O'Reilly's agent unhappy about Avalanche filing for arbitration

The Colorado Avalanche and star forward Ryan O'Reilly are poised for another acrimonious round of contract negotiations, it would appear.

On Tuesday afternoon, O'Reilly's agent Pat Morris of Newport Sports Management Agency appeared on Sportsnet's "Hockey Central at Noon" show and blasted the Avalanche's decision to file for team-elected arbitration.

"We had some warning that the arb might be taken advantage of. It’s within the CBA. Ryan understands that," Morris said per Adrian Dater of the Denver Post. "He also understands that it’s unique, that no player has been arbed for a pay cut that is of his stature."

There's some critical background to wade through here. In January of 2013, O'Reilly - who remained in contract limbo throughout the 2013 NHL lockout - signed a toxic, two-year, $10 million offer sheet with the Calgary Flames. 

The Flames' offer sheet was designed to dissuade the Avalanche from matching, which was accomplished by "backloading" the deal significantly. O'Reilly made $3.5 million for the 2012-13 season and made $6.5 million on the second, just completed, year of his contract. As result of this backloaded contract structure, the Avalanche would have to extend O'Reilly a mammoth $6.5 million qualifying offer just to retain his RFA rights.

By electing arbitration instead, the Avalanche can take advantage of the right to contest the amount he's otherwise entitled to per the terms of his qualifying offer. From article 12.3(a)(ii) of the 2013 NHL/NHLPA collective bargaining agreement:

In any salary arbitration that takes place pursuant to this section 12.3(a), the Salary Arbitrator may not award the Player a Paragraph 1 Salary that is less than eight-five (85) percent of the aggregate sum of Player's Paragraph 1 Salary plus Signing, Reporting and Roster Bonuses in the final League Year of his most recent SPC.

If the Avalanche win their arbitration hearing, they could reduce O'Reilly's salary for next season to as low $5.525 million (or 85% of the sum of his "Paragraph 1 salary"). They can also prevent him from receiving a qualifying offer from another team this summer, with the exception of a short window between July 1 and July 5. 

The cost of taking advantage of team-elected arbitration, however, is that you run the risk upsetting the excellent young player whom you're negotiating with. Based on Morris' comments, that sure seems to have occurred in O'Reilly's case:

Ryan is unrestricted in two years, and under the model now, given that Colorado has arbed him, short-term looks like what the future is for Ryan going forward, possibly year to year or for the next two years….some people might look a little sideways that a team has done that to a special player, but they certainly have the business right to do that and Ryan is mature, but there’s a history a little bit on the previous contract and Ryan is a stubborn young man.

If this case does go to arbitration then O'Reilly's camp can elect a one- or two-year term to the arbiters award, which will be binding for both sides. Morris' comments suggest that O'Reilly's camp may select a one-year deal, in which case this cycle will repeat itself again next season, but the Avalanche will be unable to file for arbitration again. 

The other scenario: O'Reilly's side can elect a two-year award, and the Avalanche will have essentially walked the versatile 23-year-old forward right into early unrestricted free agency. Either scenario is fraught with risk for the notoriously spend-thrift Avalanche.