The first week of July saw Free Agent Frenzy come and go, but the biggest shockwaves will be felt thanks to the two massive contract extensions signed by Edmonton Oilers centre Connor McDavid, and Montreal Canadiens goaltender Carey Price. McDavid signed the fourth $100 million contract in the history of the NHL, and it was also the first one shorter than 12 years (only eight years to be exact). Price followed that up by setting the new benchmark for goalie contracts. The previous high was $8.5 million annual average value (AAV) for seven years for Henrik Lundqvist. The Canadiens’ net-minder has that one beat by $2 million a year, as well as having an extra year on the deal.

Since the salary cap has been gone up almost every year since its inception after the 2005-2006 lockout, it makes straight comparisons between these contracts a little more difficult. The best way to look at it is through the actual percentage of a team’s cap space that a new contract takes up. The other thing to pay attention to is the comparisons in age when the contracts were signed. With the right comparison here we can get a really good look into what to expect not just in year one, but also in year four or year seven of the contract.

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Connor McDavid –  Edmonton Oilers

Annual Cap Hit:  $12.5 million

Of course, the best comparison for McDavid is Sidney Crosby. There has been no more dominant player in the league since Crosby broke out, but his younger counterpart out West is now giving him a run for his money. The debate may last another couple of years as to who is the better player in the moment, but McDavid does boast the measurable win of the higher salary.

Crosby has been signed at $8.7 million for his last two contracts (covering 17 years). The first one was signed at 17.3% of the cap at the time, and the more recent one was signed at 14.5%. This number is down to 11.6% for the coming season, and still falling. McDavid’s new deal by contrast, is to be 16.67% of the cap this coming season. Less of the cap space than Crosby was taking up initially, and it will continue to shrink just as Sid’s has done.

That being said, with the cap increasing at a smaller percentage almost every year now, there is a bit of a risk that there isn’t as much extra room down the line as one would hope. Crosby’s deal now looks like a massive bargain, perhaps one of the best in the NHL. For fantasy leagues that have the same cap as the NHL, or one that floats above it, McDavid will also be a bargain by the last years of his contract, but not to the same extent as Sid.

There is also the consideration that McDavid’s contract is only eight years in length, as this is now a number limited by the new collective bargaining agreement (CBA). Thus, the star Oilers centre will be up for another contract as he moves through his prime. He is also not attached to a number like Crosby was with 87, so it won’t be a $12.5 million cost throughout his career. There will be the inflation to take into account for his next deal.

This also sets the bar much higher, meaning teammate Leon Draisaitl is likely going to get a sizeable payday too. He is reportedly seeking a $9 million per season deal. This is probably holding up the entire restricted free agent market, as players such as Sam Bennett and David Pastrnak will use whatever number Draisaitl signs for as a bargaining chip to raise their costs.

The fallout here is that contract costs just got a lot more expensive. If you are in a salary cap league, what you can take away here is that to contend over the next two to four seasons, ideally you want to have much of your salary already spent. What I mean by this is that having too many players due for new contracts over the next year or two will lead to having to cut too much cost, and soon. Players signed for the next three years or more are now ideal targets. For example, Steven Stamkos isn’t exactly a bargain now (not that he’s overpaid either), but two years from now if the rest of the star players are signing new contracts for $11-12 million per year, then his $8.5 million deal looks like an absolute steal.

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Carey Price –  Montreal Canadiens

Annual Cap Hit: $10.5 million

On the goaltending end of this, things are a little different, as there has never been a bigger goalie contract. While this contract does match the two deals signed by Jonathan Toews and Patrick Kane, the closest goalie comparable is the seven-year, $8.5 million contract that Henrik Lundqvist signed for the 2014-2015 season (13.22% of the cap). All three of those related deals are debated today as to whether they are overpayments or not, let alone if they were good value when they were initially signed.

Whenever a goaltending mega-deal is mentioned, it has to bring Rick DiPietro’s contract back to mind. The 15-year deal he signed in 2006 at $4.5 million AAV, was viewed as ridiculous when it was signed. Since he didn’t even make it halfway through the deal due to injuries, it was further maligned. Due to performance or even just the nature of injuries with goalies, it has been shown time and time again that throwing big money at goaltenders is a fool’s errand. By the end of the longer contracts, starting goalies are being – or have long been – replaced by younger, less expensive talent. Pekka Rinne and Roberto Luongo are recent examples of this.

If there is one key to the Canadiens’ ability to make the playoffs, it is Carey Price. From that standpoint it is easy to see that they had to pay him what they did. He is also the best goalie in the NHL at the moment. However, if the Canadiens’ are to succeed (or your fantasy team for that matter) then overpaying your goalie is generally not the way to do it.

A few years down the line when Cam Talbot, Matt Murray, Braden Holtby and others have re-signed for bigger deals closer to Price’s, then maybe it doesn’t look so monstrous. For now, he is in a different stratosphere in terms of salary, while his level of play is only enough to put him marginally above the rest of the top tier. Spend your money on a cheaper alternative in net where possible. If you have Price and want to get out from under his new contract, maybe target someone like Martin Jones, who just signed a much more friendly extension at $5.75 million per year, and will still give you above-average performance.

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The Subtext

Contractually, there are some interesting notes to be found in the underlying details of these new contracts. The McDavid and Price deals, as well as the recent re-signing of Evgeni Kuznetsov (eight years at $7.8 million per year) have all the clues we need.

The first thing I have noticed is how the actual salary paid out per year varies in some contracts. It seemed like a funny coincidence at first that a lot of contracts paid out a lower amount for the 2020-2021 season, and more for other years. However, there are no funny coincidences when it comes to money. Digging around, it turns out that the next possible lockout season is… you guessed it, 2020-2021. The NHL can opt-out of the current CBA as early as 2019, which would give the year notice necessary for a lockout starting in September of 2020. NHL players don’t make their salaries during a lockout year, and they are well aware of the impeding dates. So the longer-term deals signed give the players more money for the seasons they are guaranteed to play, and with a cheaper lockout year on the contract, the cap hit goes down, meaning there is more flexibility for the team; win-win.

The other impending lockout sign is that the new extensions this summer are coming with large percentages of the contracts being paid out in signing bonuses. Signing bonuses (along with injury pay, buyout money, etc) still gets paid during the lockout, while the normal salary does not. So all three of McDavid, Kuznetsov, and Price, have massive percentages of the money being paid out in signing bonuses. The players know it’s coming. So don’t plan for your one contention year to be 2020-2021. Be aware of the possibility and plan accordingly.

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As always, you can find me on twitter @alexdmaclean where I post some of my other smaller musings that don’t make it into the articles. 

Thanks to Cap Friendly for all the cap information.