NHL entry-level contracts: Duration, guaranteed payout and other rules for draft deals explored

The 2024 NHL Draft is rapidly approaching, with prospects from around the world eager to hear their name called in Las Vegas. Round one is set to take place on Friday night while rounds 2-7 will all take place the following night on June 29.

Those who are drafted will be eligible to sign entry-level contracts, which the league has set at a max of $950,000 per year.

The entry-level contracts signed by rookies will be for a span of three years, regardless of whether or not they immediately lace up their skates. For example, a player drafted out of a junior league would have their rights owned by whichever team drafts them, even if they don't skate for them this upcoming season.

As we progress through the draft, the entry-level deals signed by players will become less and less. While a first-rounder may sign a max entry-level deal valued at $950,000 annually for three years, a third-round pick may sign a deal that pays $400,000 annually for three years.

Of course, it's also important to note that not every player drafted will end up signing an entry-level deal. For example, teams may decide following the draft that they don't want to offer an entry-level deal. On the flip side, players may decide that they don't want to accept the entry-level offer.

In this case, the team who drafts the player retains their rights and would be allowed to trade them. This situation, however, is incredibly rare, and players who get drafted and offered entry-level deals sign them the vast majority of the time.

Looking further at details of NHL entry-level contracts

In addition to players having the option to decline their entry-level deal, teams can decide to send the player they draft back to develop further in juniors, or the NCAA. This decision must be made before the player competes in 10 games at the NHL level, or else, their contract will count against the team.

Teams who decide within 10 NHL games to send players back to juniors or to develop in the NCAA will have the contract frozen. For example, if a team sends a player to develop two games into the season, once they return the following season, they would still have a full three years left on their deal.

In addition to the maximum entry-level contract amount of $950,000 per year, NHL entry-level contracts also give teams the option of offering signing and performance bonuses. In the case of signing bonuses, the value must not be more than 10% of the total contract value.

In the case of the performance bonus, the amount offered must be less than $3.5 million. For the signing bonuses, the amounts are fully guaranteed. Whereas if a team looks to buy out a player's contract, they are only obligated to pay out a portion of the base salary.

For example, if a first-round player is signed to a max entry-level deal valued at $2,850,000 over three years ($950,000 annually), they could then offer a $95,000 signing bonus that is fully guaranteed. In addition, the team can also include various incentives up to $3.5 million for things such as being named a star of the week.

With all that in mind, and with time winding down before festivities begin in Vegas, it will be interesting to see where the young stars of the future land in the 2024 NHL Draft.