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

    To be fair, the comparison should list the pts per 82 games when the player signed the contract, not the pts per 82 games at this moment. Another factor to be considered is the salary cap when the contract was signed. The next factor I would consider is the number of NHL games the players had played when they signed their contracts. The last factor is the projection of their potential.

    IMO, the contract for Hall and Eberle are very reasonable, or very good. Hall and Eberle have similar, if not better pts per 82 games than Taveres when they signed their contracts. And the salary cap is lower by about 10% when Taverse signed compare to Hall and Eberle (64.3M vs 70.2M), so if Taveres contact is a great signing, I can’t see why Hall and Eberle’s contracts are not as great.

    A bridge contract is a different way to gamble. You win if the player doesn’t pan out but lose when he does. If you believe the player is going to improve, it is better to sign him early. Just look at PK Subban and Claude Giroux. Canadiens can lock up Subban at around 6M last year, now they probably have to pay him 7.5M – 8M next year. And how much do you think the Flyers could lock up Giroux 3 years ago?

    We don’t want to overpay our core players, but at the same time, the last thing we want to do is to piss our core players but underpaying them but a few hundred thousand. Just look at what happen to Senators. A happy player will be better than a piss off player and a few hundred thousand saving in salary, especially for our core players, IMO.

  • The cap is going nowhere but up after this season. The TV contract for HNIC will be renegotiated and CBC will no longer have the exclusivity on Saturday nights that they have enjoyed for decades. TSN and Sportsnet will remain 2/3 but the tv contract will add at least another 100 million or so to HRR per year. Never mind that the NBC contract will need to be redone and NBC knows that the NHL is the one sports product where it can grow its advertising revenue.

    The move of the Islanders to Barclays Arena will improve league gate revenue. Also the addition of new arenas in Edmonton and Calgary in the next few years will also help the leagues bottom line. The sale of the Yotes will also help the bottom line. The wild card is expansion. How much will Markham and QC pay for new franchises. I imagine Markham is a special case. I’d say 3-400 million? QC 200 million.

    My point is that what is occurring will increase the leagues salary cap upwards into the 85 million dollar area. What is seen as a overpay now will seem a bargain moving forward. 6×5 is 30 million. With 55 million or so left over for another 18 players. It seems less likely we’ll have the issues we had back in the late 80’s concerning affordability.

    Hall and Ebs bring different thing to the table. Yak,RNH and JS same deal. Though they differ a base as has been established gives players like RNH,Yak and JS a ceiling with which to negotiate. Unless one of them knocks it out of the park I think we’ll see contracts comparable to Hall and Ebs. And for me that is just what the team needs to compete longterm.

  • Spydyr

    I think the contracts for Hall & Eberle made sense. These guys are good friends, and excellent players. I dont think we get them both to sign long term unless we did both of them at similar term and dollars.

    Yes, they were overpaid for the first 2 years on these contracts…Hall, however, may soon be viewed as a value contract if he takes another step forward this year. I also think Ebele will have a much better year given he played with a hand injury last season.

    The future will tell, but if taken in context of % of total cap hit, they could acutally look quite decent for the last half of their terms.

  • I know you can’t rely on “should be”, but the salary cap is expected to go up a fair margin in the next few years. I have no problem with these extensions. Sometimes you just need to pay a player what you think is their value rather than pinching pennies. They probably could have gotten better deals with Eberle or Hall, if they waited longer, I suppose, but me, I’m just glad those deals are done.

    There is a fine balance though.. sometimes I really dislike long term deals because some players seem to start thinking more about their long term health rather than playing at a high level, and they get pretty comfortable just taking the money in. I don’t see that in Eberle or Hall though, but you just never know. Everyone seems to play their a– off when their contracts are up for renewal.. however that’s a dangerous game for a GM to play.

    Anyways, a bridge contract would have been nice…. but once that deal was done, the number would be NORTH of $6M, almost guaranteed, because that market value for top end talent will be climbing again as the cap goes up. They skipped the salary savings at a time when they don’t really need the cap savings (the Oilers aren’t struggling) in favor of a time when they more than likely will.

    • Quicksilver ballet

      I mostly agree with you.

      You make an excellent point about bridge contracts – look no farther at how f$%#ed the Canadiens are going to be with Subban, and your point is essentially proven.

      My only complaint (and I admit it is nit-picking somewhat) is that they could have / should have held off on signing Eberle for one season, instead of inking him immediately after his “crazy high shooting percentage” year. Having said that, I appreciate that they wanted to get him signed before the lockout, and they may have wanted to lock him down before someone came in with an offer sheet (which seems a remote possibility given how rare offer sheets seem to be, but still a valid concern).

