I ambitiously (but too late) started writing a post that touched on multiple financial situations for the upcoming offseason for the Carolina Hurricanes but quickly realized I was going to run out of time and energy before I finished it.
The rest will wait, but today’s Daily Cup of Joe tackles arguably the most interesting of those situations.
Jaccob Slavin’s current contract situation
Jaccob Slavin is signed on his 3-year entry-level deal through the 2017-18 season. He, Brett Pesce, Sebastian Aho and to some degree Noah Hanifin are examples of the benefit of having players excel early. The result is top end players who have nothing close to a top end salary. Slavin will earn an incredibly modest $792,500 for the 2017-18 season that projects to start as a top pairing defenseman. That is a bargain to say the least.
After the 2017-18 season, Slavin will become a restricted free agent with very limited ability to explore other options. An important starting point for what follows is to make it clear that it is not imperative that Slavin be re-signed this summer or anything before his contract ends after the 2017-18 season. But I think it makes sense to extend Slavin this summer before his current contract is up if the terms are reasonable.
Justin Faulk as a comparable situation
The first question is “how much?” To find a comparable, we need to look no further than Justin Faulk.
Coming off of a strong campaign in the final season of his entry-level contract, Jim Rutherford signed Faulk to a 6-year deal worth $4.83 million per year. Faulk was coming off the final year in his entry-level contract, had established himself as a top pairing-capable defenseman, had put up 32 points and was 22 years old.
Slavin’s situation is quite similar. Like Faulk, he stepped into and played well in a top pairing role. He has 34 points. And he is set to turn 23 years old on May 1. One key difference between the 2 situations is that Slavin is not due for a new contract this summer, so if the 2 sides do not agree it is easy enough for either to walk away and just wait to see how the 2017-18 season plays out before sitting down at the negotiating table in the summer of 2018. But otherwise, the 2 situations have an uncanny resemblance.
So why not just wait out the next season if you are Ron Francis?
Signing Slavin to his next contract before necessary is not without risks. If Slavin regresses in his development in 2017-18 or suffers and injury, Francis could regret not waiting and re-signing him for much less after a down season. And at some point if the discount for doing a deal early is not enough, Francis is better off not taking the risk.
But there is potential upside if Francis can use a tiny bit of negotiating leverage since he does not need to do a deal now and also if Francis gets Slavin under contract before his scoring rises. As noted above, Slavin’s 34 points (so far) in 2016-17 are a good but fairly modest total for a defenseman. But if Slavin takes another step up and scores at more like a 55-point pace (the pace he has played at in the last quarter of the season), he starts to enter the rarefied air of elite defensemen. At that point, his extension could get really pricey.
Francis has been bitten twice by extending players early
Interestingly, Francis has been bitten twice by re-upping early. He extended Elias Lindholm for 2 years before his entry-level contract had expired and overpaid to some degree relative to what Lindholm would have been worth had he been re-signed after a lackluster final year in his entry-level deal. More significantly, Francis traded for Eddie Lack before the 2015-16 and extended him for 2 years past the 1 remaining on his contract before he even played for the Hurricanes. Had Francis not done this deal, he would have been able to sign Lack for much less the next summer or possibly just made the decision to move on. So Francis clearly knows the financial risk of re-signing players before it is necessary.
So what is the deal for Jaccob Slavin?
I could see two kinds of deals for Jaccob Slavin this summer. First would be to do a bridge deal of 2-4 years. Such a deal guarantees Slavin financial security for life and gets him a good contract though less than the ceiling if he continues to grow offensively. As the term increases, the price usually rises because Slavin starts to give up more free agent years (reference Faulk’s contract which is 6 years). I think the rough range on a shorter deal is something between $3.5 and $4.5 million per season. The other alternative is to lock Slavin up long-term and officially commit to him being an anchor on the back end for years to come. The point of reference for Ron Francis is Victor Rask’s deal (Faulk was re-signed by Rutherford) last year for 6 years at $4 million per season. I think fair value for Slavin for a 6-year deal is something in the neighborhood of Faulk’s $4.83 million or a range of $4.5 – $5 million.
Personally, I would be happy to see Slavin extended for 2-4 years at $3.5 – $4 million or even longer-term for $4.5 million. If Slavin’s agent makes a case for $5.5 million per season which is not completely outlandish in today’s NHL, I think the price starts to push close enough to a maximum ceiling. At that point, I think Francis is better served to ride out the 2017-18 season and then re-sign him next summer.
The broader impact of Jaccob Slavin’s salary
If Jaccob Slavin is in fact the first of the Canes’ crop of good young players to sign his second deal, I think it could have a significant impact on the Hurricanes financial future. For the 2016-17 season, I would rate Slavin as the team’s best defensman by a small margin over Brett Pesce (and yes over Justin Faulk). If that remains the case, Slavin’s salary could set a ceiling and expected price range for a number of contracts to follow. Brett Pesce (who could also be a candidate to be extended this summer) and Noah Hanifin also have contracts that expire after the 2017-18 season. Behind them are Roland McKeown and Haydn Fleury who have good chances to break onto the NHL roster next season and whose contracts end after the 2018-19 season. If through some combination of negotiating well and maybe trying to use Faulk’s deal as a ceiling for Slavin’s deal, Francis could get Slavin under contract for say $4 million annually, it could set a precedent and ceiling that helps control cost on at least 4 other contracts. And if Slavin continues to be a top player on the entire team, his salary could even impact next deals for players like Sebastian Aho, Elias Lindholm and others.
Tampa Bay Lightning general manager Steve Yzerman has played his cards much like this playing cat and mouse a bit with his 2 top stars Steven Stamkos and Victor Hedman signing for at least a little bit less than maximum contracts. Yzerman already got Nikita Kucherov to sign for a surprisingly low $4.8 million in a short bridge type deal. He will try to do the same this summer with Tyler Johnson and Ondrej Palat.
Since Jaccob Slavin is already under contract for the 2017-18 season there is no rush or urgency to this deal. Francis could do it really early to get it out of the way before he gets busy with the expansion draft, regular draft and free agency. Or he could wait until the tail end of the summer once the other chores are completed. My wild guess subject to be way off is that Francis does this deal early and that Slavin is extended before the end of May and the busy June.
I included Jaccob Slavin in the polls and discussion questions for the Thursday Coffee Shop, but feel free to also bandy it around here too.