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?
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 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: