Did the Oilers make a mistake signing Hall and Eberle to matching cap hits?

When the Oilers signed young stars Taylor Hall and Jordan Eberle to long-term extensions with matching $6 million/season cap hits, they set a benchmark for their key young players.

Was that an error?

Recent Contracts

The chart above shows long, big-dollar extensions for young forwards with minimal NHL experience signed between 2011 and 2013 and is ordered by points per 82 games at the time of the contract being signed.

Aside from Steven Stamkos – the clear leader of the pack in terms of production – all of the contracts come in at $6.0 million or less, putting Hall and Eberle near the top of the chart in terms of compensation. In fairness, they’re also near the top of the chart in terms of point production – with the caveat that Eberle’s performance came at an older age than most of these players.

The number that stands out is John Tavares’ contract, not just against the Oilers’ stars but also in comparison to the field. Whoever negotiated that contract for the New York Islanders did a nice job knocking that contract down to $5.5 million per season.

The Problem

The trouble for the Oilers is that they aren’t signing one or even two star forwards – they’re signing four of them. And by signing Hall and Eberle to $6.0 million contracts, they’ve made it very difficult to extend Ryan Nugent-Hopkins (who is at the same point in his entry-level deal as Hall and Eberle were when they were extended) or Nail Yakupov to a deal at less than that $6.0 million.

Imagining that chart above without Hall and Eberle, what kind of extension would Nugent-Hopkins be looking at? Six years, somewhere between $5.5 and $5.75 million maybe, falling right between Tavares and Skinner? Nugent-Hopkins’ agent might point to Matt Duchene, but Duchene agreed to a two-year bridge contract before he got his big-money extension.

In hindsight, there’s an argument to be made that Hall and Eberle are slightly overpaid relative to their peers. We aren’t talking major dollars, but Hall’s performance is in that same Tavares/Skinner range and Eberle is both older than these other players and was less highly-regarded in his draft year. The word hindsight is used because that’s what this is – it’s worth remembering the labour uncertainty when Hall and Eberle signed their extensions.

But if we imagine Eberle and Hall signing at around Skinner dollars – say Hall at $5.7 million and Eberle at $5.8 million – that’s $500,000 in cap space per year over the next six seasons. If we further imagine that Nugent-Hopkins and Yakupov ended up signing extensions south of $6.0 million, we might be looking at $1.0 million in cap space being saved every year for the next six to seven seasons. That kind of space can help a smart general manager a lot, or compensate for overpaying a player like Eric Belanger or Ben Eager.

Ifs And Buts

There is a lot of projection and imagining and 20/20 hindsight in a piece like this, which is one of the reasons the idea has sat on a notepad for a few months rather than being developed. But I eventually chose to write it up because I think the primary point is valid. Establishing a benchmark for the Oilers’ young stars would have been a positive if the benchmark was lower than the league payment for these kinds of players. Instead it now looks like the Oilers are paying more than the standard going rate.

Because there are four (five, if one includes Justin Schultz, though I’ve excluded him because I think he falls into a different category) of these contracts to do, and because they’re all long-term deals, even a small overpay is magnified.

It’s going to be interesting to see what the Oilers do with Nugent-Hopkins. At this point, a new general manager might make the case that he isn’t bound by a benchmark set by his predecessor, and that Nugent-Hopkins deal (particularly given his low totals in 2013) should look more like Landeskog’s, or Tavares’, or Skinner’s than it does Eberle’s or Hall’s.

Recently around the Nation Network

At Canucks Army, Thomas Drance concludes the site’s countdown of Vancouver’s top prospects with their pick for the team’s best – Brendan Gaunce. There’s a lot to like about Gaunce, but there are also concerns about his ceiling:

Gaunce is probably the safest bet among Canucks prospects to emerge as an NHL regular. He’s also probably the third most likely player on this list to see NHL action this upcoming season (behind only Corrado and perhaps Eddie Lack). The harder question to answer when it comes to Gaunce’s development, in my view, is whether or not he has the offensive upside to project as a top-six forward at the NHL level.

Click the link above to read more, or check out some of my recent stuff:

  • pkam

    If I am RNH’s agent, I would argue that we should use contracts that signed this year instead of contracts that signed years ago as reference.

    So comparable contracts would be Landeskog and more so with Seguin because he is a center. RNH is one year younger and has a 25% better stats in pts per 82, and RNH’s contract will start one year later, which the salary cap will be higher, so is it unreasonable to get 250K more than Seguin?

  • OilClog

    What I see is a chart, on that chart, are a bunch of stats and dollar signs.. Ranking both the Stats and Dollar signs strikingly in the same range.. both the contracts are more then acceptable.. Hall’s even more so. Naysayers need to stop the negative Nancy talk and accept Eberle is worth is his contract, because he is. He’s clutch, and as it stands now is being compared to a group of players pick in an entire different echelon of the draft.. so.. Well done, Eberle.

  • beloch

    You should probably compare more than just counting stats. For example, Tavares has significantly better possession stats than Hall or Eberle, although he’s a bit more sheltered than either of them.

    What the Oilers desperately need are some players who drive play into the offensive zone against top competition. Hall and Eberle are great once they’re there, but they’re equally horrible in their own end! If the Oilers had a second line that could drive play forward they could deploy Hall and Eberle in a similar manner to how Vancouver uses the Sedins. i.e. Lots of shelter!

    I know this is a tall order to fill. The Oilers may have to trade an offensive weapon to get a quality two-way forward. One thing is for sure though. The Oilers are not going to be contenders with possession like they had last season! The only team as bad as the Oilers that made the playoffs was the Leafs, and it took a PDO miracle for them to sneak in!

  • beloch

    I would say the Hall and Eberle contracts created a ceiling more than a benchmark. By which I mean that if Yak has slightly better numbers than Hall and Eberle had when they signed and the cap has gone up he will still only get $6 million long term. As for Nuge, I have great confidence in him, but if he does not establish himself at the same level, how can be expect $6 million? Which is not to say I don’t think he is at the same level, only that ultimately performance will tell the tale.

    The only true outlier in the chart is the Taveres contract, which is a super bargain. If anything, I would be more nervous with the Skinner, Seguin and Kane deals as likely overpays. The key is revenue growth and the cap. If last season is any indicator it will be back to $70 million this year and higher after that. If so the Eberle and Hall deals will be better than good.

  • Cowbell_Feva

    If the Oilers continue to be a bad team (which this year they will be again seeing as minor tweaks were made rather than bold moves) then this whole young nucleus will have to be changed. As Gregor has stated numerous times, the makeup of this current team isn’t good enough to compete with the big boys.

    To pay $6+mill to Yak,Nuge,Ebs,and Hall and something comparable with J.Schultz is too much for too little in my opinion. The talent level is world class but the grit/strength/tangibles needed to win in the playoffs isn’t there. Another year outta the playoffs should let management know that the DNA needs to be changed.

    Also, I really like what Hall brings game in game out, but there is a lot of people jumping over Ebs having a high shooting % and being overpaid….in my mind Hall had a good year last year, but it was a half season. He has been shellacked and encountered major injuries numerous times already. I think Eberle is a better bet to stay healthy,longer while producing as well. If Hall can keep going at the trend he was clipping along at last season AND stay healthy it will be a steal of a deal, but I honestly don’t know if he is a) capable or b) able to stay healthy long enough.

    I’m sure I will get trashed hard over this, but there is a reason people around the league are talking about the Oilers as the next Islanders and it has a lot to do with some of what was covered here. If you take the Oil goggles off for a second you will see that the current team isn’t playoff worthy

  • yawto

    No. Any other questions.

    Hall, Eberle, Nuge and Yak at a 24 million cap hit (obviously making two assumptions) is better than any other deals quality wise for a top 4 offensively. There may be teams with a better 1-2 than the oilers, but if that cap hit gets done for all 4, best deal in the league.

    Show me a team that deep on 4 forwards for that cheap in the league. Honestly, if Eberle is deemed worst of the bunch, is there a team in the league where you take the 4th highest paid forward on that roster and swap him for Ebs? I say no. Patrick sharp would be the closest but with age and injury history do you make that deal to save a 100 grand?

    Most teams that are any good spend 22-29 million on their top 4 forwards. We are on the lower range of that and have the deepest 4 in my opinion. Correct me if I am wrong.

  • Supernova

    As a management team if your sure that the players are difference makers you don’t want a bridge contract. You only want a bridge deal if you are unsure.

    Zero issue with future cap space as well.

    Hall $6
    Ebs $6
    RNH ~$6
    Yak ~$6
    JS ~$5

    Under 30 million for a stellar core, every team would take that. If you don’t have the cap space to fill out that roster you are either an idiot or you acquired a Weber type contract. By the time Yak’s contract would kick in the cap will be mid 70’s.

    40 million to fill out the roster is ample space, especially if you don’t over pay on 4th liners

  • toprightcorner

    Salaries for star players have even increased since Hall and Eberle signed their contracts. A bridge contract for 2 years likely would have ended up pushing the following contracts to 8+ million, look at Perry, Getzlaf, Giroux and Parise. Sure, it would have been great to have them at $5.75 or even $5.5 but they would have likely been at less term.

    For the next 7 years, we probably are best off with the contract we have then a bridge and then a new contract.

    5+5+5+8.5+8.5+8.5+8.5 = $49 mill
    6 x 7 + $42 mill

    $7 million potentially saved during the same term which ultimately can be used to make a stronger team for the last 4 years of the contract than the first 3 years, which is more likely the time when the Oilers could contend for a cup.

    If Yak and Nuge meet expectations and cost $5.5 – $6 mill I think the Oilers will be in good shape, especially with cap space projected to increase by $10 mill in the next couple years.

  • Marc

    As Jonathon has ably demonstrated the two contracts are on the high end of average (or is it the mean? – or both?)

    It is not these contracts oil fans should be concerned about – nor likely should we worry about RNH and Yak or Shultz – the anticipated growth in cap space should take care of that.

