CBA.[4] Thus, in the case of Anaheim, it is likely that Silfverberg’s extension is finalized on or after that date. After all, the Ducks have made over 100 roster moves this season, which eats up Payroll Room through the calculation the prorated NHL salaries from these minor league players.[5] Additionally, Anaheim is already exceeding the cap by almost $1 million through the Long-Term Injured Reserve exception.[6]
The last issue affecting the Ducks is their previous extensions that begin next season. Adam Henrique will receive a $1.825 million raise starting next season, while John Gibson will also receive a $4.1 million raise. That makes it hard to accommodate Silfverberg, who is receiving a $1.5 million raise in this deal. Factor in the relatively small aggregate amounts of Anaheim’s expiring contracts, Andrej Sustr ($1.3 million), Chad Johnson ($1.75 million), Ryan Miller ($2 million), Michael Del Zotto ($2.25 million), Derek Grant ($625,000) and Brian Gibbons ($1 million), and it’s easy to see how the Ducks’ current Payroll Room has been utilized to the maximum before Silfverberg’s deal.
Unless Anaheim finds a way to lose cap hits right now (either through trade or via waivers), Silfverberg likely won’t be able to sign until March.
[1] 2013 NHL CBA art. 50.5(d)(i)(A), 50.5(e)(i).
[2] 2013 NHL CBA art. 50.5(e)(iv)(c)(2).
[3] “Tagging Rule Holding Up Silfverberg Contract,” TSN (Feb. 20, 2019), https://www.tsn.ca/tagging-rule-holding-up-silfverberg-contract-1.1260592; see also NHL CBA 50.5(d)(1)(A)(5) (calculating the salaries that two-way players earn while playing in the NHL based on service time).
[4] 2013 NHL CBA Exhibit 16.48(d).
[5] “Tagging Rule Holding Up Silfverberg Contract.”
[6] See Anaheim Ducks, Capfriendly (last visited Feb. 21, 2019), https://www.capfriendly.com/teams/ducks (stating that Anaheim is currently using $907,753 of LTIR cap space).
The Hat Trick Herald 