Prompted by something I wrote in the comments over at the Battle of California, I thought it might be interesting to gather a bit of information on this summers upcoming Restricted Free Agent crop.  We all know that come July 1st, the GM's of the league will drop obscene amounts of money on the UFA class, but I think the far more interesting portion of free agency is in how the RFA's are handled, especially if anyone besides Kevin Lowe finally decides to step up and shake the branches.  What I find particularly interesting is the fact that RFA becomes a more attractive option as the salary cap (and average player salary) increase, because the compensation never increases.  Perhaps most interesting though is the potential financial ramifactions of using the RFA system, particularly when using it as a financial weapon.  The use of the RFA system as a weapon might be its simplest and most effective use, and yet no GM in the league seems to be prepared for such, and several have allowed themselves to get into precarious situations, where such a lack of foresight could severely hurt a contending team going forward.  Let's take a look at the RFA process as a whole, and I think you'll understand what I mean.

PART 1 - The Basics

Before we get into the actual discussion, lets take a look at what and how compensation is awarded for an RFA offer sheet, and because all compensation is in the form of draft picks, lets look at the value of those draft picks as well.  RFA compensation is based on the average annual salary amount in the offer sheet.  The compensation thresholds were originally set coming out of the lockout, and were to increase by the percentage by which the average annual player salary increased.  Taking previous offseason numbers, and determining the percentage by which this year's annual salary should rise, we can find an approximation of what the contract thresholds should be for next year.  2007-08's average salary was 1,906,793.  For 2008-09, per a quick discussion with James Mirtle, I'll be using approximately 2.1 million as the average annual salary.  This represents an increase of 10.13%, creating the following thresholds for compensation.

950,593 and below = no compensation

950,593 - 1,440,292 = 3rd round pick

1,440,292 - 2,880,587 = 2nd round pick

2,880,587 - 4,320,880 = 1st & 3rd round pick

4,320,880 - 5,761,173 = 1st, 2nd, & 3rd round pick

5,761,173 - 7,201,469 = Two 1st's, 2nd, & 3rd round pick

7,201,469 and over = Four 1st round picks

It is important to note here that the ONLY draft picks you can use in an RFA signing are your own draft picks.  If you traded a 3rd for a bag of pucks, you will not be able to sign someone to an offer sheet wherein the compensation would have to include your 3rd round pick, unless you can convince the team currently holding your 3rd to trade it back.  The interesting thing about the "% increase equal to the average salary increase" is that it widens these ranges for compensation, and the top end rises quite quickly.  Think how many quality players are out there making under 3 million a year, and according to this model, are worth only a 2nd round pick.  As the relative value for someone goes down through this RFA process, and teams get into cap crunches, especially if the cap comes down, the RFA scene could become much more active.

As for what the picks being given up are worth, Big Picture Guy tells us that your chances of getting a player to play 150 NHL games at all, regardless of impact in those games, look something like this:

Round 1 - picks 1-15 = 86% -- picks 16-30 = 56%

Round 2 - picks 31-44 = 29% -- picks 45-60 = 25%

Round 3 - picks 61-74 = 25% -- picks 75-90 = 21%

PART 2 - Why bother?

Now, why would a team want to pursue someone through restricted free agency?  The first reason to pursue someone through restricted free agency is obviously to acquire a player who should (presumably) be an upgrade to your roster.  The NHL is unique from many other sports, in that there is a long period of time between when a player's rights are acquired through the rookie draft and when that player is expected to become an impact player in the NHL.  Obviously there are exceptions to this, mostly in the first half of the first round, but after the first round, suddenly those players drafted become more like long-shots or long-term roster solutions.  Many players entering RFA status already have some NHL action under their belt, and in many cases, have already begun to build a body of work in the big leagues.  If you can send, say, a 2nd round draft pick for a roster player who is a known quantity, you're winning the deal.  A 2nd rounder has less than a 30% chance to develop into a player who will play at least 150 games.  But if you sign a guy you like, you're basically turning this pick into a sure success, barring some sort of career-ending injury or some such.  

Especially as the contract values in question continue to rise, but the draft picks going the other way stay the same, RFA will be come a more and more attractive route by which to build a team.  For example, Jiri Hudler is a RFA this year.  He is proving to be a legitimate top-6 forward in this league, and probably a top line forward on some lesser teams.  If you signed him to a deal for 2.8M/year, you're giving up a ~27% chance of getting a guy to play 150 games at an unknown level, for a 100% chance to have a guy play at least as many games, presumably at a high level.  Given that the Red Wings are in a pretty tight situation financially, this is quite possibly doable.  Even if you have to up the ante to over the 2.880M mark, its still only a 1st/3rd in compensation.  For a team in the top half of the league, this equates to 56% and 25% chance of giving up a guy who will reach 150 games, at some unknown level of play, for a 100% sure thing. 

