"THE TAGGING RULE" - AN EXPLANATION

Last updated:  December 8, 2007

            If you've never heard of the "Tagging Rule", don't feel bad.  Until this week, it was something I knew was in Article 50 of the CBA, but thought "bah - it's one of those things we'll never hear about" ... until Bob McKenzie mentioned in one of his articles that the Anaheim Ducks couldn’t bring Scott Niedermayer back from suspension until they cleared cap space because of it.  Since we can't ignore this any longer, let’s try to figure out what it really is.  [The details below will likely change over the next several days as I get more information].

            From Article 50.5(e)(iv)(C):
    For a Club that wishes to sign an Unrestricted Free Agent following the commencement of a season (i.e., after the first day of the NHL Regular Season), if the Club signs such a Player to an SPC after December 1, then the following rules shall apply:
    (1) In order for the Club to sign such a Player to a one-year SPC after December 1 of a season, the Club must have Payroll Room equal to or in excess of the remaining Player Salary and Bonuses to be earned by the Player under the SPC in that League Year; and
    (2) In order for a Club to sign such a Player to a multi-year SPC after December 1 of a season, the Club must have Payroll Room equal to or in excess of the Averaged Amount of the Player Salary and Bonuses for the remainder of such season.  If, however, the Averaged Amount of the SPC exceeds the Club's Payroll Room for the then-current League Year, the Club may still sign such SPC, provided that it has Payroll Room and, if such Payroll Room is insufficient to acquire the SPC, it has an amount equal to one or more SPCs that will expire at the end of such League Year, in an amount equal to or in excess of the amount by which the Averaged Amount exceeds the Club's Payroll Room (the "Tagged Payroll Room").  Until such time as the Club has or makes Payroll Room in the current year in excess of such Tagged Payroll Room, the Club may not engage in any Player transactions requiring Payroll Room, including but not limited to, acquiring an SPC or "extending" or entering into a new SPC (the "Tagging Rule").  In the event the Club does have or creates such excess Payroll Room, it may use such excess Payroll Room in accordance with the terms of this Agreement.

    Q: “But Scott Niedermayer is already suspended, and this has to do with Unrestricted Free Agents; why is Niedermayer subject to this?”
    A: It’s related to this question:

    Q:  If Niedermayer is suspended, the Ducks should have had to hold payroll room open for him in case he returned … so why were they allowed to sign Ryan Getzlaf to an extension?
    A: Actually, they could have … and I’ll explain below.

    Currently, Anaheim has the following contracts on its roster expiring at the end of the current season [averaged amounts in parenthesis]:
            -- Jonas Hiller ($2,350,000)
            -- Chris Kunitz ($1,056,250)
            -- Brian Sutherby ($800,000)
            -- Ryan Getzlaf ($739,733)
            -- Joe DiPenta ($700,000)
            -- Drew Miller ($677,500)
            -- Corey Perry ($633,333)
            -- Geoff Platt ($550,000)
            Total:  $8,356,817

    Platt wasn’t recalled until after Getzlaf was extended, and Mark Mowers ($462,500) was still on the roster … so the Ducks had $8,269,317 of expiring salaries on its roster when Getzlaf’s extension was announced on November 20, 2007.  Since we don’t know exactly when the contract was registered with and approved by Central Registry, we’ll use that date as the basis for everything discussed below.

    The CBA has this statement on extending contracts in 50.5(f):
    (iii)  A Club shall only be permitted to sign a Player to an "extension" of the existing SPC in the amount of: (A) the SPC of the Player to be extended (then included in the Club's Averaged Club Salary); plus (B) the Club's Payroll Room in the current year; plus (C) the aggregate Averaged Amounts of any other SPC or SPCs that expire at the end of such League Year (to extent the Club has other such SPCs which are currently counting in the Club's Averaged Club Salary); minus any previously Tagged Payroll Room.  The Tagging Rule referred to in paragraph (e)(iv)(C) above will thereafter apply.

    This is important.  Under this rule, the extension for Getzlaf could only be for the Averaged Amount of his SPC [$739,733], plus the amount of payroll room the Ducks had at the time he was signed [by my estimate, they had $1,842,497 in payroll room on November 20, 2007], plus the $6,473,333 in expiring SPCs.  The first two parts add up to $2,582,230 and the Averaged Amount of Getzlaf’s extension is $5,325,000 – so $2,742,770 of those expiring contracts became ‘Tagged Payroll Room’.  The team then had $3,730,563 in available contracts to be designated as ‘Tagged Payroll Room’ in the future.

    The Ducks could have signed Getzlaf, no problem; they just had to “tag some payroll” to do it.  That seemed pretty harmless … until Scott Niedermayer told Brian Burke he was ready to come back, and Burke made the announcement to everyone.

    Now, we go to the Tagging Rule: this time, we’ll bold the important part:
            Until such time as the Club has or makes Payroll Room in the current year in excess of such Tagged Payroll Room, the Club may not engage in any Player transactions requiring Payroll Room, including but not limited to, acquiring an SPC or "extending" or entering into a new SPC.

    That means once expiring contracts are tagged for whatever reason, the team loses some flexibility in making roster moves; the more that gets tagged, the more payroll room that must be retained in the current year to make transactions that require it [such as call-ups, trades, and new contract signings]. If you want to sign a player to a contract in excess of what’s allowable under 50.5(f)(iii), that’s OK – you just lose flexibility in the current year in exchange.  The Ducks had just enough payroll room on December 4 to call up Geoff Platt [I have them short by about $80,000 but I’m sure that some of the bonuses Jonas Hiller has in his contract are no longer attainable – I’m working on specifics there] … but after that point, they clearly don’t have enough flexibility to add anyone else to the roster unless they either assign a player to the minors or designate a player for LTIR [which they really can’t do – anyone who’s injured enough to go there makes less than the amount of payroll room they have].  Since Niedermayer is suspended, he’s not on the Active Roster [but the Ducks have to keep payroll room open for him in case he comes back] – so to add him, the Ducks need to have sufficient payroll room to comply with … yes – the Tagging Rule.

    Which means … as the season goes along the Ducks will always have to have about $2.74 million in payroll room [or whatever the exact amount was that the Ducks tagged when signing Getzlaf to his extension] to be able to call guys up; if they don’t have it, they won’t be able to make call-ups until they somehow open up cap space.  Suffice it to say, signing Corey Perry to an extension may be out of the question if the Ducks want to give him more than about $3.5 million per year.

    How much space do the Ducks need to free up?  Bob McKenzie of TSN reports that this number is about $880,000.  My own indications are that it’s much less - just under $300,000, and that assigning Geoff Platt to Portland would do the trick … but (A) if Hiller has unattainable bonuses, I don’t have that amount [and it would decrease the amount of payroll room the Ducks currently have], (B) we don’t know how much the Ducks had to tag when signing Getzlaf – if they had to tag more, they’d need more payroll room, and (C) I’m quite confident that Mr. McKenzie didn’t pull his number out of the air, and that it comes from a pretty reliable source.  Either way, simply assigning a player isn’t going to do the trick unless it’s a player who currently has an Averaged Amount over $1.2 million.

    Disclaimer:  the above is not intended to serve as a justification for the rule - the NHL and NHLPA can explain why it's there.  It's simply designed to help explain how the rule works and serve as a guide to follow should this happen in the future.

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