Hello, budding hockey superstar! Welcome to the National Hockey League, and congratulations on making it this far. A lot of people doubted you, but you overcame their skepticism. Call them and laugh in their faces.
But wait! There's a big step ahead of you. You have to sign a contract. Normally you would have an agent who would explain all this stuff to you, but you weirdly don't, and thus you have to rely on a blog. Never fear—we here at PPP Industries are here to walk you through your SPC. We'll explain what it is, what's in it, and why it looks like it does. Then we'll ask you for a 15% commission.
(In case anyone takes that seriously, this is a general and basic informational article only. It does not constitute legal advice, should not be relied on in decision-making, undertakes no liability on the part of PPP or SB Nation, and may at points descend into farce.)
What is an SPC?
"SPC" is short for "Standard Player Contract." While in theory it would be possible for you to write "I play the good hockey for the big dollar" on a piece of paper and sign it with a team rep, the Collective Bargaining Agreement (CBA) mandates that SPCs follow a specific format and have certain clauses in them. An SPC is therefore any contract that follows the rules. If you play in the NHL, you're signed to an SPC.
What's in it?
The money and term of the deal, for one thing. Beyond that, there are a number of rules for player conduct, dispute resolution, buyout procedures, and other stuff. Fun times!
The CBA obviously touches on player contracts throughout—arguably in a sense the whole thing is at least partly about them—but there are a few things in particular that matter: Section 11, Section 50 and Exhibit 1. Sections 11 and 50 lay out many of the rules that apply to SPCs, and Exhibit 1 actually gives the form of a contract with the essential clauses in it. We're going to walk through the Exhibit 1 contract, bit by bit, and look at what you're signing up for, occasionally glancing at 11 and 50 where they apply.
The Exhibit 1 SPC
Paragraph 1: Timing and Salary
We start with the big one: your salary. Your salary has to be paid in U.S. dollars, because you know Lou Lamoriello would pay guys in Zimbabwean ones if we let him. You get paid on the 15th and the 30th of each month from either the start of the regular season or whenever you report to the team, whichever is later. If you aren't employed by the team for the whole season, the salary is pro-rated to whatever portion of the season you play.
If you're signing a two-way contract, this paragraph will also have your salary for whenever you're loaned to another league. Remember: a two-way contract does not mean you're waiver-eligible. It just means you get paid a different salary when you're loaned elsewhere. Whether or not you have to clear waivers before being loaned is determined by either how many games or seasons you've played (there are limits for each depending on your age and you stop being waiver-exempt as soon as you hit either of them.) The full section laying out the waiver exemptions is 13.4, but if you're just wondering who is or isn't, websites like CapFriendly will tell you.
Back to your money: there are some restrictions on what teams can pay you. First, the maximum player salary for a contract is 20% of the team salary cap in the year the deal is signed (section 50.6.) In 2016-17, the salary cap is set to $73.0M, so any deal signed right now could not pay a player more than $14.6M in any of the years of the deal, including all salary and bonuses. Interesting to note: this limit is determined by the salary cap in the year the contract is signed, meaning that a megacontract signed this summer must be cap compliant as if the individual limit is $14.6M in every year—even if by, say, 2022, the limit has jumped to $16M.
Teams also have to set your salary as a dollar figure, not as a percentage of the cap. You can't simply be given 18% of the team's cap per season as a way to let the value float.
A Short Discussion of Year-to-Year Salary Variation: A Topic As Exciting As Drugs Or Pornography
I’m blocking this section off a bit because only the truly deranged are going to care, but I do want to include material for those deranged persons, as they are my people.
There are rules to stop extreme variations in salary and bonuses. For an example of the sort of thing the league was trying to prevent, look at the Shea Weber contract.
You'll often hear things like "an SPC can't vary more than 35% from year to year", which is usually true, but it's a little trickier than that. Section 50.7 divides contracts into two types: "front-loaded" and "not front-loaded." "Front-loaded" just means the AAV of the first half of the deal, if it were its own deal, is higher than the average of the whole thing. Makes sense if you think about it.
If an SPC is in the front-loaded category, there are essentially two variability rules: no more than 35% year-to-year, and no more than 50% ever. For the first one: let's say you're making $4.0M in the first year of your deal. In the second year, your salary can't go past either 35% more--$5.4M—or 35% less---$2.6M. (Even NHL teams sometimes miss this. The league recently rejected the first version of Mikkel Boedker's SPC for breaking this rule.) For the second one: the stated player salary and bonuses in the lowest year can't be less than 50% of that in the highest. If at the peak of the deal, you're making $6.0M, you can't be making less than $3.0M in the lowest year. Easy.