The second big reason for using the RFA system, which is much more underhanded, is to make the hugely mean move of attempting to screw up a rival team's salary structure and kill their salary space, by using the offer sheet as a financial weapon.  This year, the NHL's cap is 56.7 million dollars.  Nearly every top contending team sits extremely close to the cap, as well as quite a few not-so-good teams.  To come back to the Jiri Hudler example above, imagine how much it would ruin Ken Holland's day, if Jiri Hudler signed an offer sheet for 4.0M this offseason.  The Wings are already feeling a massive cap crunch as it is, trying to retain guys like Franzen and Hossa, while filling out the roster and trying to get a stable goaltender.  If another team stuck Hudler with a 4.0M deal, given the Wings situation, it would be very hard for Holland to match, and even if he did, that money would have to come from someone else.  Perhaps because the Wings paid more for Hudler than they wanted, they're forced to continue taking the ice without a goaltender they can trust, or they're forced to let a guy like Franzen and/or Hossa go.  

Furthermore, such a contract would set a bar for other up and comer's in the team's system, a bar which other guys on their way up would point to, and say "hey, if he got that much, then I want this much".  Every team tries to keep some sort of salary structure, using previous players contracts as precedents for what the next guy should make, or setting limits so that no one makes more than a certain player.  Throwing that into whack is a pretty good way to piss off a team and shake things up a little bit from the inside.  Of course, this is assuming the team keeps the player.  If they choose to take the picks, not only do you get a player for picks, but you're also forcing your rival to go to their fans and say "Sorry, we had to let go that guy you really liked, who we've been pushing as part of this team's future for the last few years, because we didn't/couldn't pay him that little bit extra."  No one wants to do that.  

Of course, if you such a thing happens multiple times to the same team multiple times over a period of 2-3 years, it can really compound the effects.  Every organization has a long term salary strategy for what they plan and expect to pay each player.  When you give 4 or 5 guys an extra 500K-1M because teams kept throwing RFA deals at them, and the team didn't want to lose them, that adds up quick.  An extra 1-2 million in cap commitments can prevent your rival from pursuing that important free agent, or from upgrading a weakness in their lineup, or push them into using league-minimum players as opposed to someone who can earn 1-2M.  And of course, that extra salary commitment makes them an even more attractive target for continued RFA-screwing, by making their situation worse, or allowing opponents to pinch teams off the roster.  Suddenly, a powerhouse team is being forced to give away all its depth over what is, on an individual basis, chump change, or to keep all that depth at higher prices, which in a salary cap world, will also hurt their depth.  In a marathon 82 game regular season, and a grueling playoff tournament, depth will always come into play.  Depriving a rival of that depth, while gaining players yourself, and while attacking your rival's ability to plan salary structure isn't as obvious an advantage when you step onto the ice, but it is certainly a significant one. 

Part 3 - What's the drawback?

As stated, he benefits of being a complete jerk in the RFA pool are pretty significant, and again, as the contract values go up but the draft picks don't, this only becomes more so.  However, just as it is the case in your own job, being a complete jerk to everyone else in a very small group can have its reprecussions.  Foremost is the obvious threat of getting your own RFA's attacked by other teams.  While this is certainly a risk, it is something that can be avoided to an extent by being proactive in retaining your own homegrown talent.  As the system is now, GM's tend to go into the offseason with a cavalier attitude towards their RFA's.  they try and make the headlines on July 1 with with the UFA signings, and then turn to their RFA's and say "Ok, after I gave all the money to soandso, I have this much left, here you go."  Understandably, this isn't the most attractive situation for the RFA's, but if they're being treated well, and ownership is upfront and proactive about trying to retain players, you could certainly do better at retaining your own talent.  

The other significant drawback is that the other GM's will hate you.  This could make trading difficult (how long until we see Edmonton trade with either the Ducks or Sabres?), but this would mostly be limited by the number of teams that you've used RFA against.  Since teams often do not trade within their own division or with rivals anyways, attempting to financially screw a rival over financially is unlikely to lead to serious consequences, and in fact may boost the rivalry, helping to fill your arena.  This means the major place a team is likely to lose a potential trade partner is with non-rival teams who've been poached by your team.  However, I believe that RFA is quickly becoming a more and more attractive option, and eventually, other GMs besides Kevin Lowe will start using it more aggressively.  As more teams use the RFA process to raid other teams of their talent, teams will be forced to either give up holding those grudges (at least for more than about a year), or end up refusing to trade with almost anyone in the league.  

