Ottawa has a very big decision to make. Erik Karlsson, he of the astronomical defensive scoring, potential Norris winner, and at the ripe old age of 21, is due a new contract. Though to read about it, it seems like what he’ll earn is as disputed as his claim to the Norris.
Some reference Mike Green’s $5.25MM / year, implying that, like Green, Karlsson is an offensive specialist. Others reference Drew Doughty’s $7MM / year and over many more years, implying that Karlsson is a complete, and foundational, player. There are even a few that think Karlsson will exceed that amount, especially if he gets fewer years and if he beats out Shea Weber, who is about to earn something insane, for the Norris. Eugene Melnyk, for what it’s worth, hopes Karlsson remains “reasonable.”
Melnyk’s comment is actually pretty appropriate in a league where reason is usually the first victim of contract negotiations. The community of savvy businessmen that are the NHL’s General Managers can sometimes display the memories of goldfish. Every July 1st, a few big markets who make free agents a pillar of their team-building strategies (and smaller ones aspiring to be like them) get into escalating bidding wars over the scraps from the UFA table. Poorer teams, in a bid to hang on to their talent, offer decade-spanning “long-tail” contracts to their RFAs to spread out the financial burden. Prices and term are artificially raised. The next generation of players start salivating. The result being that when you have a player like Erik Karlsson—very young, very promising, but in only his third season—he gets paid for potential and the assumption that he will maintain his current level of play.
The league is bogged down with player contracts that are insane relative to the value earned. It gets so bad that every once in a while, when a new CBA needs to be negotiated, the GMs paint pictures of financial apocalypse, teams are allowed to buy out contracts without salary cap penalties, or salaries are rolled-back altogether at the expense of all players. As soon as the bidding re-opens, the flavor of the week gets paid.
Alex Ovechkin is, or at least was, a generational player. To do anything but give him what was the most lucrative contract in the history of the sport would have been viewed as asinine and obtuse by a public whose perception is fueled by a hyperbolic media. George McPhee probably would have had a fan mutiny on his hands if contract negotiations had dragged out any longer than it takes to wire some cash overseas. A couple of seasons later and Ovechkin is playing 14 minutes a night for Dale Hunter, setting new career lows in points every season, and with a brain-melting $97 MM still outstanding on his contract. (Dellow has a nice post on the subject here.)
He may be only the most extreme example, but take a look: every team seems to have at least one of these guys—Vinny Lecavalier, Eric Staal, Brad Richards, Roberto Luongo, Thomas Vanek, Dany Heatley, Ilya Kovalchuk…even Sidney Crosby if you take his concussions into account. These players establish themselves as elite and then begin a precipitous drop in productivity until, finally, they inhabit veteran roles, sometimes as top six players. Valuable, to be sure, but not providing an equal return to the vast investments made. Those who do produce above-average seasons sometimes do so with preferential ice-time and zone starts. Their teams, having spent so much to procure their services and often handcuffed by no-trade and no-movement clauses, have little choice but to push all their chips in and hope they didn’t buy a lemon. Even those who produce at an elite level for many years are hard pressed to produce relative to their salaries. And I’m not even getting into the Scott Gomez, Rick DiPietro and Ilya Bryzgalov contracts.
(If you have oodles of time, here’s a 100 page thesis on player salaries and performance. The author concludes, basically, that you can link salary to performance in a statistically siginificant but generally inaccurate way. I haven’t delved into his methodology enough to know if he’s privileging point production over defensive play. There’s no mention of CORSI or Zonestart from what I can see. Forbes’ article on ‘efficient’ teams is probably a more, eh, efficient read. Interesting to see New York in the top five, having reformed, a little, from orgiastic spending.)
It’s a question to keep in mind when teams consider taking on Rick Nash’s contract by trade, making a bid on Zack Parise, or when rebuilding teams like Ottawa or Edmonton look to re-sign their young stars. Conventional knowledge suggests you can’t compete without having some core players to build around, but the prices for those types of players seem insane in a league where half the teams are constrained by the salary cap and the other half are barely scraping by financially.
Dirk Hoag over on On the Forecheck made the point forever ago that the Nashville Predators’ version of “money puck” is premised on a very basic assumption that GMs overpay for point production and undervalue defense. This might be because point production is very easy to understand in terms of its quantifiable value, and it may be simply because their teams are much more exciting to watch with offensive dynamos in the lineup. But for years, Nashville let seemingly integral players walk and they only got better. Building from the net out, they’ve been a goaltender factory, and consistently draft and develop premier defensemen. (That trend is now apparently set to end, with the team ramping up to spend a billion dollars on Ryan Suter and Shea Weber, having already locked up Pekke Rinne.) They trade for and sign great two-way players. You’d never see them getting involved in a Kovalchuk derby. While it may be true that you need to overspend on that flashy point-producer to get your team over the hump into true contention territory, it’s hard to imagine building around these types of players.
Which brings me to the uncomfortable question of what to do with a player who we all love to death and want desperately to see in a Senators uniform for many years, but who might just command a contract in excess of the monster Heatley and Spezza deals handed out post-Cup-run. As a premier point producer, Karlsson is a particular risk for massive overpayment. There’s no question that Karlsson has made Ottawa a team worth watching this year; he’s the engine for MacLean’s entire system. But I can’t emphasize enough that that’s this season. Paying with the assumption that Karlsson is going to be a perennial Norris contender, while nice to imagine, isn’t really realistic.
I’m not exactly advising that we package Karlsson up and trade him, but what I think needs to happen, in as professional and respectful a manner possible, is for the club to play hardball with the RFA. There’s going to be enormous pressure on Bryan Murray to show up with a blank check. He could walk out of those meetings with pretty much any deal and, so long as he doesn’t make Karlsson the highest paid defenseman in the league, he’ll be lauded for getting a “complex” deal done. But the true ramifications of this deal won’t become apparent until a couple of seasons down the line, when perhaps the team is trying to re-sign their other young players. By then it’ll be another GM’s problem.
The thing is, signing these types of elite players isn’t something that GMs have to do all that often, and it can be tempting to simply lock them down and keep an eye on the jersey sales. The short life-span of your average GM probably doesn’t encourage austerity and conservation. These problems are systemic, but it doesn’t mean we can’t be aware of them.
I would point, I suppose, to our very own, homegrown cautionary tale, who goes by the name of Wade Redden. I’m sure it must have been tempting, having chosen Redden over Chara and knowing how important his puck-moving skills were to the team’s system, to lock him up long-term. And perhaps Ottawa did try to do that. In the end, he signed for only two seasons, after which he was allowed to walk and, as we all know, was signed to a monster contract by the New York Rangers, who enjoyed the worst seasons of Redden’s career and are now paying him to be a mediocre player on their AHL squad.
Ottawa doesn’t have the kind of money to bury their mistakes in the minors.
Karlsson is the main reason, in my mind, that this season of Senators hockey was so much fun to watch. But with Melnyk hinting at an internal cap, a raft of prospects in the system who represent the future of the organization, and other teams constantly shooting their own feet off with these enormous deals, I’d much rather overpay for a few short years than lock this franchise in to a lifetime of nervous hoping. I hope we get to see Karlsson play for many years to come, but more than that, I hope he plays like he did this year. Senators management only has control over one of those two things.
Welcome To Your Karlsson Years 
Solid……….freakin’………………article………
This certainly broadens the range of thought I was having about Eugene’s prattlings. I was thinking; “shut up about it and get it done!” But this article makes things look more 3 dimensional in a sense that there are more than two sides to a coin.
This team was very fun to watch this year, and hopefully years to come. Realistically we aren’t the Rags so we can’t throw money at everything but this deal needs to get done, and barring any severe setbacks likely will, but at what cost? Was this year a fluke? Is he consistent enough in his play to warrant this huge raise? Will he continue to produce now that he’s on everyones radar? How can you pay someone for the potential they demonstrated, but may never reach again?
Karlsson $6.5m for five years. (AND NO NO-Trade clause)
Ultimately, I’m sort of okay with whatever they sign him for, so long as it’s done in a way that accords with their own value system, e.g. “This is how much this player is worth to us given our system, our prospects, where we expect him to be in a few years,” etc. and NOT what the market would pay. If that’s $7M or something, well I guess that’s okay. The problem is that Karlsson has all sorts of precent to work with because of these loony GMs. He can start with Doughty’s deal and work his way down.
