Auston Matthews, as you might have heard, signed a five-year extension yesterday at an average annual value of $11,630,000.  The deal almost certainly means he will have the second-highest cap hit in the NHL next year, behind only Connor McDavid’s $12.5M.  That bears some discussing, but first—

Why Can’t You Just Enjoy Things?

A lot of people resent the hell out of anyone having something negative to say about this deal. If you don’t believe me, well, I admire your judgment in not going on Twitter.  The argument, usually, goes something like this.

“We wait years and years and years for a franchise superstar, and after agony and 18-wheelers and It Was 4-1 and David Fucking Clarkson, we have the honest-to-God real thing right here.  And when our General Manager negotiates an extension with that player that will keep him in town for what should be six legitimate runs at the Cup, you have to criticize the flaws like you’re yelling about a scratch on a Ferrari.  Great players cost money, and we have one, and can’t you just be fucking happy about it?”

I don’t blame anyone for feeling this way, and I want to be clear here. Auston Matthews is fantastic and we are going to have him for the next several seasons at least, and the big picture on this is that these are all Very Good Things.  The Leafs are contenders.  I’m going to write about this deal because this is a hockey website and analyzing things is kind of the point, but if you would prefer to leave it there, I honestly do get it.  Put on some music, chill out, watch some highlights, and go enjoy yourself.

Still here?  Okay.

Opportunity Cost

In a salary cap system, you have a certain amount of money to spend on your players, and after that point, you can’t spend any more.  This is the piercing insight for which you read our blog, I know.

But this has to be emphasized right here off the top, because people want to handwave away contract numbers by saying “it’s an extra million or two.”  $2M is the difference between Andreas Johnsson’s next deal and Replacement Player #326.  You can live with Replacement Player #326 (maybe he’s Tyler Ennis!) but I would like to have Andreas Johnsson.  $2M can be the difference between making a competitive offer for Jake Gardiner and not being able to do that.  Now you can say we’ll keep Andreas Johnsson (I think and hope so), or that Jake Gardiner was iffy to stay anyway, but the pinch of those missing dollars has to come in one place or another.

Sometimes people object that the real issue here is the Patrick Marleau or Nikita Zaitsev contracts, which are overpayments for players who are not superstars (to put it mildly.)  There are many fine objections to those contracts, and they do not change the value on the Matthews deal.  You have more cap space or less cap space, more capacity to get and keep good players or less of that capacity.  You make your decisions, hopefully, to try and have more.

Did Kyle Dubas do that on the Matthews deal?

Comparables

I talked about comparables in an article about Matthews’ and Marner’s extensions last week.  In Matthews’ case, you can rightly argue that he is almost peerless.  The two players who are by far the most mentioned are a pair of young franchise centres: Edmonton’s Connor McDavid and Buffalo’s Jack Eichel, both of whom signed extensions in 2017 that took effect for the 2018-19 season.  McDavid’s was eight years at $12.5M and Eichel’s was eight years at $10M.  McDavid’s had a large amount of money in signing bonuses paid out on July 1st each year, whereas Eichel’s had $15M in signing bonuses for lockout years but otherwise is paid out in real salary.  Matthews, you will recall, got $11.634M for five years, with the maximum possible money paid out in signing bonuses.  All three players have complete no-move clauses that kick in for the fifth year of their deals.

Connor McDavid is widely understood to be the best player on Earth, and I think even biased Leaf fans would agree he is better and projects to be better than Auston Matthews.  Jack Eichel is excellent (and better than I think than a lot of Leaf fans recognize), but I would take Auston over him.  Auston is as good a pure goal-scorer as there is in hockey and, well, shit, it’s a goal-scoring competition when you get down to it.

Here’s TSN’s hockey uber-reporter Bob McKenzie:

Hang on a second.

The cap is expected to go up about $3.5M next season over this season.  That means that a deal equivalent to McDavid’s under the new cap would be about $13.13M , because in its first year was about 15.8% of the current annual salary limit of $79,000,000.  You can argue that we should instead use the cap when the deal was signed, although the cap has gone up annually since it was instituted, and everyone negotiating McDavid’s deal would have that in mind.  In that case, an equivalent deal to McDavid’s would be about $13.8M (16.6% of $75M in 2017-18.)  This is a simple version—tax jurisdictions matter, as do endorsements and a host of other things—but this is what we have to work with.

If McKenzie is saying that Matthews would still be making more than that after inflation, well, that means he would be far and away the highest-paid player in the NHL.  One comparable, of course, doesn’t set the table here, even when we have so few to work with.  But it gives us a little bit of information.  Jack Eichel’s deal, for comparison, comes out at $10.4M or $11.1M, depending how you scale it.

The sticking point of all these numbers, of course, is that Matthews signed for five years, and the other two guys signed for eight.

Given we expect the cap to keep going up, and that we expect (hope!) Matthews is going to have several elite seasons, getting to unrestricted free agency in five years instead of eight sets him up to get a spectacular raise in 2024-25.  He’s also taking a certain amount of risk of decline or serious injury, but he’s locked in over $58,000,000 and the deal ends when he’s still only 26, so he probably feels fairly safe doing that.  The Leafs, by contrast, are facing the risk of that huge raise as well as the risk he just leaves for another franchise.

