One of the most intensely debated moves in the entire NHL last season was Marc Bergevin and the Montreal Canadiens signing P.K. Subban to a two-year $2.875M cap hit deal instead of a long term deal that could provide savings later. It's been written about on Puck Daddy, Backhand Shelf, Driving Play, and even a few non-Habs team blogs that took interest in it.
There are differing opinions as always, but the consensus seems to be that the Canadiens made a serious mistake not signing Subban to a longer deal. Not only was he going to have a higher cap hit on his next deal anyway, but winning the Norris Trophy usually comes with a pay raise.
In order to figure out whether or not signing Subban to a bridge contract was smart, we're going to have to use a fair set of assumptions. Chief among these is that the NHL will continue to see the same average growth that they've had since the previous lockout, and the ensuing effect that will have on the salary cap.
The second major assumption is that Erik Karlsson's contract is Subban's closest comparable (signed last year days before winning the Norris, one year younger). Because of that, we're going to use Karlsson's contract as the basis of Subban's contract as far as structure goes.
Next, we'll be looking at the two most commonly rumoured contracts that Subban's camp was after, a five-year deal worth $25M, and a six-year deal with $36M. The reason we're going to look at those contracts specifically is because we don't live in fantasy land. Lots of fans wanted to sign Subban to an eight-year contract worth $5M a year, and I'd like to own an tiger that obeys my every command and doesn't smell bad, but this isn't a fairy tale.
For the purposes of this exercise, I'm going to ignore the fact that a five-year contract would have bought only one UFA year for the Canadiens and was therefore never on the table in the first place, and instead we're going to measure Subban's cap hit impact over the ten years of his current bridge contract and an eight-year extension using the percentage of the (estimated) cap that his contract would eat up on average over each deal.
The salary cap
What will the salary cap look like over the next few years? Over the previous CBA it went up on average by 8.9% per year, which would give us the following breakdown starting with last year's inflated cap:
|Year||Estimated salary cap|
What will Subban's contract extension look like?
It's always a bit of a problem trying to calculate what a contract might look like, but I think we can get a good general idea using Erik Karlsson's contract from last year since the salary cap is almost the exact same and the players are in essentially the same situation as well.
Karlsson is paid an average of $6M per year on his remaining four restricted free agent years, $7M for his first two unrestricted years, and $7.5M in his last one. Considering a slightly lower salary cap and that Subban will be signing after winning the Norris instead of just before, I think it's fair to say that he'll be getting more money than Karlsson in each year, but not absurdly more.
It's been estimated that a major award win is worth about $1M extra per year in salary for UFA years, so we'll half that for his RFA years. For the sake of being liberal with estimates on the high side, we'll say that Subban gets a raise in his eight-year extension every two seasons, similar to what Karlsson got. This means his contract structure looks like this:
$8M per year is likely on the high side for what most Canadiens fans want to see Subban get paid on his next contract (it will make him the highest paid defenseman in the NHL), but I think that's around where it will be. But how does this compare to the other floated deals? Well, for that, we have to figure out what he would be paid on his next deal in both situations; one for five years and one for four. That's easy enough though; all you have to do is multiply the percentage of the cap Subban's salary takes up in the remaining years of that deal by the projected cap in the year he's signing his new deal. What we come up with is the following three scenarios over the 10 years Bergevin could sign Subban for.
The nitty gritty
|Year||Scenario 1 cap hit||Scenario 2 cap hit||Scenario 3 cap hit|
|Average % of annual cap space||7.78%||8.81%||9.3%|
As you can see, the results are pretty staggering. Bergevin was dealt a serious blow when the cap crunch was announced for 2013-14, and he had to form his team around the incoming six million dollar drop in cap space. What he ended up doing was creating a scenario where he doesn't just get Subban at a severe discount for two years, he's likely to get better value over the next decade, carrying Subban to the age of 33.
Even more surprising is that even if Bergevin isn't as good of a negotiator over the next year and Subban's annual average isn't $8M, but $9M over the course of eight years, the average percentage of annual cap space he would take up would be 8.64%, still lower than the other two situations, and that's without adjusting the higher salaries for those UFA years.
By taking advantage of two UFA years over the course of Subban's contract that covers his prime years, Bergevin may have made a genius stroke.
And just for the record, I was vehemently against the bridge contract. This isn't an "I told you so", it's an "I was wrong".