Personally I think that there has been enough time and evidence during this cap system to make the case that a group of core players only really have one shot at competing for the cup. Chicago is a perfect example of this. Its not just their inability to sign secondary players due to cap constraints, Its players like Duncan Keith and Brent Seabrook whos contracts looked very reasonable up until this year, but now they just arent dominant players anymore. All of a sudden, not only can Chicago not sign good depth guys, but their superstars have been run into the ground and arent even superstars anymore. Bottom line for me is if you sign a defenseman like Karlsson to a long term 7 mill/year contract you are basically expecting him to be a hall of famer for the rest of his career. I love the kid but a 4 or 5 year deal makes sooooo much more sense in almost every situation.
I agree completely. Basically you summed up my thoughts in about 1100 less words than I took to say it 🙂
As far as I can tell, the cyclical tear-down / rebuild thing is the best shot a team has at actually winning a Cup, but it’s fantastically inefficient. You spend years sucking and losing money, then you have maybe 3-4 years to get it done, and then you enter a plateau of disappointing early round exits. The trade-off of course is that winning a cup does wonders for your brand, possibly even builds you a fan base overnight. Chicago sucks now, but man, remember those parades? I wonder how many of those were new Hawks fans.
Otherwise, teams could do a cheap, defensive-minded team that has the chance to win, but is hard pressed to go all the way. It’ll provide more years of playoff appearances and won’t cost nearly as much.
It’s circumstance… Everything falls to circumstance.
Great article 🙂 I gotta say, I’m biting my nails a bit as to how this contract is going to shake out….though at the end of the day, like everyone, I’m kind of just resigned to “Pay hyim hyis maney.” I’m just glad I’m not the one who has to get this thing sorted.
I cant’ predict the future only Don Brennan’s cool guy hair gel can do that. I don’t think Karlsson’s production will drop off the face of the earth any time soon. I think it will be Jason Spezza style, like Spezza gets paid a lot and is not a complete player but a “down year” for him is just under a point per game. Its not 100 points but still pretty damn awesome production that’s vital to the team year in and year out. What I’m saying is King K may not get 78 points a year but will likely still be counted on to be in the neighborhood of 50-60 which is still in some elite company for a d man. The big thing is that Karlsson will never be that anchor D man. Watching him game after game I think he’s pretty damn good defensively for a player who takes risks on the level that he does. But in terms of team needs I think he’ll always need a responsible partner for it to really work. That’s why I’m really excited that the Sens have a young guy like Cowen in the system too. EK’s a point getter, Zdeno Chara he is not and that’s okay as long as he doesn’t finish a season -30 ever again.
I agree completely that a shorter contract is safer and smarter given the current NHL climate. If he gets 80 points for 2 or 3 more years then yeah give him a zillion dollars on his next one..he’d have earned it at that point.
It’s funny how you pointed out how when you look around the league sooo many teams have some nightmare contract in the mix. It’s pretty unfair that some teams can bury them but what can you do? The thing that I cant get over is how, like you said, GMs have short memories as soon as a carrot is dangled in front of them. For instance, this list of teams we’re being told about that would have the privilege of taking on Roberto Luongo’s contract makes me laugh out loud. I don’t think Luongo’s terrible but I think his contract sure is. It’s interesting that guaranteed that some GM (Brian Burke) will be like “Yep, hand that albatross right over here I want to help unfuck Vancouver who wants to throw in the towel on a TWELVE YEAR deal just THREE seasons in. Sounds like a plan.” I’d love to see the Canucks get stranded with that thing out of principal. It’s like no one learned from Rick DiPietro. The shitty thing is that I suppose that part of a GM’s job is to take that gamble at some point, like you said, at some point put the chips in and lock that shit down. Who knows if DiPietro ended up an iron man if the Islanders would have made the playoffs consistently. The cosmic ballet goes on.