The point of all that?  Giving up those three seasons at the end is a shift of benefit from the team to Auston.  The Leafs are taking on the additional risk of Auston’s raise/departure, and so the contract is worth less to them as a five-year deal than an eight-year one.  That risk should be compensated for in the average annual value.  But Bob is telling us the eight-year price for Auston was McDavid or higher, and that just getting him to the second-highest cap hit in the league is as far as we could hope.

Some people have objected “why do you care about what’s going to happen in 2024?”  Because the Leafs are paying for it as of July 1st of this summer.  Those three missing years of the contract are a thing of value that the Leafs gave up.  This is fine if they got value back on the AAV.  If they didn’t get value back, they overpaid, and the value they didn’t get back matters not just for 2024 but for the player they might not have much sooner as a consequence.

Now, some people have named a few comparables on five-year contracts from the previous Collective Bargaining Agreement (such as Crosby, Malkin, Kane, and Toews.)  But the further back we get from the present, the more we go into a different league where players could have different expectations about contracts two, three or four in their careers; we also get into an era with no term limits on contracts, and different legal contract options.  (Crosby also has a mystical fascination with the number 87 and the Penguins were inclined to have Malkin on an equal footing with him, which makes it hard to apply their matching $8.7M deals to other situations.  Kane and Toews just took a notably lower cap percentage.)

The short version here is that it looks like the Leafs paid an amount of money in line with Matthews’ value on an eight year contract, except they got five years.  If that’s true, then it means we paid an opportunity cost.  Simple as that.

Leverage and Negotiations

Okay, though.  The Leafs are a contender as of this instant, like Bob McKenzie said.  (McDavid’s Oilers were coming off a second-round loss, so they probably considered themselves to be contending also, as funny as that’s turned out in hindsight.)  Nonetheless, that means the Leafs can’t really afford to have Auston Matthews sit out in a year of Tavares’ prime, of Marner and Nylander’s prime, of the great discount deals Rielly and Kadri and Andersen are still on.  Matthews had power here.

And comparables, helpful as they are, are deals between other people in other cities.  In the end, every negotiation is its own animal, and what we really have to weigh Kyle Dubas’ work against is what we expect him to have done differently.  Given that this deal looks like an overpay, we have to ask—was there something he could have done to try and get the price down?  And there’s an answer.  Wait.

Auston Matthews couldn’t negotiate with any other team until July 1st.  Accepted offer sheets—signed offers from other franchises—basically don’t happen in the modern NHL, but let’s say Dubas is connected enough to know there was some substance to all those rumours and that one really was coming, one he feared Matthews might sign.  That still gives him nearly five months.  It gives him the chance in June—after whatever has happened in the playoffs—to come to Matthews and lay it out for him, along the lines of:

“Okay, Auston, you know we want you here as long as we can get you, but if you want a five-year deal we can do that.  I need to know, though, if there’s any flexibility before I tell Jake Gardiner or Kasperi Kapanen or Andreas Johnsson they’re on the way out of town.  I need to know if I can make a move to upgrade this team or if I have to let players walk.”

Maybe this wouldn’t work!  Maybe Judd Moldaver and Matthews would stick to their guns and say that it’s too bad other guys have other salaries, but it’s not their job to worry about that.  In signing on February 5th, though, Dubas has forfeited any chance for movement in the next five months.  Lou Lamoriello has a saying that “if you’ve got time, use it.”  Kyle elected otherwise.

Some people consider the Nylander contract an overpay; I don’t.  Kyle Dubas held his line for exactly as long as was reasonable—to the nearly literal last minute—and then he made a deal because it was better to have Nylander on this team than not have him.  I think he probably did the best he could there.  With Matthews’ deal, I can’t say that he did.  It’s possible this was as good as we were going to do, but when a deal at above-comparable value comes in well ahead of time, it’s hard not to wonder at what was left on the table.  Ultimately, I just don’t think the Leafs got value back for those three missing years.

Perspective

Now, look, you can still say a few things in defence of this deal.  One, a lot of good RFAs are going to get new deals for next season, including not just Mitch Marner but Tampa Bay’s Brayden Point, Colorado’s Mikko Rantanen, Winnipeg’s Patrik Laine and Kyle Connor, Carolina’s Sebastian Aho, and Calgary’s Matthew Tkachuk.  None of these players is as good as Matthews, but if Bob McKenzie is right and the market for these players is about to zoom upward above the rate of inflation, it’s possible their expensive second deals might make Matthews’ look more in line.

And Dubas did get one thing of value by doing this deal on February 5th: cost certainty.  He can draw up his rosters with a clearer idea of what they’ll cost, and the (probably imaginary) threat of Matthews signing an offer sheet is gone.  We’ve heard the Leafs are still exploring the trade market, and maybe this makes it easier to make a big move.  Further to that, one overpay on a superstar is by no means a fatal mistake, and superstars are the players to overpay rather than mid-range options.  And hell, I’ll say it again: Auston Matthews is an incredible, franchise-changing player, and none of these concerns or caveats about his deal mean I am anything but ecstatic that he is a Toronto Maple Leaf.

All the same, the team decided they’d rather settle up early than push for value.  I’m not judging this deal against the possibility Matthews will end up worth it or not; he’s worth a hell of a lot and I’m comfortable betting on that.  I’m judging it on the basis that it looks to me like the Leafs stood up from the table too early.  And that costs you.

Free Agents and Contracts