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NFL

In the National Football League, a restricted free agent (RFA) is one with three accrued seasons of service, who has received a "qualifying" offer (a salary level predetermined by the Collective Bargaining Agreement between the league and its players) from his current club. He can negotiate with any club through a certain date. If the restricted free agent accepts an offer sheet from a new club, his old club has "right of first refusal," a seven-day period in which it may match the offer and retain him, or choose not to match the offer, in which case it may receive one or more draft picks for the upcoming draft from the player's new club. If an offer sheet is not executed, the player's rights revert to his old club the day after negotiations must end.

Tender amounts

In 2007, a second-round tender offer was added. The four tender amounts for 2008 are as follows:[1]

Tender amount Compensation required
$2.562 million First- and third-round
$2.017 million First-round
$1.417 million Second-round
$927,000 Determined by RFA's original draft status (see below)

Each player that signs a tender receives the one-year salary that corresponds to the tender level. Teams which choose not to match an offer on a player with a low tender receive a draft pick corresponding to the round in which the player was originally drafted (except that the highest pick that can be surrendered for such a tender is a second-round pick). For example, a player who was originally drafted in the sixth round of the NFL Draft would force the team signing him to give his former team a sixth-round pick in the upcoming draft as compensation for his service. No compensation is required for an undrafted player on the lowest tender amount, so teams with valued undrafted RFAs are taking a notable risk by offering such tenders.

Examples of possible outcomes

In addition to the following outcomes, if a player does not receive an offer sheet from his original team, he becomes an unrestricted free agent. If a player signs the offer sheet from his original team, he remains with that team.

  • Team declining to match offer sheet. Carolina Panthers cornerback Ricky Manning, Jr. was a restricted free agent in the 2006 offseason. Based on the tender placed on Manning by the Panthers, the team would receive a third-round pick in the NFL Draft if Manning signed with another team. On April 21, the Chicago Bears signed Manning to an offer sheet - a five-year contract worth up to $23 million. Although the Panthers had a full week to decide if they wanted to match the offer sheet, they announced on April 24 that they would not match. At this time, Manning became a member of the Bears and the Panthers received a third-round draft choice in the 2006 draft from Chicago.
  • Team matching offer sheet. Arizona Cardinals offensive guard Reggie Wells was a restricted free agent in the 2006 offseason. On March 17, the Buffalo Bills signed him to an offer sheet - a five-year deal worth approximately $18 million. Four days later on March 21, the Cardinals matched the Bills' offer sheet for Wells, and he reverted to the Cardinals.
  • Team consummating a trade. The Miami Dolphins offered wide receiver Wes Welker a second-round tender in 2007. Although it was widely rumored that the New England Patriots would offer Welker a seven-year, $35 million deal, the Patriots ultimately traded their second- and seventh-round draft picks to the Dolphins for Welker, signing Welker to a five-year, $18 million contract.

NHL

Players who are no longer considered "entry-level" but do not qualify as unrestricted free agents become restricted free agents when their contracts expire.

Qualifying offers

The current team must extend a "qualifying offer" to a restricted free agent to retain negotiating rights to that player.

Players who earned less than $660,000 in the previous season must be offered 110 percent of last season's salary. Players making up to $1 million must be offered 105 percent. Players making over $1 million must be offered 100 percent.

  • If the player rejects a qualifying offer, he remains a restricted free agent.
  • If the player does not sign before December 1st, he is ineligible to play in the NHL for the remainder of the season.

Possible outcomes

In addition to the preceding outcomes, if a player accepts a qualifying offer, he goes with that team.

  • Salary arbitration. A team or player can file for salary arbitration as a mechanism to resolve or settle contract disputes. A team can take a player to arbitration once in his career, and cannot ask for a salary reduction greater than 15 percent. Players can ask for salary arbitration as often as they want. It is noted that a player going through salary arbitration cannot sign an offer sheet.
  • The team matches the offer sheet. When an offer sheet is signed, the player’s current (original) team is notified. The original team cannot negotiate a new contract under different terms or trade the player’s rights and has seven days to makes its decision; that team can keep the player under the terms of the offer sheet, or decline and let the player join the new team under those terms. In the former case, the player cannot be traded for one year.
  • The team declines to match the offer sheet. If the original team declines the offer sheet and loses the player, it receives draft picks from the player’s new team as compensation. Compensatory draft picks are determined by the player’s new salary, on a sliding scale.

For example:

  • In 2008 a team signing a restricted free agent to a salary averaging $2,615,625 to $3,923,437 per season will lose a first-round draft pick and a third-round draft pick to the player’s old team.
  • Signing a restricted free agent to a contract worth over $6,539,062 per year costs a team four first-round draft picks.

References


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