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A Potential Nylander Move to the KHL: Questions Answered

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When we first noted that Michael Nylander might be headed to the Continental Hockey League for the 2009-10 season we more or less dismissed it as speculation by a less-than-reputable Russia media source and hence a possibility that, while appealing, wasn’t particularly likely.

A week later the Nylander-to-Russia rumors haven’t died down. Rather, they’ve gained speed, having been reported on by ESPN and brought up as a subject in Dmitry Chesnokov's recent chat with NHLPA director Paul Kelly, who had this to say:

Q: [...] This brings the following question: in the absence of the transfer agreement between the NHL and the Russians, how can a player, like Nylander, with an NHL contract go and play it Russia?

KELLY: Technically, he can't. Unless the Capitals take certain steps to end his contract by buying him out or something like that. And this is one of the issues we have had with the KHL. We should be respecting each other's contracts. The NHL shouldn't be signing any players under contract in Russia, and vice versa, they shouldn't be signing guys who have NHL obligations. We will watch that very carefully, but they should not permit players, who have contractual obligations elsewhere, to sign.

Q: Even if the Capitals, for example, don't mind him signing in the KHL?

KELLY: Again, if it gets cleared by the club and the league approves then it is a different story. I am not aware that that's happened with respect to Michael Nylander.

What Kelly may have been getting at in his response to the follow-up question was the possibility of Nylander being loaned to a Russian team something that is permissible under the current collective bargaining agreement, a concept with which Capitals fans who followed Michal Neuvirth’s early season trip around the globe will be familiar. Why exactly Kelly never spells it out as such is unclear, especially given that the rules surrounding loans are among some of the simpler ones in the current collective bargaining agreement:

13.2 The "Playing Season Waiver Period" shall begin on the twelfth (12th) day prior to the start of the Regular Season and end on the day following the last day of a Club’s Playing Season. Subject to the provisions of this Article, the rights to the services of a Player may be Loaned to a club of another league, upon fulfillment of the following conditions, except when elsewhere expressly prohibited:

(a) Regular Waivers were requested and cleared during the Playing Season Waiver Period; and

(b) the Player has not played in ten (10) or more NHL Games cumulative since Regular Waivers on him were last cleared, and more than thirty (30) days cumulative on an NHL roster have not passed since Regular Waivers on him were last cleared.

But what exactly is a loan? What would the ramifications be for the Capitals? That’s where things get a little trickier.   Due of the numbers of questions we’re seeing about the topic, we’ve decided to put together a little Q & A about what could happen and what it could mean for the Caps.

Q: So what exactly are we talking here?

A: In loaning a player an organization gives him the opportunity to play for another team under his existing contract.  The practice is common in soccer (though it usually arises from different circumstances than the ones we're seeing with Nylander) and not completely foreign to the NHL - in addition to fairly well known players like Darius Kasparaitis and David Aebischer having been loaned abroad in recent years, players are considered to be on loan when they're assigned to AHL or ECHL teams.

Q: How does the process work?

A: Because of Nylander's veteran status, he would have to be waived before he could be sent out on loan.  If Nylander cleared waivers, he would become eligible to be loaned to an overseas team.  At that point the Capitals and the team Nylander was to go on loan to would have to work out an agreement that was satisfactory to both parties in terms of finances and duration.  Once that deal was finalized, Nylander could begin playing for the team to which he was loaned.

Q: Does the team need Nylander's consent to loan him?

A: Yes.  Nylander's no-movement clause applies in this situation, not least of all because he would have to consent to being waived and let all 30 NHL teams decide whether or not to claim him before he could be sent on loan, which is somewhat unlikely.  But even if Nylander didn't have that NMC, the Capitals would still need his permission to loan him to a team overseas.

Q: Would Nylander's contract with the Capitals be terminated?  Would he have to agree to new terms with whatever team he went to?

A: No.  Nylander would still remain under contract with the Capitals who would still have the authority to release him, trade him, or potentially call him back from his loan, depending on how the loan agreement is structured.  They would also be the ones who are ultimetly reponsible for Nylander's salary.

Q: Who would be paying Nylander's salary?

A: At the end of the day Nylander would still be contracted to the Capitals and the team would still be financially responsible for him.  However it's possible that whatever team he might be loaned to would pick up some of the wage bill as part of the loan agreement, though perhaps it's unlikely they would need to in order to convince the Capitals to send Nylander overseas.

Q: Would Nylander's hit still count against the NHL's salary cap?

A: No.  Just like the salaries of players who are loaned to the AHL or ECHL don't count against the NHL salary cap, Nylander's loan status would mean his hit would come off the books for the Capitals.

Q: So what's the catch for the Capitals?

A: The catch is the Capitals would (most likely) still be responsible for paying Nylander's salary which means that $5.5 million dollars would still be coming out of Ted's pocket.  Other than that, he would cease to be a problem for the team... until next year, that is.

Q: Is this just a way for the Capitals to circumvent the salary cap?

A: No.  If Nylander were to move overseas it would be because he, the Capitals, and whatever team he had agreed to go on loan to were all in agreement that the move was in their best interest in a decision making process analogous to what would happen if Nylander were to be moved to another NHL team.

Q: Is this an Alexander Radulov type situation?

A: No.  When Radulov left to play in Russia (for Salavat Yulaev Ufa) he was still under contract to the Predators and went overseas without the team's permission, breaking his contract.  If Nylander, the Capitals, and another team all entered in to the agreement, everyone would be "respecting each other's contracts" as Kelly put it - no one would be in breach.

Q: Isn't the player's union likely to object to this?

A: Maybe, maybe not.  If the move is perceived as a last resort method of forcing out a veteran with a no-movement clause, the union is likely to be pretty upset about it.  However it's unlikely that it would come to that point since Nylander would have to waive his NMC in order to be placed on waivers as a precursor his going on loan.  In addition Nylander's certain financial future is better is he goes on loan: if Nylander plays out his contract abroad he'd received the full $8.5 million dollars in salary he's due over the course of the next two seasons, whereas keeping Nylander for 2009-10 and buying him out over the following summer would earn him $7.5 million and buying him out this summer would net the center "just" $5.67 million.

Further questions?  Lay 'em on us in the comments!