Overall, as such a process becomes more popular the drawbacks will begin to become less negative, and at the same time, as the process becomes more and more profitable, the positives outweigh what negatives there are by an even greater degree.  Significant RFA action is coming, its just a matter of when, not if.  

Part 4 - Who can this impact right now?

With the very real possibility of the salary cap not climbing, or even decreasing, over the next two years, and poor planning by many teams in their ability to deal with such, this summer could be the time when the RFA market comes to life.  Lets take a look at some teams who have attractive RFAs, and may be in a position to either lose talent by this route, or get financially slammed by an agressive opponent.  I am pulling RFA status and cap info from NHL Numbers.  Per the nhlnumbers disclaimer, some of these RFA's may in fact be Group 6 UFAs.  This is uncommon, but I just want to mention that it is possible.  Apologies if I didn't recognize someone on your team as being an attractive RFA, as well.

TEAM ( money committed to next season / players committed to for next season) -- Player (2008-09 salary) (All numbers in millions)

ANAHEIM - $37.44 / 13 -- Mike Brown (0.522), Brett Festerling (0.475), James Wisniewski (0.900), Erik Christensen (0.750)
ATLANTA - $29.05 / 11 -- Colby Armstrong (1.200), Kari Lehtonen (3.000)
BOSTO N - $41.73 / 13 -- Phil Kessel (0.850), David Krejci (0.825)
BUFFALO $46.54 / 15 -- Drew Stafford (0.984)
CAROLINA $42.77 / 15 -- Tuomo Ruutu (2.250), Jussi Jokinen (1.875), Anton Babchuk (1.000)
CALGARY $45.53 / 14 -- None
CHICAGO $36.22 / 11 -- Ben Eager (0.650), Kris Versteeg (0.490), Cam Barker (0.984), Dave Bolland (0.887)
COLUMBUS $40.70 / 18  --None
COLORADO $43.78 / 13 -- None
DALLAS $40.23 / 17 -- None
DETROIT $47.30 / 15 -- Jiri Hudler (1.150), Ville Leino (0.875)
EDMONTON $46.78 / 18 -- Kyle Brodziak (0.500), Denis Grebeshkov (1.500), Ladislav Smid (0.952)
FLORIDA $38.00 / 13 -- David Booth (0.675), Steve Eminger (1.200)
LOS ANGELES $43.19 / 20 -- Teddy Purcell (0.850), Brian Boyle (0.750), Jack Johnson (0.850)
MINNESOTA $43.19 / 16 -- Josh Harding (0.750)
MONTREAL $24.40 / 12 -- Chris Higgins (1.900), Thomas Plekanec (1.800), Guillaume Latendresse (0.850), Matt D'Agostini (0.508)
NASHVILLE $32.99 / 13 -- None
NEW JERSEY $39.91 / 13 -- Travis Zajac (0.984), Andy Greene (0.600)
NEW YORK ISLANDERS $30.19 / 15 -- None
NEW YORK RANGERS $42.10 / 10 -- Nikolai Zherdev (3.250), Brandon Dubinsky (0.635), Fredrik Sjostrom (0.840), Ryan Callahan (0.600)
OTTAWA $50.93 / 20 -- None
PHILADELPHIA $54.81 / 20 -- None
PHOENIX $31.35 / 14 -- Keith Yandle (0.635), Enver Lisin (0.850), Scottie Upshall (1.250), Petr Prucha (1.600), 
PITTSBURGH $46.11 / 13 -- Alex Goligoski (0.895)
SAN JOSE $46.75 / 13 -- Ryane Clowe (1.600), Marcel Goc (0.775), Torrey Mitchell (0.715), Tomas Plihal (0.500), Lukas Kaspar (0.600), Thomas Greiss (0.725)
ST. LOUIS $44.36 / 18 -- Jay McClement (0.950), Jeff Woywitka (0.725)
TAMPA BAY $38.60 / 14 -- Lukas Krajicek (1.100), Noah Welch (0.750), Martins Karsums (0.825)
TORONTO $41.94 / 17 -- Mikhail Grabovski (0.850)
VANCOUVER $31.28 / 11 -- Steve Bernier (2.500), Kyle Wellwood (0.998), Jannik Hansen (0.500)
WASHINGTON $45.93 / 14 -- Eric Fehr (0.735), Chris Bourque (0.525), Jeff Schultz (0.650)

Two teams in particular jump out to me here as teams that are ripe to have their talent snatched up by a smart opponent.  First of all, the Detroit Red Wings have to find a goaltender, and sign some free agents, and won't be able to pay Jiri Hudler, a legitimate top-6 forward in the NHL, more than maybe 2.5-ish next year, and Ville Leino is quickly proving himself to be an NHL caliber player, perhaps top-6, and he's going to get squeezed even harder in that cap situation.  Either of these guys could be gotten for a second rounder, or maybe a first + third.  Even if the Wings chose to match an offer sheet, that would likely have to mean not fixing the goaltending situation, or letting guys like Hossa and Franzen walk.  Think the up and coming Blue Jackets wouldn't love to weaken the Wings, even if they didn't actually get a player out of the deal?  Hell, given their cap space and need for real scoring depth, it would be a brilliant move by the Jackets to sign one or both of Hudler/Leino, help create a rivalry, and help sell tickets.  Its a win all around, for everyone except Detroit.  

The other big team that jumps out at me from this list is the San Jose Sharks, who have 6 desirable RFAs, while having plenty of cap space already dedicated to only 13 players.  Perhaps more importantly, San Jose has to plan for 2010-11, where potential Olympian Joe Pavelski and potential all-star Devin Setoguchi will also become RFAs, as well as captain Patrick Marleau and goalie Evgeni Nabokov becoming UFAs.  This means that San Jose must plan out cap space ahead of time for a year that the cap threatens to go down on their captain, starting goaltender, and two up and coming top-6 forwards.  With so many RFAs this year, rival teams could choose to sign these players to offer sheets, and screw up the Sharks cap structure, forcing them to lose one or more of Pavelski, Setoguchi, Marleau, and Nabby the following year, or could be nabbing these quality NHL-caliber players for 2nd or 3rd round picks.  There's no way the Sharks could afford to match offers of even 1 million dollars to all 6 of those players, and still have a hope of keeping more than 2 of their free agents the following year.  Any team with cap space could do itself a huge favor by picking up a couple of quality Sharks players to help fill out the roster, and help hurt one of the very top teams in the league at the same time.  The Ducks or Kings could make a particularly smart move here, by gaining a reasonably priced roster player or two, build for the future, and continue to elevate a rivalry that engages more fans through California.  

The Rangers could also be in a bit of a crunch this offseason with Dubinsky and Zherdev being RFAs and the team already having over 42M committed to 10 players, and 35.72M to 7 players the following year.  The team will likely try to force these guys into cap-friendly deals, to give themselves some amount of flexibility under the cap, especially in the following year.  Given Glen Sather's propensity for throwing money around, could an opponent try to help exacerbate the Rangers cap crunch by offering raises to Zherdev and Dubinsky and getting Sather to match?  This offseason could allow the Rangers to move towards a somewhat more reasonable salary structure, but if Sather gets roped into matching raises for Zherdev and Dubinsky, that could go out the window pretty quickly.  

Furthermore, aggressive GM's could use the RFA process to help keep an opponent on the rise down on the mat.  For example, Chicago has rookie of the year candidate Kris Versteeg and 2004 third overall pick defenseman Cam Barker coming up as RFAs.  Could another team try to cause long term problems for the Hawks by signing away these players, or offering them larger raises than the Blackhawks would like to give them?  Given the Blackhawks' return to relevancy and the team's need to continue proving to the fans that they intend to seriously compete, could they afford to allow another team to poach those players?  Much like the Sabres with Vanek a couple years ago, if they decide they can't take that PR hit, they could possibly be lured into an unfavorable contract.  With Kane, Toews, Ladd, and Keith following into RFA status the following year, an aggressive GM could help force the Blackhawks into a poor financial position, helping to prevent the 'Hawks from ever even opening the window to serious Stanley Cup contention, or at least limiting that window.  Other teams in a similar situation could include the Los Angeles Kings and, to a lesser extent, the Boston Bruins.

Especially as many teams feel the cap crunch over the next two years, restricted free agency offers the aggressive GM who is willing to break the gentleman's agreement a chance to inflict some serious hurt on his rivals, and improve his own team at the same time.  Particularly for the first GM's to take this creative step, such actions would be a metaphorical sucker punch to their colleagues, allowing the gains to be made to be even larger, as unsuspecting GMs are caught looking the other way.  Brian Burke has insisted multiple times that cap space and money are assets in and of themselves.  How much of an asset they are is up for debate, but that they are assets of some sort is indisputable.  If a GM can take actions to not only deprive a team of players, but of other, less substantial assets like cap space, money, and a working salary structure, the gains to be made could be quite significant.  To my way of thinking, this becomes more obvious each offseason, and eventually, someone in a high place will see the same thing.  The question then shouldn't be if a GM will use the RFA process as I've described, but instead, when will it be used, and more interestingly, who will be the one to do so?