    What needs to be understood however is that these contracts have set an end date on the oilers making a run for the cup at six years. For if all of these five stars live up even to modest expectations it will be the contracts after their first ones signed as veterans that will be very problematic indeed. Simply put there likely won’t be near enough room for all of them when Hall negotiates his next one.

    And as it’s likely to be done prior to his RFA year we really only have five years.

    As it looks like MacT is not going to make the changes this year to get into the playoffs we are down to four playoff years to hit the jackpot before the team atomizes.

    From that perspective it would seem that a historically error-prone management group has very little room for error.

    • Supernova

      So whatis your critique then?

      That management should have went a longer term?

      Or shorter?

      You make it sound like they have screwed up so much it doesn’t matter, whatever they choose is wrong because of their history.

      If they aren’t winning by then we should atomize the roster. If they are winning that cures a lot of things.

      • THRNHJE

        Neither regarding term.

        We have a poverty of riches regarding young offensive talent. And it is likely going to cause problems and heartache in the future.

        Those problems could be greatly mitigated in the short term if some of the lesser offensive talent had been dealt in the past couple of years – hemsky a couple of years ago; gagner before the work stoppage for example. Had that been done the team today would be more balanced and on a strong playoff footing much sooner.

        But those moves were not made and three very bad coaching hires – Quinn, Rennie and Krueger means we have virginal coaching as well.

        MacT has largely continued in tambellini’s lack of boldness – hemsky is still here (!) making predictable and 3/4 line and backup moves. The team is still a long way from being playoff ready.

        Edmonton is still in anguish over the sale of Gretzky. Angst and sorrow likely await again. Except it could be much more bitter if there are no cup rings as consolation.

        • Supernova

          I honestly don’t know what any of what you wrote has to do with Hall and Eberle’s contract.

          Sure there has been plenty of mistakes, but I disagree the city is in Anguish over Gretzky. probably half the Oilers fan base has never even seen him play in a Oiler Jersey.

          Give MacT a full season for change, he has already turned over a fairly large chunk of the 50 man contract list. Sounds like your angst is about Lowe and Tambo.

        • toprightcorner

          “We have a poverty of riches regarding young offensive talent. And it is likely going to cause problems and heartache in the future.”

          I think you meant ’embarrassment of riches’, and assets are never a problem if they’re managed properly. I don’t think these core contracts are going to be an issue cap-wise. The debate in the future may ensue when one of these young forwards is moved in favor of a big piece on the back end or in the crease, in an attempt to even the talent level on the team, which is currently weighted to the top 6 forwards.

          Finally, regarding the Gretzky deal….I’m not in Edmonton, but know a lot of rabid fans there and elsewhere….and I don’t know of ANYONE who’s spending a moment of concern over something that happened 25 years ago…..yeesh! Maybe you do, Gord, but the rest of the world has moved on.

  • Impartial Oilers Fan

    Can someone give me solid reasoning as to why Taylor Hall’s point total and specifically this point/game pace is being used a baseline, rather than what it was, simply a very good season?

    Taylor Halls had a 94.3% IPP last season. This is off the charts for any star player in the NHL. Crosby had a 80.9% last season, Ovechkin had a 73%. And furthermore, for reference sake, Hall had a 75.6% the year previously.

    Hall obviously received more lucky assists than he can predictably project to get in future seasons. Yet everyone keeps talking about how his point per game was one of the best in the NHL last year, and because of that (SKEWED) fact, he should be a lock for the Olympic team?? Really?

    That doesn’t even bare in mind that there will be centre’s playing on the wing for Team Canada.

    I’m an Oilers fan and I don’t understand how the Oil Country’s consistent role in encouraging entitlement, ESPECIALLY of Hall and Yakupov.

    What does it hurt to have Hall earn a spot on Team Canada, rather than bitch and complain that he wasn’t a lock?! Especially, since its been constantly stated by Team Canada brass, that they want skills guys but not at the expense of good defensive play. If you believe Hall is always making good decisions with and without the puck, you obviously didn’t see Hall’s play at the World Championships without Oiler rose coloured glasses on.

    Bottom line, let him earn a spot on Team Canada rather than some claim he’s a lock after a short season, where he got more points while he was on the ice than will likely be sustainable.

  • Marc

    @ Jonathan Willis

    “Hall’s performance is in that same Tavares/Skinner range”

    Are you just looking at Skinner’s best season only for comparison?

    No way I would compare Tavares and Hall to Skinner, they are different beings. From what I recall about Skinner, he does much better against easier competition and may not drive his line nearly as well as the other 2. I would argue that Skinner and Eberle are much better comparisons, in terms of production, style of play, etc.

    I think Hall’s is a bargain, and that extra year of UFA that they bought for Hall is valuable even by comparison to Tavares.

    Eberle’s could have been down by 0.25-0.5 per year and it would have made me happy, as it would have outlined Hall is the best and set his alone as the upper limit.

    Good agents won’t care what either got, however, and will use the best comparables they can come contract negotiation. We’ll see what MacT is made of in a year or 2 when it comes down to brass tax but his early negotiations have been encouraging (save for Ference).