NHL Offer Sheet Compensation Explained

The 2019 NHL offseason has been fun and chaotic, with some of the league's top players on the move. One of the more unorthodox moves of the offseason was the Montreal Canadiens offer sheet for Carolina Hurricanes' 21 year-old star Sebastian Aho.

When that went down, you were probably a little confused as to how offer sheets worked. You also probably found yourself wondering how the compensation in these situations works as well. Hopefully, this will help clear things up.

So, when a team signs a restricted free agent to an offer sheet, the incumbent franchise of that player is given a week to decide if they want to match. If they elect not to match, they are owed signifiant compensation in the form of draft picks in exchange for the player.

For example, the Canadiens offered Aho a contract with an average annual value (AAV) of $8.454 million. With that offer just falling into the fifth category, the Canadiens would have had to give the Carolina Hurricanes a first, second and third round pick in compensation if Aho accepted the offer and the Canes did not match.

All in all, the complicated nature of compensation in the NHL is all based on how much the offer sheet is worth in AAV. Based on those numbers, teams can make a better assessment of what they'll get in return for not matching an offer sheet.

Since some levels of compensation are so extreme, losing teams a majority of their future picks, most franchises avoid the offer sheet and wait for the player to become a UFA.