If your SPC isn't front-loaded, there's a different set of rules with some potentially odd impacts. The first rule is the "100% rule" over the first two years, which just means that your salary in the higher of the first two years of the deal can't be more than double the salary in the other year. Example: if you're making $2.0M in the first year of a non-front-loaded contract, your other year couldn't be lower than $1.0M or higher than $4.0M. After that, the increase from year to year can't be more than that of the lower year of the contract—so if you're making $2.0M in Year 1 and $1.0M in Year 2, the year-to-year increase thereafter can't be more than $1.0M. You also can't decrease by more than 50% of the lower year, meaning year to year you couldn't go down by $500,000 as well as up by more than $1.0M. Whew.
Why did I say this might have odd impacts? Because it's possible to draw up deals that seem like they ought to violate something if you don't know about the front-loaded/not-front-loaded distinction. The CBA illustrates this with the following example: $1.0M in Year 1, $2.0M in Year 2, $3.0M in Year 3, $4.0M in Year 4, and $5.0M in Year 5 is completely legal. It's not a front-loaded contract, and the increases year-to-year are exactly as much as the lowest year of the contract—so it doesn't matter that you're making five times as much in Year 5 as you did in Year 1. Kooky.
So: now that we've all glazed into a minicoma contemplating salary variations, let's look at a couple of prohibited terms as under Section 50.8. There are no option years allowed (option years are quite common in the NBA, interestingly, but they're banned in the NHL.) There are no voidable years or salary revisions allowed—the contract is guaranteed (unlike half the crap deals you see in the NFL, because the NFL manages to treat its players even worse than other team sports.) Teams can't make deals where other teams pay part of the salary except as part of a retained salary trade; they can't re-negotiate deals (seriously, we mean it, they're guaranteed!). Teams also can't make salary advances or loans to players.
Two other big ones, maybe more familiar: you can't sign a deal that does not cover at least the current league year, unless you're signing an extension in the final year of our contract. This means, for example, Steven Stamkos can't sign his 2024-25 deal any earlier than July 1, 2023, and that's only if it's with whoever he's playing for. The other one is no contracts over seven years, unless you were on the team's reserve list as of the last trade deadline (then your team can offer eight.)
Got all that? Well, there are also bonuses—but we'll talk about those later.
Paragraph 2: Player Obligations
Here's where your end of the deal starts up. You agree to play to the best of your ability, and under the direction and control of the Club, in any NHL, All-Star, Exhibition, or International games. Don't feel like showing up for that preseason tilt in Columbus? Well, too bad, you signed to it.
You also agree to show up to training camp in shape ("good physical condition"), and to stay in good physical condition throughout the year. You play exclusively for the Club or whatever team the Club loans or assigns you to—no moonlighting as the star centre for the Moose Jaw Meat-Peddlers. You participate in all reasonable Club promotional activities. Oh, and as per clause 2(e), you conduct yourself "on and off the rink according to the highest standards of honesty, morality, fair play and sportsmanship, and to refrain from conduct detrimental to the best interest of the Club, the League, or professional hockey generally."
It's a lot of fun to wonder what kinds of things might count as breaching that last clause—you can make hypothetically tenable arguments for things like "watching soccer" or "cutting in line at the supermarket"—but in practice 2(e) comes up very rarely. It's possible that the Los Angeles Kings were alleging Mike Richards violated 2(e) when they tried to terminate his contract for "material breach" (see Paragraph 14) in June 2015, but we can't know for sure, since very little was ever publicly confirmed about that case and the two sides settled it before it went to an arbitrator. The odds are, if we're ever talking about a violation of 2(e) in a serious way, you've gotten into very serious—possibly criminal—trouble, because your team will likely be trying to terminate your deal.
Paragraph 3: The Paragraph That Says You Have To Show Up For Practice
This is the paragraph that says you have to show up for practice.
Paragraph 4: Team Rules
The team can set "reasonable" rules governing conditioning and conduct, and can impose fines or suspensions on players for not following them. However, the rules have to be filed with both the league offices and the NHLPA, meaning teams can't just impose fines at random to try and cut costs.
Incidentally, this is a good introduction to the fact that "reasonable" is the most obnoxiously popular word in law. It's shorthand for "don't be ridiculous" without having to lay out every possible scenario. Want to know how many times "reasonable" is used in the CBA? One hundred and nineteen.
