Now that Teemu Kivihalme has reminded us that contract extensions can be signed for next season, thoughts will naturally turn to the rest of the Maple Leafs RFAs who are on expiring contracts. One of those players rises above all the others in importance. Travis Dermott needs a new deal.
Dermott is not eligible for arbitration, so his contract negotiation will follow this timeline:
- Any time between now and the start of next season, Dermott can be signed to an extension of any sort of term and AAV that meets the rules of the CBA.
- October 6 or four days after a the Leafs play their last playoff game, whichever is later, Qualifying Offers are due to the Leafs RFAs.
- October 9 or seven days after the Stanley Cup Final, at noon Toronto time, Qualifying Offers can be accepted by the player.
- At exactly the same time, the signing period for RFAs and UFAs begins. Free Agency will be upon us.
- October 18 or 16 days after the Stanley Cup Final, whichever is later, is when Qualifying Offers expire at 5 pm.
There will be a date determined for the last day an RFA may sign a contract once the actual start date of the 2020-2021 season is known as a replacement for the usual December 1 signing deadline.
CapFriendly has updated their Qualifying Offer calculator to have all the new rules, and the Qualifying Offer for Dermott will be: A one-way deal with a salary of $874,125.
Evolving Hockey’s contract projection tool has Travis Dermott as likely to get a 2-year term at an AAV of $1.788 million. I’m going to round that off to $1.8 to make my life easier.
Dermott shouldn’t waste his time negotiating for something like $1.8 million, he should just take the Qualifying Offer.
Reason one: Andreas Johnsson
When confronted with the same set of circumstances and a minimal track record of meaningful play to base his negotiating on, Johnsson took his low QO, and moverd his negotiating to the next summer when he had arbitration rights, and he now earns $3.4 million.
If Dermott takes his QO, he’s also got arbitration rights next year.
Reason two: Escrow
Escrow holdbacks next season will be 20%. In 2021-22, the rate will be somewhere between 14% and 16% depending on actual revenue, and in the following year it will be 10%. The chances of any of that being returned to the player, particularly in the first two big-hit seasons, are very small. All of this year’s escrow is gone, and there is a debt outstanding which has to be paid out of future escrow.
If we compare Dermott’s actual take home salary if he takes his Qualifying Offer followed by two years at that $1.8 million vs two years at that amount followed we get a hint of how this plays out:
Escrow and Salary over three years
|Year||Escrow||QO plus 2 years||2 years|
|Year||Escrow||QO plus 2 years||2 years|
Assuming that two-year deal was even on offer from the Leafs, taking it now does absolutely pay more once you fill in for the question marks, as long as the number you fill in is at least $980,000. But the two things no one knows now is how much he’d get in that third year in the scenario on the right, and how much he’d really get next offseason with arbitration rights in the scenario on the left. That $1.8 million might be really low, or it might be a bit high depending on how the next season plays out.
In the Qualifying Offer scenario, Dermott has the opportunity to do the Johnsson manoever and get even more than what he could command now at a time when the escrow is dropping, and he gets to keep more of it.
Reason three: Johnsson again
Dermott, presumably, wants to play for the Maple Leafs. A quick calculation of their cap situation for the next few years shows a problem. There isn’t room for another third-pairing defender making over a million along with Justin Holl, and there are a lot of prospects coming on. There is room next season for Dermott’s Qualifying Offer, but if the Leafs choose to give him something like double that on a term deal, they will either be trading someone like Johnsson, or they’ll be committing to running a 20- or 21-man roster all season.
Johnsson signed his current deal while both he and the Leafs expected a sharply rising salary cap. Dermott lives in this new world where that’s unlikely to happen, and to get a job on the Leafs, you either need to be able to hold out for $11 million, or you need to work cheap. It’s not fair, but working cheap while escrow is high comes with a little mitigation.
Reason four: Is Dermott more than a third-pairing defender?
Dermott thinks so. It’s his job to think so, and no matter what the Leafs think, it’s their job to plan for him to not be. There’s no reason for the Leafs to offer him term of any kind now at anything like what he will believe he can earn. There’s every reason for him to believe he’ll get more next offseason, and he’ll blow that chart of mine out of the water with a much bigger deal. Or he’ll be on some other team that can afford to pay depth defenders more than a prospect gets. Either way, in his mind, he’ll win by taking the QO, and in the Leafs minds, they can’t lose if they just force him into a corner and make him take it.
Reason five: They’re all the same reason
To maximize his probability of getting the most actual money in his bank account on the day he retires, taking the gamble on his own ability now is the right play. If he takes a wishy-washy term deal like Pierre Engvall did, he’s saying he’s peaked while possibly making himself too expensive to stay in Toronto. If he gambles and fails to impress much, he’s not really any worse off given the escrow bite than if he’d taken this imaginary term deal.
But the main reason he should take the QO is because he’s not likely to get an offer of $1.8 million from the cap-strapped Maple Leafs. Not this year.