Ryan Ellis signed to entry-level contract

The Predators announced today that 2009 first-round pick Ryan Ellis had been signed to an entry-level contract. Ellis is currently assigned to the Windsor Spitfires of the OHL, though currently sidelined with a wrist injury. Ellis has 10 assists in 7 games played, a plus-8 rating and 4 PIMs (penalties-in-minutes). I know many of the friends and family that read this site may not be familiar with what exactly it means when a player is signed to an entry level contract, but may not have had the opportunity to ask so I will do my best to explain it here. I have been unable to locate the terms for Ellis' deal, so I will be explaining in very generic terms.

The Collective Bargaining Agreement (CBA) between the player's union and the league dictates players between the ages of 18-21 years of age can only be signed to an entry-level contract for their first 3 NHL seasons. Players 22-23 must be signed for 2 years, and 24 year olds to a 1 year deal. The maximum annual salary allowed for a player drafted in 2009 and 2010 is $900,000 at the NHL level. The players are also eligible to receive a signing bonus up to 10% of the player's maximum annual salary at the time the deal is completed. Entry-level players can also negotiate for up to $850,000 in individual performance bonuses(i.e., goals-scored, goaltender wins, etc), as well as performance bonuses up to $2 million for league-wide excellence (individual year-end recognitions such as Calder Trophy, Vezina, etc.) Performance bonuses are calculated in the following season's salary cap, unless the season being played is the last season of the collective bargaining agreement, which is currently set to expire at the end of this season. In these instances, the maximum bonuses being given are calculated against the team's current cap hit. For example, if a team's cap hit for salaries of players is $55 million, but the team has agreed to pay up to $500,000 in performance bonuses if a player meets a certain criteria, the team's cap hit is calculated as being $55.5 million.

I hope this explanation has helped anyone who may have had any uncertainty regarding an entry-level deal. Any questions or further insight is encouraged in the comments section.