Paragraph 5: When Players Get Injured
The whole SPC exhibit in the CBA is ten pages. More than three of them are Paragraph 5. A simplified overview:
If you're injured, you have to let a physician chosen by the Club examine you, and the physician tells you, your team, your agent, the league, and the NHLPA his or her determination as to whether you're injured. If you get hurt in the course of your employment as a hockey player, the team is on the hook for your medical expenses, and will pay you the rest of your contract, but not after. Also, if you get a payout under the league's disability policy, you're giving up your right to sue. This is one of those things you really should get explained in detail.
Moving right along, this section lays out the procedures for getting a second medical opinion, and should the first and second opinions disagree, a third opinion. While fights over how injured a player really is aren't too common, they aren't unheard of, and we could conceivably see one with Joffrey Lupul this year if that situation really blows up. Hopefully this won't matter to you in the course of your iron-man career, but the injury provisions do matter. Hockey's a violent game.
Paragraph 6: Injunction Junction, What's Your Function
This one sets up a legal shortcut for the team in the event of breach: the Club can go straight to getting an injunction—in this case, a court order forbidding something—without having to exhaust all their other remedies first. In normal terms, this means the team can jump directly to getting a court order telling you, say, you can't play for another team—something you obviously can't do according to your contract, but this saves your team time having to prove it in court, while you're playing it up for Franchise X.
Paragraph 7: No Other Sports
You can't play other sports without the written consent of your team ("which shall not be unreasonably withheld", though. Reasonable!) Because you might break your limbs ‘n' stuff and that'd be bad.
Paragraph 8: Who Owns Your Face
Your mom! Sorry. Anyway, this one's about slicing up your promotional value. You have rights to your likeness, but the Club has to sign off on your promotional work (but again, such consent is not to be unreasonably withheld.) You can also identify yourself as a player for your team. The Club gets the right to use you in team materials, meaning you can't sign for them and then sue them for using your face on the programs—though the focus of their work has to be the team.
Paragraph 9: No Side Money, No Bribes
The Club can't pay you money on the side as a bonus for winning, say, your game against your coach's old team, and you can't accept it. You also can't take a payoff to throw a game. Seems sensible.
Paragraph 10: No Tampering
Yes, this means you. You can't negotiate with another player regarding that player's services—present or future—without that player's team signing off on it. Turns out Matt Martin can't serve as our window to Tavares. :(
Paragraph 11: Assigning and Loaning
The Club can loan you to other teams (like the Club's AHL affiliate), and you have to show up and play as if you were signed with them. If you don't, you don't get paid.
Paragraph 12: Default
This is a series of procedures on what happens if the Club doesn't pay your salary. NHL teams are usually solvent enough to keep paying their players, but in the rare event one isn't, Paragraph 12 will kick in. Mostly it gives the Club time to fix the default (i.e. pay), or a chance for the League to step in to try and help the situation—time in which the SPC stays in force. Essentially, you can't declare your contract terminated because your paycheque came a day late.
Paragraph 13: Termination by Buy-out
If the team wants to buy you out, this lays out how they do it. In short, they have to put you on waivers first and file the paper work. Buyouts can (generally) only happen either in the normal, first buyout window--in the latter part of June—or in the second window, which opens if a team has arbitration cases, after they conclude. Buying out guys younger than 26 is cheaper; the team only has to pay a third of their remaining salary over double the remaining years of the deal, whereas guys over 26 get two-thirds.
Paragraph 14: Termination for Material Breach
Serious business. In short, if you "materially breach" the SPC by either breaking team rules/your contract or by "failing, refusing, or neglecting" to provide your services, the team gets to terminate your deal. And that's it. It's gone. No more money for you.
"Material breach" is a legal term, and its meaning is contextual—it means a violation of the contract that is in some way substantial, meaningful or impairing to the other party (the breach is "material", not minor and unimportant. This is why we know the Kings didn't try terminating Mike Richards for cutting in line at the supermarket.) Material breach is only rarely alleged, and many situations where it would be so are obvious. For example, if Morgan Rielly wakes up tomorrow and decides he'd rather go play in the KHL for the rest of his career, the Leafs will have a perfect case for material breach. But it's still unclear what else might qualify—this is where the action would have been in the Richards proceedings, and I suspect the uncertainty might have helped push both sides to settle before it went forward.
At any rate, as dramatic as this section is, most players never wind up dealing with it. Hopefully you never do.
Paragraph 15: Suspension or Expulsion
If the league suspends or expels you, the team is allowed to do what the league says, and is not obligated to keep paying you—either during the suspension or forever, if you're expelled. (Nobody gets expelled, Hermione.)
