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Insider Trading found their Leafs content: the Auston Matthews contract

With the Leafs wrapping up their big deadline trade a month early, the insiders still have one other Toronto topic to discuss.

2019 Honda NHL All-Star Game Photo by Bruce Bennett/Getty Images

On Insider Trading on Tuesday night, or Muzzin Day plus one, the talk turned to the negotiations for the Auston Matthews contract extension.

There have been several reports before now that Matthews and/or the Leafs want a shorter-term deal. This was reiterated again by Bob McKenzie, and he added the following:

“There is reason to believe they are making some notable progress.” He also explained that no public statements have been made by either side, and that there is a chance the deal will get done before the trade deadline, which is February 25.

McKenzie says he thinks an eight-year deal for Matthews would be in the $12.5 - $13.5 million range. The shorter deal would be more like Tavares’s contract plus or minus half a million or so.

If that speculation on money is accurate, and it’s not hard to believe that a first overall centre would believe he should command that much, then it does make sense for the Leafs to make this shorter deal. There is always risk to a player in taking less than full term, but also the potential of reward. If Matthews agents assume the cap will rise over the next five or six years, his second big contract could be very big indeed.

The closest comparables to Matthews are Connor McDavid who is on an eight by $12.5 million deal (15.72 per cent of the cap in the first year) and Jack Eichel who is on an eight by $10 million deal (12.57 per cent).

Scrolling back through the draft classes, there are very few recent top picks who did not take a seven- or eight-year deal coming of their ELC.

The most notable is Nail Yakupov, the 2012 first overall, but that wasn’t due to financial consideration.

The next first overall who didn’t go for the max, as you work back in time, is John Tavares. He took a six-year deal in 2011 that paid him $5.5 million AAV. His second big deal doubled that. At the time he took the deal the salary cap was $64.3 million for 2011-2012. His first contract works out to 8.55 per cent of the cap, which is absurdly low for a franchise centre.

The salary cap for next year is projected to be around $83 million, so 8.55 per cent of that is just over $7 million, or William Nylander’s deal. Matthews, if we’re using McKenzie’s numbers, is looking for more like 13 per cent of the cap on a shorter term or 15 per cent on a longer.

Now, when you talk cap percentages, you remove the differences due to inflation, but only at the point of the first year. In 2011, the cap jumped up by a hefty amount, fuelled in part by a new NBC television deal.

The salary cap was actually very stable after Tavares signed, with a lockout the next year creating a prorated cap on the full year that was an increase, but it dropped right back down to $64.3 million in 2013-2014.

The NBC television deal was signed in early 2011 before Tavares signed his first contract, and it was a 10-year agreement. His agent would have been expecting (correctly) fairly flat cap growth in the future at the time the deal was done, but it was still a very low AAV, and a gift to the Islanders.

The constant creeping up of the cap since 2013 has been fuelled by two things: expansion, which increases the revenue total that is halved to determine the cap ceiling, and the Rogers television deal which saw the NHL increase its revenues substantially.

Expansion is continuing and the NBC deal comes up for renewal after the 2020-2021 season. The expectation is that that deal will be a large increase, based mostly on the ratings for the recent playoffs on NBC, and that will cause the cap to rise, potentially at a higher rate than it is now.

A smart agent will bet on the cap going up enough that by the time a five- or six-year deal is up, his client will get much, much more. Not necessarily double like Tavares did, but more. That’s enough to override the status and security of an eight-year deal and make a player want to play a different kind of gamble.

The Leafs, of course, have a second motive beyond their cap concerns next year for favouring a shorter deal. They also want to curb the inflationary effect on Mitch Marner’s contract that a monster Matthews deal could have.

Steven Stamkos took a five-year deal, and then re-signed for a modest $1 million raise.

Two other players who took five-year deals at first were Patrick Kane and Sidney Crosby. Kane got a raise on his second deal, but Sid is Sid and he’s been paid $8.7 million AAV since the day he came off his ELC.

Tavares is the odd man out because he’s the only player here who moved teams. And that is the way to get the most money. Stamkos chose differently, Crosby was never a question, and most players of this calibre never change teams. If this rumoured shorter deal happens, in five or six years, Matthews will decide what to do based on who he is then. Trust me, right now, he can’t imagine that man, and any plans he has now are just fantasies.

The Leafs will decide as well, based on who they are then. And anything can happen between now and then that might change how everyone feels about where their interests lie.

In the meantime, those numbers are a bucket of ice cold water on anyone’s fantasy trading to further revamp the defence corps. Some kind of hard decision will need to be made next summer to figure out who fits under the cap and who doesn’t once Matthews and Marner’s numbers are known. There is more than one path to get under that cap, and anyone who tells you it can’t be done, has forgotten that it has to be done.

For any other player out there thinking they’d like a job on the Leafs, they need to be willing to take a really low salary. Next year’s July 1 free agent frenzy is going to be boring around here.