      • While I do understand your point and agree somewhat re: the shooting %, I think some people focus far too much on that. For instance, Eberle fell back down into a more maintainable 12.0% last year and still managed to be on pace for 27 goals. It’s no 34 goals, no, but we also have to remember that Eberle was hampered by a wrist injury and was having some issues getting the puck up in some situations. If he’s still putting up 27 goals (well, on pace) with that kind of problem, I am thinking he’ll be worth the value.

        Of course, his deal came before the 27 goal season and after his “crazy high shooting percentage” year, so you can definitely say the Oilers took a risk.. but I just think last year showed it will pay off, even though he did take a hit. This year will hopefully be more telling (in a positive way) that the gamble was worth it.

        But I suppose you’d be right in thinking that they probably could have negotiated the same deal after waiting to see how last season went. I don’t think I would have paid him any differently though as I believe that last year was more the anomaly due to the wrist issue than the “crazy high shoot%” year was. And he still managed to have a fairly good year, all considered, scoring wise, tying Hall for goals scored (he did it in 45 gp though) and one behind leader Yak.

  • The Hall contract is brilliant, and one of the few bright spots from the Tambellini regime, IMO. This contract will keep looking better and better as Hall continues his “supernova” trajectory (to steal a phrase from Lowetide).

    The Eberle contract is less brilliant – my understanding is that they signed him a year before they had to (correct me if I’m wrong), and on the tail end of his “crazy high shooting percentage” season. Hindsight is 20/20, however, so we shouldn’t have too much sand in our collective panties over this one. Six million might be a little high for he player at this point in time, but I think we can be pretty confident about the cap increasing quite substantially over the term of the CBA (the owners can’t help themselves), and the number will look better/more acceptable with each passing year.

    As for Nuge and Yak, I think MacT might get some traction negotiating on the basis that the $6 million figure was Tambellini’s benchmark, and there is a new world order with the new GM. Having said that, I won’t be too upset if both get signed long term for 6 million – I am confident that both will end up covering that bet.

    • Marc

      After two seasons in the NHL, Eberle’s numbers were better than Hall in every measurable way – goals, assists, points and points per game, +/- – Eberle was better in all of them. Because of the CBA, he also earned less than Hall, despite being more productive (and that’s not even including the fact that Hall got to start his ELC a year earlier instead of earning nothing in jr for his draft +1 year).

      There is absolutely no way that Eberle could have been signed to a contract at that point that was less valuable than one offered to Hall. They either get the same deal, or Eberle gets slightly more – but a scenario in which Eberle signed for less than Hall after 2 seasons simply wasn’t a possibility.

      They could have waited until this offseason to start negotiating of course, and might have saved a bit of money on Eberle as his shooting percentage fell. But I suspect any such savings would have been eaten up (and more) by the extra cash that Hall could have asked for in season when he was the second best LW in the entire league.

      If you like the Hall contract then you have to accept the Eberle contract as a necessary part of it. There is no way the Hall contract could have been done without giving Eberle at least as much.

      • THRNHJE

        Sloppy Joe wrote:
        After two seasons in the NHL, Eberle’s numbers were better than Hall in every measurable way – goals, assists, points and points per game, +/- – Eberle was better in all of them. Because of the CBA, he also earned less than Hall, despite being more productive (and that’s not even including the fact that Hall got to start his ELC a year earlier instead of earning nothing in jr for his draft +1 year).

        There is absolutely no way that Eberle could have been signed to a contract at that point that was less valuable than one offered to Hall. They either get the same deal, or Eberle gets slightly more – but a scenario in which Eberle signed for less than Hall after 2 seasons simply wasn’t a possibility.

        They could have waited until this offseason to start negotiating of course, and might have saved a bit of money on Eberle as his shooting percentage fell. But I suspect any such savings would have been eaten up (and more) by the extra cash that Hall could have asked for in season when he was the second best LW in the entire league.

        I agree with all of this, and Eberle’s shooting percentage fell to the 12% range which is where elite shooters percentages are,and he had his broken hand during that time. Eberle beats hall in points by about a ppg for each game more than Hall he has in the chart. I personally think locking up two potential superstars for longterm knowing they will be worth way more later was incredibly smart. Great contracts for both of them imo.

  • Spydyr

    The Blackhawks managed to restock their roster after losing players to higher contract offers from other teams, and even won a second cup in a few years’ time.

    MacT will likewise have to make moves and decisions to build this team. If Hemsky is traded or resigns for less, there’s a few extra dollars. Cap goes up, a few more. Trade Schultz, more room. The trick is to fill holes with value signings (like the Hawks did, and as madjam points out above). It’s a moving target, but that’s part of the GM’s job.