Paragraph 16: Salary Loss During Suspension
The standard is you lose salary based on how many days you're suspended as a proportion of how many days there are in the regular season. This can vary, though.
Paragraph 17: Stopped Operations
If the league either stops operating or reduces operations for reasons beyond its control, such as war, this is what happens to your salary (basically, you stop getting paid if the league stops, and you have to figure it out with the team—or with an arbitrator—if the league reduces operations.)
Paragraph 18: League Rules
Everyone is bound by the league rules, and if we have disputes, we refer them to the commissioner, whose decision is final. (Despite this language, the league can't totally immunize its decisions from being reviewed in court. They say it anyway.) If the contract violates the CBA, the CBA supersedes the contract insofar as the two conflict.
Paragraph 19: No Undisclosed Agreements
You can't pay money under the table or otherwise try to cheat the CBA. The fact that this is here and in about a thousand other places didn't prevent people insisting we were totally going to pull something like this off to land Stamkos, though.
Paragraph 20: Capitalized Terms
"Capitalized terms shall have the meaning set forth in the CBA, to the extent not otherwise defined in this SPC." In other words, no exotic interpretations of the language, thank you.
Paragraph 21: Notice Requirements
This sets the standard for how all the parties are informed of certain things. Look, we're going to get you an agent who will take care of this stuff.
Paragraph 22: All Considered in Salary
P22 prevents you from arguing that your salary was only for playing for the Club, and that the Club actually owes you more money not to play for other Clubs, or to televise you, or take pictures of you.
Paragraph 23: No Other Agreements
The whole agreement between you and your team is in the contract or in the CBA, and there's no other side deal. "But Stamkos—" BUT NO.
There's also a postscript where you express your wish that the contract be drafted in English, to prevent you using languages to try and challenge the deal later.
NTCS and NMCs
Article 11.8 of the CBA governs no-trade and no-movement clauses. While contracts don't have to have NTCs and NMCs, they may. No-trade clauses either limit or prevent a player from being traded; no-movement clauses do the same, but also prevent the player from being loaned to another team or claimed on waivers. However, no NMC can make a player buyout-proof. Players can only have NTCs and NMCs during years in which they would be eligible to be UFAs.
NTCs and NMCs can either be total or modified, so that the player can either allow or disallow certain teams from acquiring him—for example, by providing an annual list of eight teams to whom he would accept a trade. Modified NTCs are very popular; according to CapFriendly, the Leafs currently have nine players who either have or are set to have a modified NTC at some point in their current deals.
There was some debate as to whether an NMC protected players from being claimed in an expansion draft; the league eventually settled for forcing teams to protect players who had them, thereby piling even more misery on the Columbus Blue Jackets.
Bonuses
Enjoy this "bonus" section on bonuses! [Ed. Note: Why do we let you write for us?] Bonuses are really in two categories: Performance Bonuses, and other stuff—Signing, Reporting and Roster Bonuses. Performance bonuses give players certain bonuses when they hit approved benchmarks. However, only specific categories of players can have them: players on entry-level contracts, players who are over 35 and signing a one-year deal, and players who are 400-plus-game players, who spent 100 or more days on IR in their last season, and who are on a one-year deal. In short, performance bonuses are either "prove to us you can play in the NHL" or "prove to us you can still play in the NHL."
Signing, Roster and Reporting Bonuses—of which Signing Bonuses are by far the most common—serve to move money. Signing bonuses do this so that it's paid on July 1st of a given league year, rather than as general salary. They can also serve, as can be seen with David Clarkson, to essentially buyout-proof a contract, if there's language making it clear that the bonus is an irrevocable one intended to induce signing and not as salary. (This means that it becomes impossible to reduce the remaining money by 1/3 or 2/3 the way that a buyout normally does, because the money is disqualified from being Paragraph 1 NHL Salary, which is what teams are buying out.) On the other hand, a signing bonus can also make a contract easier to trade, as was recently seen with Jonathan Bernier; the Leafs managed to execute what was almost a retained salary trade without using a retained salary slot, because Bernier got a big chunk of his money on July 1st, and was much cheaper in real dollars for a team acquiring him thereafter.
Signing bonuses are nice for the player for the simple reason that money today is nicer than money tomorrow. The buyout insurance is also a plus. Signing balances still count towards the team's salary cap, so they aren't a magic trick, but they're another wrinkle in the never-ending game of NHL salaries.
So, any questions?
I actually don't want to sign an NHL contract anymore.
Don't blame you.
