On big contracts, and the fears of repeating past mistakes

The Rangers have committed $19.6 million to just a pair of players this offseason, which has grabbed the headlines and shunted the rest of the offseason to the back burner. When the Rangers signed Artemi Panarin and Jacob Trouba to their seven year deals, some viewed it as a major step in the right direction. Others were fearful that the Rangers were repeating history, and not learning from prior mistakes. This fear is certainly understood.

The Rangers of the past, specifically under the Glen Sather regime, have a history of long term contracts to old players. Leaving out the pre-salary cap era Rangers, the Blueshirts have seen a bunch of contracts blow up in their faces. UFAs Wade Redden, Chris Drury, and Brendan Smith are the big names, but Brad Richards’ deal wasn’t overly great either and the Rangers were saved by the compliance buyout period. Even when extending their own UFAs (Marc Staal, Dan Girardi), these have blown up in their faces. So there’s cause for concern, which I get.

Any long term contract comes with risk. The goal of a team is to find mitigating factors that reduce that risk. For Trouba, he’s just 25 years old, a bonafide 1RD, and has the skill set (puck mover, doesn’t throw his body around as much) that generally ages well. His seven year deal also takes him through his age-31 season, so he’s no grandpa when his contract is up. Panarin is older, and his seven year deal will expire when he’s 34 years old. We will get to that.

The biggest difference here is when the contracts end. Staal will be 34 when his six year deal ends. Girardi would have been 36 when the terms of his six year deal, pre buyout, would have ended.  Richards would have been 40, Redden 39. Smith will be 32 years old, which is the youngest on this entire list. This may not necessarily apply to Panarin, but it gives us tremendous risk mitigation for Trouba’s contract.

So how do we find ways to mitigate the risk of the Panarin deal?

The biggest difference between Panarin and the other 28 year old NHL players is that he only has four full seasons of NHL work under his belt, limiting the mileage on his body. When elite players of his caliber reach free agency, it’s usually with double the mileage and wear and tear on the body. It may not seem like much, but that should lead to less of a slow down as the contract gets into his early and mid thirties.

The other thing to remember is the skill set.. Generally speaking, elite level players age well and don’t crash and burn once they hit a certain age. Panarin is one of the best wingers in the game today, and should be for a decent portion of the contract. Yes, he’s going to begin some level of decline before the contract is up, the smart money is on that. With the cap going up an average of 3% a year until then, the cap hit is going to be less of an impact.

Which is the final point to make – the cap is going up each season, and the 3% rate I mentioned above is a conservative guess. At that rate, the cap will be at $100 million in the final year of Panarin’s deal, and lowers Panarin’s cap hit percentage to 11% from the current 14%. Cap hit percentage matters, more than raw cap hit does.

These two contracts are a far cry from the Rangers of old, who threw money at middle of the roster players. Panarin and Trouba will be at the top of the roster, and top players get top dollar. That was the biggest mistake the Rangers of the past made, who gave top dollar to middle players. That’s the key difference here, along with the age of each signing.