    If a skill contract has to be moved, Gagner might be the first to be considered, rather than Eberle, but we’ll see who performs better moving forward.

      • Oilers G- Nations Poet Laureate

        Yes, MacT has his work cut out for himself.

        But nowhere did I say the Oilers were the Blackhawks, only that like the Hawks, MacT would have to re-shuffle his roster using value contracts “to build this team”.

        I do hope that in a few years the Oilers will compare favorably to the current Hawks lineup, but not there yet…

        • Oilers G- Nations Poet Laureate

          MacT is well on his way to reshaping and building this team in a manner that they will remain competitive for years to come. He ris himself this off season of 10 players? from last years squad. Lots of deadwood was chopped. How can you go wrong dumping Ryan Whitney,Bulin and Belanger. Talk about anchors.

          We’ll see more change this year as the season moves forward. By seasons end I bet we’ll see at least 2-3 more changes. Especially if the Oilers are close or in the post season.

  • I don’t care how they do it, but they need to get all of them signed. The big 5 (Hall, Ebs, RNH, JS, and Nail) are the ones that will move this team. If management waits any longer they will be running into the problem of Nail and RNH potentially out performing Hall and Ebs (50/50 chance of happening) costing the team > 6M to sign. The Oilers should not screw around if these odds are presented to them. When it’s all said, pay them all between 5.5-6M, and deal with it. At least all your eggs will be in your own basket to break. No other GM will be able to crack them.

  • magisterrex

    After all those years where we couldn’t land free agents, and shipped off stars due to both real and perceived budget constraints, we finally make a statement that the Oilers are a premiere destination. And there’s always somebody who finds fault with whatever the Oilers management team does. I’m just surprised its you, Johnathan, as you typically are far more astute in your analysis.

    • If the Oilers win (which, given the young core, seems plausible in the near future), they’ll be a premiere destination. If they lose (which is what they’ve done so far), they won’t be a premiere destination.

      Fans should just hope the team’s management isn’t making decisions based on the need to make a statement/inferiority complex.

  • Spydyr

    Their contracts and length are value contracts . So should be the other youth if stars are emerging . The problem lies more in signing supportive /depth staff to exhorbitant raises , such as Ference and Gordon .

  • D

    In my opinion, the Oilers did not make a mistake signing Hall and Eberle to these numbers.

    This question goes beyond hitting the sweet spot in terms of compensation in comparison to other players. It goes to the whole culture and reputation of the Edmonton Oilers.

    This is an organization that since the late 1980’s has earned a reputation of being “small market” and “tight budget”. By signing Eberle and Hall to lucrative contracts with no public acrimony during negotiations, Daryl Katz has changed the perception of the Oilers in the NHL when it comes to finances.

    A slight overpay for Hall, Eberle, RNH, Schultz and Yak City seems preferable over contract holdouts, tense negotiations, and the Oilers can’t pay me full market value, so I want to test free agency.

      • John Chambers

        I think the flipside of your argument is that the potential consequence of a bridge contract is that you might pay in the $7M + range if either Hall or Eberle score at a ppg rate (which they very well might).

        Hall’s contract also has one more UFA year than Tavares’, and that year is a bargain at $6M. I also don’t think Landedkog or even Skinner for that matter are on the same level as #4.

        The Oilers get cost-certainty – it’s worth paying for. Also if Nuuuge struggles this year there’s no reason he can’t be signed to a bridge contract, and if he doesn’t, I’d love to have him under contract for 7 more years at that price.

  • Spydyr

    I don’t think Eberle deserves the same money as Hall.

    Hall had shown dominance already, Eberle had shown a lot of holes in his game and a high SH%.

    Hall has an extra year, yes. Just seems the best should be paid the most. They had better sign Hopkins Yak and JS soon before the rising cap escalates salaries and they have to be paid more than Hall.

    Maybe first trade Eberle for Pietrangelo to rectify things.

  • Spydyr

    They’re good contracts imho. If anything we’re overpaying the bottom 6 forwards. If all of the young stars sign at the benchmark ($6/yr) and we get average contracts for the role players then that’s very doable, we’ll be able to keep them all (with the caveat that the cap will go higher as projected). The problem starts if any of RNH, Yak, JSchultz start asking for more than $6M and we keep overpaying the depth roles.

  • Quicksilver ballet

    Thought there should’ve first been a 4.5’ish multi yr deal squeezed in there somewhere, before making that kind of financial leap. Lets face it, without these kids, there’d be no hope for the Oilers return to respectability. They’re really our only hope now, and they’re being paid as such. With management choosing this route, it could be nearly impossible to achieve any sort of competitive depth. To be a definite non playoff, and a cap team, well that’s not a financial problem. That’s a management problem.