Chicago gets me excited about Ottawa’s current situation, though the B.Hawks’ players had some intense pedigree, they showed that you get a few kids that work out in the system and you can make some serious noise quickly, even if you have a Price Club box of Glad Garbage Bags in net. The catch seems to be that the window is very small, so you know, we might be in tears when the Sens are trying to resign all the these kids coming off their ELCs and the reality sets in that some of them will indeed set sail for the Quebec City Frontiersmen or the Markham Cheetah Power Surge Energy Drinks.coms. Anyway, sorry to keep it so brief.
More thoughts posted here:
Very though provoking Orlando! Short answer, no. I don’t feel throwing cap stressing contracts at elite level players is ever worth it. Hockey’s team first approach doesn’t provide an adequate framework for evaluating the return on investment. But we’re talking about impact players, whom the media identifies as the ones winning the hockey games. Public perception of your front office rarely considers financial acumen over “the one they let walk for nothing”. It’s a potential lose-lose here.
Sit EK and his agent down and explain things from management’s perspective. Slice the pie and explain that a big money deal over a lengthy term exposes a team to unreasonable amount of risk. Unreasonable in the sense that why should an owner pay for the mistakes of others? Start at Green’s money and incentivize it up to Doughty’s level (Can they do that? My CBA is how you say? Not so good).
All management requires in return is the player’s best effort and to sit and chat about this again three to five years from now. Heck by that time his leverage may have increased beyond today’s current level.
Suddenly it dawns on me that his leverage could only increase from this current level if he saved Jose Canseco from a burning building.
I think you can do bonuses, sure, though they still count against the cap, and most likely would still be based on offensive numbers rather than defensive play. So he’d probably reach them.
t’s interesting that Green continues to be cast as “an offensive specialist” considering that he played more time on the PK in his Norris nomination seasons than Karlsson did this year. Then again, he also scored points at a higher rate (more than a point per game both seasons), so maybe that’s the source of the confusion.
All snark aside, Karlsson is fun to watch. Definitely see a Green (circa 2008-2010) comparison, and Karlsson’s best years may be ahead of him (unlike Green, who is officially “injury-prone” at this point). I definitely see the Sens giving him more defensive responsibilities as he matures.
It should also be noted that Green received his $5.25 million per year deal BEFORE he put up 70+ points, and a lot of Caps fans were pretty scandalized by that amount at the time. If $5.25 million got you a 50-60 point defenseman 4 years ago, it suggests Karlsson is going to get paid. I’d be shocked if he gets less than $6 million per year.
Well, Karlsson did play on the PK much more under Clouston. MacLean has the emergence of Cowen, a healthy Kuba, and Phillips to defer to on the PK now, and so saves Karlsson for the offensive stuff. Last year that wasn’t an option.
I don’t know Green’s PK numbers, but would be interested to know if he was any good at the position, especially if he isn’t playing there anymore. Just because he played the PK regulalry didn’t make him an all around defenceman. But granted, casting him as an offensive specialist maybe wasn’t fair. It’s not like he’s Anton Babchuk or something.
I’d also be shocked if he didn’t at least have a $6MM year or two in there. And you know what? I probably wouldn’t even care if they paid him something ridiculous, like $9MM a year, so long as it isn’t more than a couple of years.
Oilers fan here, was sent here from Puck Daddy’s Puck Headlines. I just want to say this is an extremely well written article. Objective, unbiased, and realistic, while still portraying fond feelings towards your team and it’s star. I think the Oilers will be in the same boat when it comes time to resign Hall, Eberle, and RNH.
Hey, thanks! That’s nice of you to say.
3-4 years at 4-5 million tops. If he keeps at current pace AND improves his defensieve game AND becomes a game-breaker in the playoffs, THEN you can think about opening the vaults for him.
I’m pretty scared of this deal honestly, because Murray has always erred on the side of the player and I could see him handing out an 8-year deal for 7-8 million a year with a no-movement clause…which terrifies me.
I’m ok with rewarding him, but not with a no-trade or no-movement…those are just anathema to a team maintaining power over the player and his performance.
I’m 95% positive the final deal will end up in the middle of your “tops” scenario and your apocalyptic scenario: Six years, $36M. Maybe $39. That basically pays him a buttload and carries him into unrestricted free agency, at which point Karlsson will just earn even more money, in all likelihood.
Ottawa Sun speculating agent looking for 7 mil, no talks being held and potentially waiting until after awards show to negotiate/sign…:(
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