Tyler Myers signed a 7-year contract extension worth $38.5 million on September 15. It will kick in next year once his three-year entry-level contract has expired.
In my mind, the key factor that should be used to evaluate how the Sabres did for themselves in negotiating this contract is how many years of unrestricted free agency (UFA) status Myers gave up. Under the current CBA* Myers would normally become a UFA after the 2015-16 season by virtue of having accrued 7 professional seasons, but his contract extension lasts for another three years after that.
For the first four years of his new contract, Myers would still be a restricted free agent (RFA) if he was not under contract. What that means is that in the alternate universe where he didn't sign the contract extension, the Sabres could match any deal he signed and if they chose not to then they would be compensated with draft picks from the team poaching Myers. The higher the annual cap hit of the deal alternate-universe-Myers signed with a different team, the more drafts picks the Sabres would get from that team. Here is the sliding-scale of draft pick compesnation for the 2011-2012 season:
- $1,034,249 or below: No compensation
- $1,034,250 – $1,567,043: A 3rd round draft pick.
- $1,567,044 – $3,134,088: A 2nd round draft pick.
- $3,134,089 – $4,701,131: A 1st and 3rd round draft pick.
- $4,701,132 – $6,268,175: A 1st, 2nd, and 3rd round draft pick.
- $6,268,176 – $7,835,219: Two 1st’s, a 2nd and a 3rd round draft pick.
- Over $7,835,219: Four 1st round draft picks.**
Given that Myers is already considered an elite defenceman, we can safely assume that at least one out of the other 29 teams in the league would be willing to give up a 1st and 3rd round draft pick for Myers, which corresponds to the $3,134,089 – $4,701,131 range this year. And since that team would have to give up the same number of draft picks regardless of where the contract fell in that range, it makes sense for them to make an offer near the ceiling so it would be difficult for the Sabres to match. That means alternatve-universe-Myers could expect to make about $4.7 million as an RFA just because of market pressures. I'm sure that the Sabres would match a contract that went higher than that but the point is that he is worth at least $4.7 million to the market comprised of the other 29 teams and so that figure sets a floor for his notional-salary-cap-hit
™ over the first 4 seasons of his new contract extension.
If we break down Myers's salary on a notional-salary-cap-hit basis and put $4.7 million in for the first four seasons, here is what it would look like:
2012-13 $4.7 RFA
2013-14 $4.7 RFA
2014-15 $4.7 RFA
2015-16 $4.7 RFA
2016-17 $6.5 UFA
2017-18 $6.6 UFA
2018-19 $6.6 UFA
Average $5.5
The notional-salary-cap-hit for the last three years is calculated by dividing the $19.7 million remaining on Myers's contract at that point by 3. I realize that the actual amount being paid to Myers on a year-to-year basis is very different, but for a team like the Pegula-era Sabres that would spend more than the salary cap if it could, the only relevant number is the salary cap hit.
 |
| Myers climbing Mount Kilimanjaro in the off-season |
Other than his RFA/UFA status, the other important thing to understand in order to properly evaluate Myers's new contract is inflation. Now when I say "inflation" I do not mean the ordinary economic use of the term to describe a general increase in the costs of goods and services across the economy. Instead I am talking specifically about the year-to-year increase in NHL revenues and the corresponding increase in the salary cap. The basic idea is that a dollar against the cap now is actually a lot more expensive than a dollar against the cap in the 2018-19 season because the cap is always going up.
There a bunch of different ways to go about modelling what the salary cap will be in the future and I am not anywhere near smart enough to pull most of them off. So for our purposes consider the following: since the new CBA's first year in 2005-06, the NHL salary cap has gone up approximately $4.2 million per year from $39 million to $64.3 million. By assuming that trend continues, we can add two new columns to the table above.
Year Cap Hit Status Salary Cap Salary Cap Occupied
2012-13 $4.7 RFA $68.5 6.86%
2013-14 $4.7 RFA $72.7 6.46%
2014-15 $4.7 RFA $76.9 6.11%
2015-16 $4.7 RFA $81.1 5.80%
2016-17 $6.5 UFA $85.3 7.62%
2017-18 $6.6 UFA $89.5 7.37%
2018-19 $6.6 UFA $93.7 7.04%
Since Myers's contract is so long and it does not even kick in for another year, it is a mistake to look at players with a $5.5 or $6.6 million cap hit now and compare them to what you think Myers will be like in 2018 to determine what he is overpaid. You have to look at other players occupying 7 to 7.6% of their team's salary cap now (and preferably ages 27-29) to find a fair apples-to-apples comparison to Myers during the UFA years of his contract. Right now 7.3% of the salary cap is $4.6939 or approximately $4.7 million.
Gee, $4.7 million, where have I heard that number before? Oh right! $4.7 million was the minimum amount Myers could have expected to make as an RFA next year! That means as long as 27 year-old Myers is better than 22 year-old Myers, the Sabres will be getting good value for the chunk of the salary cap he occupies and effectively under-paying a UFA.
*: The current CBA is due to expire this season which could mess everything up.
**: From year to year the type and number of draft picks stay the same but
the salary ranges go up with the average NHL salary. Assuming that the
average salary goes up again next year (as it has the last six years since the new CBA was instituted) then the ranges will go up again next year too. That means the offer sheet you would expect Myers to sign would actually be even higher than $4.7 million next year.
