On September 16th, 2026, the NHL’s new Collective Bargaining Agreement (CBA) commences. Some of the amendments in the agreement pertain to the structure of player contracts.
Financially, should collect the most money allowable at the earliest possible time. The changes made to the CBA limit this. But to what extent? Are they significant enough to incentivize those who are currently unsigned or those eligible for contract extensions to sign a deal before the next CBA is in place?
Contract limitations with the new CBA
In addition to reducing the maximum length of a contract by one year (from eight to seven years for a team's own players and seven to six years for free agents), there are three other changes specific to front-loaded contracts that reduce their net value. In a front-loaded contract, a player is paid more than half the total money in the initial half of the term.
First, in the current CBA, the amount paid in any immediate adjacent year cannot exceed 25% of the amount paid in the first year. This is being reduced to 20%. Second, the ratio of the lowest to highest amount paid in any given year of the contract is changing from a minimum of 60% to 71%. Third, the aggregate of the signing bonuses will be limited to 60% of the entire contract. Currently, the signing bonus can be the entirety that is paid to the player, less the league minimum salary.
The amount a player is paid in any given season is the sum of the signing bonus plus their salary. It is important to remember that the signing bonus is usually paid on July 1st, whereas the salary portion is equally distributed twice monthly during the regular season.
Below is an example of a maximally front-loaded five-year, $20M annual average value (AAV) contract, which has been arbitrarily chosen to illustrate differences in contract construction between the current and future CBA.
Table 1: Maximum front-loaded 5x$20M contract signed under the current CBA
Year | Salary ($, million) | Signing Bonus ($, million) | Total ($, million) |
|---|---|---|---|
1 | 0.85 | 26.5 | 27.4 |
2 | 0.90 | 22.4 | 23.3 |
3 | 0.95 | 15.5 | 16.4 |
4 | 1.00 | 15.4 | 16.4 |
5 | 1.00 | 15.4 | 16.4 |
TOTAL | 4.70 | 95.3 | 100.0 |
Table 2: Maximum front-loaded 5x$20M contract signed under the future CBA
Year | Salary ($, million) | Signing Bonus ($, million) | Total ($, million) |
|---|---|---|---|
1 | 0.85 | 23.9 | 24.8 |
2 | 0.90 | 21.6 | 22.5 |
3 | 3.10 | 14.5 | 17.6 |
4 | 17.6 | 0.00 | 17.6 |
5 | 17.6 | 0.00 | 17.6 |
TOTAL | 40.0 | 60.0 | 100.0 |
The financial implications of the changes to the CBA
The net value of contracts varying in length, between three and eight years, with a $20 million AAV (a round number), is compared between the CBAs. Both the amount paid out in the first year and the annual signing bonuses are maximized as governed by the applicable CBA.
For this mathematical model, I assumed that every dollar was paid at the same time to the player was invested with a 10% return (slightly below the average return for the S&P 500 index over the last 20 years), compounded monthly. The taxes are far too complicated; therefore not considered in this simple model. The differences are highlighted below.
Table 3: The NET value of each maximally front-loaded contract at its expiry
Contract | Current CBA | Next CBA | Difference ($) | Difference (%) |
|---|---|---|---|---|
3yr x $20M AAV | $73.77M | $73.41M | $0.365M | 0.49% |
4yr x $20M AAV | $104.2M | $101.7M | $2.45M | 2.35% |
5yr x $20M AAV | $137.7M | $134.3M | $3.38M | 2.46% |
6yr x $20M AAV | $174.7M | $169.7M | $5.02M | 2.87% |
7yr x $20M AAV | $215.5M | $209.9M | $5.57M | 2.58% |
8yr x $20M AAV | $260.4M | $253.6M | $6.83M | 2.62% |
The bottom line
Based on the numbers, the financial incentive to not wait and sign a contract under the current CBA depends on the type of player.
Restricted free agents (RFAs) coming off an entry-level deal should optimize the value of their next contract and sign before this CBA expires. They do not have arbitration rights, nor are they eligible for qualifying offers; therefore, delaying is costly. Just like Connor Bedard and Leo Carlsson, expect high-profile RFAs like Cutter Gauthier, Simon Edvinsson, Collin Graf, and Alexander Nikishin to sign their front-loaded, bonus-laden extensions before September 16th.
If an unrestricted free agent (UFA) is signing the last contract of their career, it would be prudent to extract the most value from this contract and sign before the current CBA expires.
However, for those RFAs (like Zeev Buium) or UFAs (like Quinn Hughes) who have just entered into the final year of their deal and are now eligible to sign contract extensions, there is far less incentive. The salary cap is going up by 9.1% ($104 million to $113.5 million); three to four times higher than the differences in signing under the current versus new CBA. Therefore, waiting until next year, even if extending for a slightly smaller percentage of the cap, makes more financial sense.
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