Dept. of Small Advantages - Native Currency

The Collective Bargaining Agreement is filled with little things that made sense when the agreement was signed, but make less sense today. One of those things is the little financial assistance given to Canadian franchises so that they could more easily budget for (and afford) their own minor league franchises. This made a lot sense several of those Canadian franchises were struggling to make ends meet. Today, things have changed so much that the league is willing to move a team to Winnipeg.

Here's the relevant section of the CBA:

11.17 Currency. All SPCs must provide for compensation in U.S. Currency for Paragraph 1 NHL Salary and Bonuses. Minor League compensation may be in the Native Currency of the NHL Club.

It's an interesting rule. If you're playing for the Oilers in Edmonton you get paid in U.S. dollars, but if you're playing for the Barons in Oklahoma City you may be getting paid in Canadian dollars. (Note: that little word "may" is an interesting one; is it the club that decides which currency to pay in? Or is it something that needs to get negotiated into each individual contract? I'm not sure.) When the CBA came into effect on July 22, 2005, this was clearly intended to help give the Canadian clubs a break after years of struggling. After all, the small-market Canadian clubs had cried poor for a long time, and on that date in 2005, the Canadian dollar was worth just $0.82 U.S.

But my how things have changed (and it'll be very interesting to see if this little favor to Canada gets written out of the next CBA). The Canadian dollar is worth about $1.05 U.S. today, and could inch higher in the coming months depending on what happens with the U.S. debt situation (and a million other things). If the Canadian dollar stabilizes at something above par, that presents an interesting advantage for the Oilers in their search for minor league free agents. Many times, compensation for these players is capped. Lennart Petrell, for example, needed to sign a one-year entry-level deal, and so couldn't make more than $67,500 at the AHL level; but if the Oilers (or another Canadian club) pay him in Canadian dollars that average $1.05 U.S. over the course of the season, that's a 5% increase in salary over what he could get from an American team. The same kind of thing is true in the competition for college free agents looking for an entry-level deal, or for veteran players like Yann Danis who don't want an AHL salary higher than $105,000 (so that they remain exempt from re-entry waivers). It's a small advantage for sure, and only exists if the Canadian dollar is above par, but when we're talking about players who are earning $105,000 per season or less, an extra 5% or 10% can make a big difference.

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