Edmonton Oilers Set a Winning Precedent With Ryan Nugent-Hopkins

Getty Images

Derek Leung / Getty Images

By: Ryan Kiray (@RyanK_THG)

The Edmonton Oilers recently announced the signing of former first overall pick Ryan Nugent-Hopkins to a seven-year, $42 million contract, leaving the Oilers in control of the young center’s fate for years to come. While the reaction to the contract has been mixed, in part due to the high risk the Oilers are taking in imparting such a large cash investment to a player who has not yet completed his entry level contract, the Oilers have set a brilliant precedent that will benefit their push toward the Cup as their young core matures.

Nugent-Hopkins will carry the same $6 million cap hit as forwards Jordan Eberle and Taylor Hall, the latter a former first overall draft pick himself. This core of forwards is locked up at that rate through the 2019-2020 season. With Nail Yakupov, the third top pick on the Oilers’ roster, eligible to sign a new deal after this season, it is a safe bet that the he will receive a similar number on his contract.

Critics of the deal are quick to point out that Nugent-Hopkins has played only two seasons in the NHL, and has not yet reached elite production levels. However, there is little to suggest that he will not; his .74 point per game average is nothing to sneer at, and is already on par with the likes of Jordan Staal and Tyler Seguin, both of whom have cap hits similar to Nugent-Hopkins. While the Oilers could likely have strong-armed Nugent-Hopkins into a deal with a lower number, especially given the slightly-lower price the Avalanche recently paid for captain Gabriel Landeskog, whose value to his team is arguably greater than Nugent-Hopkins’ to his own, Nugent-Hopkins’ cap hit is similar to the ones carried by players with similar production.

However, the true benefit to the Oilers is not a lack of overpayment, but rather the long-term benefits of the deal. As has been examined in this space before, a rising cap will decrease the proportional share that long-term deals take against a team’s payout. Perceptions of what a “good” salary is have not kept pace with the rate at which the salary cap is increasing; while a player making $6 million today counts for nine percent of his team’s total cap hit, if the cap were to increase by 13% between this season and the 2016-2017 as it did between 2009-2010 and 2013-2014, that player’s $6 million in 2016-2017 is suddenly analogous to a $5 million salary in present-day terms. What the Oilers have essentially done with Nugent-Hopkins’ contract is create a deal whose value decreases every season.

Thus, a young team populated with three former first overall picks, all of whom look poised to have long and highly productive NHL careers, has set a self-imposed internal cap on individual salaries at $6 million per year. Assuming that Yakupov signs a carbon copy deal when his term comes, as the Oilers’ pattern would indicate, in a few years the Oilers will have four elite point producers anchoring their offensive efforts at a total of $24 million total investment. That $24 million will be less and less of a hindrance to the team’s efforts to add players as the years go by, all while the players signed to them begin the best years of their careers.

To add a hands-on perspective to what this could mean to the Oilers in a few years’ time, picture a 2017-2018 season where the cap has risen to $75 million, a realistic goal by most projections. The Oilers’ big four is still taking up the $24 million in cap space, and the rest of the Oilers’ current cap structure remains largely in place. A few key positions, such as goaltending, have undergone an upgrade in cost. The Oilers could realistically have a cap number around $69.5 million to start the season, all the while fielding a well-rounded roster with a crop of the best offensive threats in the game reaching their biggest breakout years. In that remaining $5 million of cap space, the Oilers would like to add top-pairing defenseman and, just for overkill’s sake, another elite scoring threat. Depending on precisely when the trade deadline falls and assuming the availability of these players for illustrative purposes, the Oilers could acquire pending free agents Rick Nash and Matt Carle at their prorated salaries without shipping out a player carrying a significant cap hit or resorting to retained salary transactions.

The Oilers may have paid more than they had to when it comes to Nugent-Hopkins. However, his current cap hit is already consistent with the current market, and will functionally decrease in value as his increases. The precedent that they have set with this deal and those that came before it essentially guarantees that the Oilers will have the cap space necessary to add pieces a few years down the road when their young core matures and they are in contention for the Stanley Cup. While the Oilers are likely still a few years away from being a serious contender, their savvy cap management with regards to the future of their team has the years ahead looking very bright in Edmonton.

Leave a Reply

Your email address will not be published. Required fields are marked *