Their Side of the Story

With the expiration of the Player Transfer Agreement between the NHL and IIHF there are several questions that need to be addressed and our friends at the IIHF were kind enough to send us an interview they conducted with the President of the IIHF Rene Fasel.

While the interview addresses some of the European concerns regarding the PTA at the same time there are now questions we would like answers for from both sides.

ZURICH – The IIHF-NHL Player Transfer Agreement has expired and no new deal is in place. What are the implications? Who are the winners and who are the losers? IIHF.com tries to explain the current situation and also the background with a Q & A with IIHF president René Fasel.

Q: Why was there a player transfer agreement (PTA) between the IIHF and the NHL in the first place?
A: Since the NHL is a league outside the IIHF sphere, the IIHF Transfer Regulations don’t apply to transfers of players who go from IIHF member associations to an NHL club or when they return. In order for also these transfers to be regulated, the main producers of hockey talent in Europe asked the IIHF to broker a special transfer agreement with the NHL.

Q: So what did the PTA regulate?
A: In terms of player transfers, basically four things: 1. A deadline for transfers from the IIHF associations to the NHL, 2. It stipulated how many players could leave each season, 3. The terms of NHL teams returning players to their IIHF clubs were specified and 4. There was a transfer fee for each player.

Q: Why was this agreement important for the NHL?
A: It provided a set framework for the transfer of European players to the NHL, without imposing on the NHL clubs the complexity of the clubs having to secure individual contract releases. It entitled the NHL clubs to sign players who are under contract with their IIHF club for basically 200,000 US dollars.

Q: And it was the last part that many of the European clubs didn’t like?
A: Yes. Many clubs feel that the sum in many cases didn’t reflect the true value of a player. They also didn’t like the fact that they constantly were losing players who were under contract. Furthermore, the decreasing rate of the dollar devalued the transfer sum. The dollar has lost over 32 per cent in index value since the beginning of 2002.

Q: What were the main advantages in the agreement for the European clubs?
A: To start with, every club who lost a player to the NHL was compensated with money. This regardless of whether the player was a free agent or not. So this was a very good deal in cases where a European club lost a free agent who was set on leaving the club anyway. It must be remembered that this was probably the only transfer deal in any pro sport which guaranteed a club compensation for a player they no longer had any rights to. The European clubs also had a 100 per cent security that after June 15 they wouldn’t lose any contracted players to the NHL.
The agreement also obliged the NHL clubs to return certain players to their European club if the player did not occupy a regular roster spot on the NHL club. Finally, the IIHF also created a supplemental fund from which monies were taken to compensate the European clubs who lost players to the Canadian junior leagues and later signed NHL contracts. All those things are gone now.

Q: What is the IIHF’s position in this? Is it good or bad that there is no transfer agreement?
A: It must be understood that it is the IIHF’s mandate to represent the best interests of its member national associations, their leagues and their clubs. If they say that they are not happy with the terms of the agreement, who is the IIHF to say that this is good? Having said that, the IIHF tried to convince the European leagues and their clubs that an agreement is better than a situation where basically nothing is regulated. 200,000 dollars is more than 0 dollars. And this is what the clubs are getting now for players who sign NHL contracts. But this is the choice they have made. The IIHF can not negotiate an agreement if our stakeholders don’t want one.

Q: Was everybody against an extension of the agreement?
A: As we know, Russia has not been part of this agreement for three years. The agreement lived on with the Czech Republic, Finland, Germany, Sweden, Slovakia and Switzerland signing on. But when the Czech clubs said no last month, it all fell through. You can have an agreement without one major player, but not without two.

Q: So why can’t the Czechs and Russians sign their own transfer deals with the NHL?
A: The NHL has informed all the European associations and leagues that they will not sign any separate agreements. They are only interested in a collective agreement negotiated through the IIHF. This is understandable. It would be extremely difficult to implement and enforce terms from seven different agreements that all look different. Just to enforce the terms from the one agreement we had was sometimes tricky.

Q: So what happens now?
A: The NHL has informed the IIHF that the league will honour European contracts and they expect that the European leagues do the same with regards to players with NHL contracts. The NHL will not pursue any players who are under a valid contract with their European club. But they will of course be entitled to sign players who are free-agents or players who have valid out-clauses, which virtually make them free-agents for a limited period of time. During that time they can sign an NHL contract. And since there is no transfer agreement in place, there is no compensation to the European club.

Q: So it will look very much like the situation which has been in place between the NHL and Russia for the last three years?
A: Yes.

Q: Let’s say a Slovakian player is under contract with his club and an NHL club would like to sign him and negotiate a release fee with the Slovakian club. Is that possible?
A: In theory yes. But the NHL has informed the IIHF that NHL clubs are prohibited to enter individual negotiations with European clubs. They are prohibited both due to an agreement the NHL has with the NHLPA, but also by the provisions of Article 26 of the Collective Bargaining Agreement. The NHL would view any individually negotiated release fee to be a clear circumvention of the CBA and punishable by heavy fines and forfeiture of draft picks. It would be considered as a very serious offence. So it’s not likely that any NHL club would attempt that.

This response alone should answer questions as to why the Rangers did not want to try to work out a deal for the rights for Cherepanov despite all the rumors.

Q: Does the absence of an agreement strain the relationship between the NHL and the IIHF?
A: Not at all. The co-operation between New York and Zurich is excellent and there is contact almost on a daily basis regarding all possible hockey-related issues. For example, the IIHF and the NHL are right now in a process of preparing the Victoria Cup, which will see the New York Rangers play European club champion Metallurg Magnitogorsk for the Victoria Cup on October 1 in Berne, Switzerland. The day before, the Rangers will meet Swiss giants SC Bern in an exhibition game. It will be the first time a Swiss team will play an NHL team. And then we are slowly gearing up for the 2010 Olympics in Vancouver, which also implies lots of IIHF-NHL cooperation.

The one question not being asked or answered especially from the Russian side is will they not attempt to sign players who are under contract to NHL teams?

There is also another issue that was not mentioned here and that was the European desire to have more of their players returned to them if they do not earn roster spots on NHL teams. Currently only a handful are returned while most are playing in the AHL or ECHL which is an area that the IIHF members want addressed.

The last question is the great unknown which is how will this now affect those European Prospects who are draft eligible. Will we see NHL teams expand their "unspoken boycott" of Russian Prospects to now include all prospects from IIHF member nations?

The ones who will be hurt most by this is not the European teams but their players as NHL teams we believe that because of the lack of a PTA wait until later rounds where the entry level contracts are not guaranteed before selecting any Europeans.

Our thanks to the IIHF for providing us with this Q+A