Thoughts on the McDavid Contract
Connor McDavid made headlines this week by inking an eight-year, $100-million contract extension with the Edmonton Oilers. While this deal ensures the 20-year-old center’s long-term future in Edmonton, it will have an effect upon the Oilers and the league for some time.
McDavid’s annual cap hit ($12.5 million) is now the NHL’s highest, eclipsing that of Chicago Blackhawks stars Patrick Kane and Jonathan Toews ($10.5 million each). Over the next several years, it could be the ceiling for the rest of the league.
It could also set a benchmark for other promising young players, such as Toronto Maple Leafs center (and 2017 rookie of the year) Auston Matthews, Buffalo Sabres center Jack Eichel or Winnipeg Jets winger Patrik Laine.
Even if none of them match the heights next season that McDavid reached in 2016-17, strong performances from those three next season could push their value close to $10 million annually. And if one of should win the Hart and Art Ross Trophies in 2018, you can be their agent will be happy to bring up McDavid’s contract as a comparable.
Critics of McDavid’s contract insist it’s far too much money for a player with only two NHL seasons under his belt. Never mind McDavid won the Hart and Art Ross Trophies as the league MVP and scoring leader, some feel the Oilers should’ve used their leverage with McDavid coming out of his entry-level contract next summer to force him to accept a shorter, less expensive term.
That, of course, is pure nonsense.
McDavid isn’t just any promising young player. He’s a bona fide generational player, the logical heir to Pittsburgh Penguins superstar Sidney Crosby as the face of the NHL. The Oilers weren’t about to go cheap with their captain and franchise player, especially the first Oiler to win the Hart since Mark Messier in 1990 and the first to win the Art Ross since Wayne Gretzky thirty years ago.
By locking McDavid up for an additional eight years, the Oilers ensure the prime years of his career will be spent in Edmonton. At his current rate of development, he’ll be the league’s top player for the next several years, perhaps throughout the duration of his new eight-year deal. If he leads the Oilers to championship glory, it’ll be money well spent.
Most Oilers fans seemed to approve of the steep price paid for McDavid. After three decades of watching their best players depart via trade or free agency because team ownership couldn’t or wouldn’t pay to keep them, many are thrilled that the best player in the game will be staying put for the long term.
McDavid faced the same criticism Crosby did a decade ago when he signed a five-year contract extension worth $8.7 million annually. Crosby, by the way, also won the Hart and Art Ross trophies in his second NHL season. Yes, Crosby left some money on the table (in part because of his superstition over his number 87), but it was still considered an eye-popping raise for such a young player so early in his NHL tenure.
Should the salary cap remain at $75 million for 2018-19, the first season of McDavid’s new contract, his cap hit be worth 16.6 percent of the Oilers cap payroll. Interestingly, Crosby’s cap hit for 2008-09, the first season of his first contract coming of his entry-level deal, was around 15.5 percent of the Penguins’ salary-cap maximum of $56.7 million. Crosby’s was lower but not by much.
McDavid’s contract will of course make it difficult for the Oilers to build up a championship club around him. Just as Crosby’s contract also didn’t make it any easier for the Penguins. Still, the Penguins managed to find a way. That will be the challenge for Oilers general manager Peter Chiarelli.
Having McDavid in Edmonton until 2025-26 could make the Oilers a preferred destination for free-agent talent, provided Chiarelli can find the cap room to sign them. The opportunity to play with the league’s best player could also entice some stars to remove Edmonton from their “no-trade” lists.
Of course, it will help if the salary cap increases steadily over the coming seasons. Some have pointed out the Penguins enjoyed hefty annual cap ceiling increases during Crosby’s contract, though it should be noted the cap ceiling rose by only $100K for the second season of his deal (2009-10) and $2.6 million for 2010-11.
With the Canadian dollar showing little sign of a significant increase in value, the NHL salary cap could rise by no more than $2 million annually for the foreseeable future.
Once McDavid’s new contract kicks in for 2018-19, CapFriendly observes his $12.5 million annual cap hit will push the Oilers payroll to over $52 million invested in just 12 players for that season. That’s assuming a cap ceiling of $75 million.
Of course, that’s not counting Leon Draisaitl’s new contract. The restricted free agent has completed his entry-level deal. Based on the 21-year-old’s steady development over the last three seasons, including his 77-point regular season and 16-point postseason effort in 2016-17, he won’t be getting an affordable short-term bridge deal. Speculation suggests he’ll could receive an eight-year contract with an annual cap hit landing somewhere between $7 – $9 million.
Assuming the Oilers get Draisaitl inked for $7 million per, that pushes the Oilers’ cap hit to over $59 million committed to 13 players for ’18-’19.
Next summer, sniper Patrick Maroon is eligible for UFA status and a big raise over his current $1.5 million per season cap hit. Promising blueliner Darnell Nurse will be coming off his entry-level deal. Should recently-acquired Ryan Strome regain his scoring touch, he will also be in need of a substantial raise over his current $2.5 million AAV as a restricted free agent with arbitration rights.
Assuming the Oilers manage to get those three under wraps for, say, a combined $10 million, they’ll have around $70 million tied up in just 16 players, with several other lesser lights to re-sign or replace next summer.
The Oilers shed significant salary last month by shipping right wing Jordan Eberle and his $6 million annual cap hit to the New York Islanders for Strome and his lesser cap hit and bought out winger Benoit Pouliot. They’ll need to dump another big contract before next summer. Don’t be surprised if center Ryan Nugent-Hopkins ($6 million per through 2020-21) resurfaces in the trade rumor mill at some point during 2017-18.
The bulk of McDavid’s salary ($86 million) is reportedly being paid out as signing bonuses over the term of the deal. Expect that to become “Exhibit A” in the league’s efforts to close that little loophole in the next round of collective bargaining, either in 2020 (if the league or the NHLPA trigger their opt-out option in September 2019) or in the fall of 2022, when the current agreement is set to expire.