Darren Dreger - an actual NHL insider - has provided some details of the NHL's newest proposal in the ongoing negotiations between the owners and the players. What seems to have garnered the most attention in the new proposal is the reduction of the salary cap without also rolling back player salaries. In the NHL's proposal the salary cap would be fixed at $58M for next season and would increase to $60M and $62 in the following years. Projected cap numbers have been included beyond the 2014/15 season but details of the calculations behind them have not been provided.
Before getting into what this might mean for the Oilers it needs to be pointed out, as many others including Jonathan Willis have already done, that not rolling back salaries doesn't mean that the owners aren't taking money back from the players. Salaries are still going to tied to revenue, in this case salaries will make up 51.6% of revenue (please click through to Willis' post for more on when 51.6% is actually less than 50%). While it may look like the players are making the same amount they will have to pay more money into escrow so that everything balances at the end of the season. The owners are getting money back in this proposal.
With that out of the way let's look at what this proposal might mean for both the Oilers and a contract extension for Jordan Eberle.
The immediate issue that most fan will identify is that without a roll back in salaries a number of teams would be above the new $58M cap. Looking at Cap Geek 16 teams, including the Oilers, would be in that situation. It's not a desirable situation for any team to be in but but it's also not likely to be as dire as it seems at first glance.
In the Oilers case the team's current cap number of $62,933,333 includes $11,962,500 worth of bonuses. If we assume that there will be a bonus overage allowed under the new CBA things get immediately better for the Oilers. Under the soon to expire CBA the allowed bonus overage is 7.5% of the upper limit, or $4.35M with a $58M salary cap. Applying that to the Oilers leaves the team just $583,333 over the cap which is easily accounted for by reducing the Oilers roster from 24 to 23 players.
I'm sure a few other teams would be in a situation similar to the Oilers or would be able to take advantage of LTIR to get below the cap. And of course there might be other options available to teams including one time amnesty buyouts as well. No to mention that this is the NHL's proposal. Even if the NHLPA loved most of what is in the proposal, and based on initial reactions they don't, there is no guarantee that the final cap number for next season will be $58M. At this point there are really too many moving parts and too many unknowns to get worked up over the finer points of the proposal.
It's that uncertainty in what the final agreement will look like that brings me to my second point: Jordan Eberle's second contract.
When Taylor Hall signed his seven-year contract extension last week it was a deal that I liked. The value was very reasonable for a player I see being one of the Top 20 players in the NHL in the next few seasons. One of the things I like the most about the deal was that I felt it set the bar for the second contracts of Eberle, Ryan Nugent-Hopkins and Nail Yakupov.
As far as Eberle goes I would be hesitant to give him the same deal as Hall based on the likelihood that his numbers will regresses next season but if he along with Nugent-Hopkins and Yakupov were to receive second contracts identical to Hall's I think the dollars are reasonable enough that the Oilers should still be able to build a team around them. At least they should be able to as long as the cap is $70.2M (or more) or salaries are rolled back in conjunction with the salary cap.
The following table shows the Oilers cap situation (courtesy of Cap Geek) for the next three seasons with the proposed upper limits in the NHL's most recent proposal and Eberle having a $6M cap hit starting in 2013/14 and Nugent-Hopkins the year after.
|Allowable Bonus Overage||$4,350,000||$4,500,000||$4,650,000|
|Cap Space After Overage||($583,333)||$16,050,000||$37,575,000|
As you can see things get really tough for the Oilers starting in 2013/14. In this scenario the Oilers have less than $1.8M available for each of the nine players they would require to round out their roster. And Sam Gagner, Ladislav Smid, and Ryan Whitney will all be in need of new contracts. For fun lets assume each of those three signs a deal with the same cap hit, which has about a 0% chance of actually happening, the Oilers would be left with barely more that $1M available for each of the remaining roster spots.
Even if we assume that the 2013/14 season somehow works out for the Oilers things don't get a lot better for the team the following season. As it stands right now the Oilers would already be 40% of the way to the upper limit of the salary cap without having a defenceman or goalie under contract. I would love to watch a team deal with a situation like that. I would not want that team to be the Oilers.
This exercise is very much a look at the worst case scenario but it illustrates a very important point that should be kept in mind when it comes to a contract extension for Eberle or anyone else right now - there are a lot of things we don't know and making decisions without all the information can come back to bite you in the ass. The rebuild has been a long and painful process for the fans, the team, and the players, and there are still a lot of questions that need to be answered before the team can be considered a contender, but there are glimpses of light at the end of the tunnel. If we want more than though then the best thing might be to wait and see how the CBA plays out before rushing into a long term deal with Jordan Eberle that might be regretted down the road.