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Update: Can the Coyotes afford to re-sign OEL?

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An in depth look at whether or not the team will be able to afford their number one defenseman.

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San Jose Sharks v Arizona Coyotes Photo by Christian Petersen/Getty Images

The trade rumors stalking Arizona Coyotes defenseman Oliver Ekman-Larsson are not going to go away until he is re-signed. No matter how tired the GM, OEL, the fans or even the local media are of hearing them.

Yesterday a new wrinkle was added to the rumors when Hockey Central at Noon panelist Nick Kypreos said on the show “[The Coyotes] priority is making payroll not re-signing Oliver Ekman-Larsson.” Kypreos went on to say that there are financial troubles for the organization solely owned by Andrew Barroway.

Very little is truly known about Barroway’s net worth, Forbes reports it as $50 million, though it always seems like millionaires are able to find legal ways to get around reporting all their income to such sites.

Since Barroway has taken over majority ownership the team has only invested more in youth hockey so there’s no indication of financial problems or a lackluster attitude toward the market.

Still, it’s nearly impossible for fans to know how much an owner can spend on a team and even harder to know how much an owner is willing to spend on a team. However, there are some logical deductions that can be made using the information that is available.

The following data is all from CapFriendly.com a premier and trusted resource for the contract details of NHL teams. The Coyotes are currently spending $53,744,444 for the 2017-18 season in player’s salary, not including injury call-ups. It should also be noted that Cap Friendly shows the full amount of Dave Bolland’s $5.5 million contract but the Coyotes are only paying 20%, insurance covers the rest. (I personally did the math so if it’s off blame me.)

It’s not known if this is an acceptable amount for Barroway but it is safe to assume that if the team is in financial trouble they wouldn’t want to increase that amount to the salary ceiling is $53,744,444.

The first place to look for more money is at the buyout, retained salary and Long-Term Injury Reserve contracts that will be coming off the books at the end of this season and next. Antoine Vermette’s $1,250,000 comes off at the end of this season, Mike Smith’s retained $1,500,000 salary and the 20 percent of Bolland’s contract $1,100,000 come off at the end of next season. So that’s $3,850,000 that can be added to Ekman-Larsson’s contract without making any hard decisions.

At the end of this season, the following players will have contracts to negotiate: Tobias Rieder, Brad Richardson, Anthony Duclair, Max Domi, Zac Rinaldo, Luke Schenn, Kevin Connauton, Antti Raanta and Scott Wedgewood. Domi is the only player that is an absolute must sign among the group and he is still a restricted free agent.

Signing a starting goalie and a backup is also a necessity though it doesn’t have to be Raanta or Wedgewood. So not including Domi, Raanta or Wedgewood, there is a total of $9,150,000 of additional salary that’s up in the air. That puts our running total of money to play with up to $13,000,000.

That’s before making any decisions on the 2018-19 free agents which in addition to Ekman-Larsson includes: Niklas Hjalmarsson, Jordan Martinook, Nick Cousins, Brendan Perlini, Jakob Chychrun and Christian Dvorak. There are more ‘must signs’ in this class of free agents, but all together the total dollars to reallocate is $9,490,000. The running tally comes to $22,490,000.

Ekman-Larsson is the best player on the team and a top defenseman in the league but he’s not Connor McDavid. It is unlikely that he would ask for or get a larger contract extension than McDavid whose new contract has an average annual value (AAV) of $12,500,000.

Currently, Ekman-Larsson’s contract AAV is at $5,500,000, so less than an additional $7,000,000 per year would be needed to re-sign him and maintain current salary levels. General Manager John Chayka could give OEL the same AAV as Connor McDavid and still have $15,490,000 left to re-sign this season’s and next season’s free agents without changing the total salary.

It’s no secret that the Coyotes are an internal budget team, but this isn’t the same as saying they’ll have to trade Ekman-Larsson instead of re-signing him to make payroll. From signing his little brother to bringing in his friend Hjalmarsson, all indications point to the Coyotes wanting to keep Ekman-Larsson happy and are making re-signing him a priority.

UPDATE:

Since the original posting several pieces of information have become available.

The first is the Forbes valuation of each NHL team. It includes the operating income for each NHL team and estimates that the Coyotes are operating at a loss of $19 million dollars. At this time there’s no indication that the team will be moving out players and contracts to make up for this loss. If they were looking at player salaries to make up for the losses than the team would only have $3,490,000 to re-sign everyone and difficult decisions would have to be made.

There’s good news though! Matt Cane of puckplusplus.com provides a yearly projection of free agent salaries and today he was working on updating his projections for upcoming free agents. He used pro-rated 2017-18 numbers to date and determined that OEL’s next contract to be either 1 year at 5.6 million or 6 years at 7 million. (Note: this is only an estimate and obviously can’t include the actual data from the 17-18 or 18-19 seasons so please take it with a grain of salt.)

This projection is much lower than the worst case scenario of using McDavid’s contract signing. If Ekman-Larsson were to be re-signed at $7,000,000 per year that’s a raise of $1,500,000. This would leave $20,990,000 to sign the coming free agents before any salary cuts and $1,990,000 if they did slash salary to cover losses.

Of course none of this factors in that the top ten most valuable teams and playoff teams share revenues with teams that operate at a loss so the need to slash salaries isn’t as high as someone, like Kypreos, might think. (s/t On The Forecheck)