1) High-end unrestricted free agents are signed at a premium.
I really don't think that statement is debatable. Consider the free agents signed in the summer of 2007. In 2007-08, the 4th highest cap hit in the league was that of Scott Gomez, at 7.4 million dollars. Chris Drury, at 7.05, ranked 6th, while Daniel Briere ranked 15th at 6.5 million. Does anybody feel that the contracts signed by those players reflect their actual value to the team? Other contracts, such as those signed by Kimmo Timonen and Ryan Smyth, were also clearly overpays.
2) Low-end unrestricted free agents are generally signed to reasonable contracts.
Take the Detroit Red Wings, who signed Dallas Drake (1 year, 550K) and Dominik Hasek (1 year, 2M) to extremely reasonable deals, considering Hasek platooned with Osgood and was the starter to begin the playoffs, while Drake was a regular 4th-liner. Consider the Pittsburgh Penguins, who signed Mike Weaver (1 year, 600K), Ty Conklin (1 year, 500K), Jeff Taffe (1 year, 500K), Dany Sabourin (2 years, 1.025M) as well as slightly pricier Petr Sykora (2 years, 5.25M) and Daryl Sydor (2 years, 5M). All but Sydor now look, at the very least, reasonable and several (Conklin, Sabourin, Sykora) were steals.
We have examples of this on the Oilers too. The Garon contract (2 years, 2.2M) looks brilliant now, and I really believe that Tarnstrom's contract (and numbers) would have looked better if the Oilers hadn't signed Souray.
This finally brings me to my point, a basic notion that influences all of my statements about free agency:
The best strategy for a team to pursue on the unrestricted free agent market is to sign quietly effective, unheralded players, to depth roles.
There are exceptions, of course. Brian Rafalski is an impact player, and played an important, if not critical role, in Detroit's cup win. Scott Niedermayer was even more important in Anaheim. Sometimes, these signings can work out. I'd even argue that signing Zdeno Chara was a good decision for Boston.
Where teams get in trouble is when the UFA crop lacks elite talent, a situation which occurs most years. In these situations, a bidding war ensues for good but not elite players, a situation highlighted last year when teams offered ludicrous contracts, not only for high money, but with no-trade or no-movement clauses, and over long terms. In addition to the aforementioned examples, players like Jason Blake and Sheldon Souray come to mind.
That's the reason why I'm always amused when fans clamour for action on the UFA market by Kevin Lowe, demanding big signings rather than insignificant deals- because I'd much rather Lowe sign someone like Garon than Souray.