Could the Caps have had Nicklas Backstrom for Less?

Nicklas Backstrom a few months ago signed a ten-year, $67 million contract extension with the Capitals, one which kicks in for the 2010-2011 season. The 22-year old Backstrom, a Capital for the forseeable future and one of the top players in the world, probably signed for a bargain price. His cap hit will only be the 22nd highest (23rd maybe if Ilya Kovalchuk signs for more annually) and his actual salary will only be tied for 46th highest. I can't help but feel, though, that the Capitals might have been able to get him for less.

Consider, first, Backstrom's age--22. He would be a restricted free agent until he turns 27 as long as he plays another season (his fourth). So, in five years, he would be an unrestricted free agent.

Consider, second, that, on average, restricted free agents sign for 60% of their "market value," or the amount you'd expect them to make as an unrestricted free agent (note though that this assumes Backstrom signs with another team, since he might take a hometown discount).

Now consider Backstrom's salary breakdown. Age is at the end of the season. I've included Ovechkin's salaries as well, since this exercise could apply to him too.



So, by paying Backstrom $6 million through his RFA years, it's as if he's being valued at $10 million. Is that too much? Well, yes and no. Yes, it is, since that number is near league maximum and at a level only Ovechkin, Crosby, Lidstrom, and Keith should be beginning to approach, but no, since Backstrom sacrificed salary later in order to be paid now. What's more instructive here is the total salary. At $77 million over ten years on the free agent market, for a cap hit of $7.7 million per season, it seems reasonable.

(Ovechkin's $15 million a season is only a bit more than what is reasonable, I think, at this point at least)

Tyler Dellow looked at Backstrom before he signed the extension and found that Paul Stastny might be a good comparable. Stastny in 2009-2010 entered the first year of a 5 year extension that pays him $6.6 million a season. Stastny is 24. So, for three years, Colorado would be paying him at RFA level. If we do the same calculations and assume the same RFA discount for three years, then Stastny's cap hit comes out to $9.24 million a season, with an $11 million adjusted salary for his RFA years. Too much? We have to look at the comparables.

Revisiting the list of salaries, the players in their RFA years who make as much or more than Backstrom are as follows: Evgeni Malkin, Sidney Crosby, Alex Ovechkin, Eric Staal, Rick Nash, Dion Phaneuf, Paul Stastny, Jay Bouwmeester, Patrick Kane, Jonathan Toews, Mike Richards, Nicklas Backstrom. With these players in part setting the salary bar for Backstrom, the Capitals probably could not have gone much lower than the price they got Backstrom for. Backstrom, like we thought, is an extremely good deal.

And I didn't even count salary inflation and the rising cap.