Why the Flames Should Offer Brodie a Long Term Contract

With the powers that be organizing themselves around the prospect development camp in town, a few bits of info are trickling out through the usual channels. One such nugget was the recent news that Calgary has offered TJ Brodie a pair of potential deals: a one year contract and a slightly longer, bridge-type deal in the same realm as Mikael Backlund’s recent contract.

Those are blandly sensible options. After all, Brodie only has 104 NHL games under his belt and it was only a 48-game half season where he started to show he might be something more than a good third pairing guy to any realistic degree. The kid doesn’t have a long track record of driving results, so there isn’t any firm evidence that he will continue to be a noteworthy player on the back-end. It’s therefore entirely possible he steps on the ice as a 23-year old defenseman this upcoming season and takes a giant step backwards.

 

 

I thought it might be Brodie’s side not interested in a longer term deal, so it’s instructive to find out it was the Flames balking at a Josi type contract for Brodie, likely for the reasons noted above. Still, it’s worth understanding that sometimes short-term "bridge" deals contain their own sorts of risk.

Namely, that the player will get drastically more expensive to retain in the near future. On the one hand, there’s the concern associated with committing dollars and term to a player who turns out to be mediocre or worse. On the other hand, there’s the possibility the player will be able to hold a team over the barrel a few years down the road. A recent object lesson in the pitfalls of bridge deals is PK Subban – the Canadiens played hardball with the young defender this past off-season (and lock-out), resulting in a contentious negotiation that eventually ended in a lowball two year deal worth $2.87M per year. Of course, Subban won the Norris trophy this season, so you can be certain Montreal will be paying out the nose to keep their young star once his bridge contract expires after next season.

Brodie isn’t going to suddenly win the Norris, but it’s a colorful illustration of how an overly cautious approach with quality young players can cost a club in the long-term. For example, if Brodie’s deal with Calgary ends up being 3 years long, he’ll be 26 when the contract expires and a season or two away from unrestricted free agency. If he develops into a top-2 defender on the club, his pricetag will be significantly higher than what he could demand today – both because his perceived value to the team would be higher, but also because natural cap inflation will inexorably raise players costs around the league as a matter of course. For instance, assuming an annual 5% growth rate in league revenues, the cap ceiling will balloon to about $74M in the summer of 2016.

This is also why the Flames could potentially benefit from signing Brodie long-term: his percentage of committed cap budget will theoretically shrink over time. Using the assumed 5% growth rate, next year a $3.5M TJ Brodie accounts for just over 5% of the Flames total available cap. In three years, that shrinks to 4.7%. In five years, he’s down to about 4%, etc.

Conversely, assuming Brodie improves and peaks around the 24-26 age range, his price will increase both by dint of his own performance and the rising cap. So, if the market for young, top-pairing defenders is roughly $3-5M this summer, it could be as much as $500k per year more for the same player in three years time thanks to inflation alone, plus whatever premium the market puts on that sort of player at the time.

Additionally, with the Flames engaging in a long-term rebuild project, it would behoove the team to be sensitive to potential future budget issues which may arise. For example, in 3-5 years, guys like Backlund, Monahan and Baertschi will probably be graduating to their next contracts. Ditto any of the other current kids who happen to stick with the big team, including Horak and Reinhart. If Johnny Gaudreau, Bill Arnold or any other future top-10 picks jump in and make an impact, the club will be looking to retain them with new deals some 3-5 years from now as well. If the current management does its job and Calgary is poised to seriously compete again starting in 2015/16, they will probably have some contract and budget concerns to deal with (god willing).

In contrast, current cap room for the club is as cheap as it’s ever been. The Flames have evacuated most of their pricey contracts and could very well be getting rid of Mike Cammalleri and Jiri Hudler in the next 12-24 months, depending on each guy’s attitude towards an extended rebuild. The Flames have more money than they can spend this year and probably next year as well. So the benefits of inking a guy like Brodie for cheap in the short-term are relatively minor.

Here’s an illustration of the potential differences between a short-term bridge deal and long-term contract could look like for the Flames going forward:

 

For the first table, I’ve assumed a 2.5M per year contract for the next 3 years. That would be the hypothetical "bridge" option. After that, I assume the team re-signs him for an additional 4 seasons.

Anyways, as you can see, Calgary does really well during the bridge, but things get a lot more expensive once that expires in 2016. Of course, the pivotal assumption here is that Brodie continues to develop as a top-2 option and settles into Oliver Ekman-Larsson territory once his bridge deal expires. It’s hard to project his next contract demands under those circumstances, so I went with Larsson’s deal ($5.5M, signed when he was an RFA) plus an extra $250k to account for assumed revenue growth and cap inflation. It could be a bit more, a lot more or a bit less, depending on other factors like demand in the market, Brodie’s point totals, etc.

The benefits become obvious when we compare the first option to the 7-year deal projections. Brodie would cost a tad more in the short-term I assume (in order to purchase some UFA years down the road), but the team would capture savings to the tune of about $6M in cap space over the same time period, again granting certain assumptions. In addition, Brodie costs the team a significantly less ($2.25M) per season in each of the years after 2015-16, a discount at a point where the Flames could theoretically be a lot more interested in their roster budgeting than they are right now.

Of course, the actual level of future cap savings depends on the degree to which Brodie improves. If he runs in place or only improves marginally, then the benefits are much more limited.

Naturally, the above scenario is based on Brodie becoming a consistent, legitimate top-pairing option for the Flames. Although he has a limited track record, this isn’t an outrageous bet given his performance last season in both the NHL and AHL. What’s more, Brodie’s underlying numbers were top notch as a rookie (albeit in lesser circumstances), meaning the kid has always had the arrows pointing in the right direction as a pro and is poised to enter his prime at the onset of his next deal*. 

Of course, there’s a chance Brodie takes a firm step back or that his performance last year was a mirage, meaning he isn’t really a future first pairing talent. In that case, the team has a mediocre player locked up for long-term and the deal would be, at best, market value for the duration. At worst, Brodie would become an immovable toxic asset because his contract is so out of step with his true value on the ice.

How you weight these probabilities will effect how you view a long-term contract. Personally I think the player is more likely to improve and grow into an above average first pairing defender, but even if Brodie settles into a capable second pairing guy over the long haul, the team is still likely getting value anywhere between $3-4M for a majority of the contract – especially if the league’s revenues grow to any notable degree over time.

Aside from the other attendant risks of long-term deals that are unpredictable (like a chronic or acute injury affecting performance for example), the only way a big time commitment to Brodie truly goes sour is if he proves to be a complete flash-in-the-pan and doesn’t rise above a third pairing guy in the league. In that case, you’re stuck with an entirely replaceable and therefore needlessly expensive bottom of the rotation until 2021. 

That’s not nothing, of course, so I understand why the team is mindful of the downside. Still, the potential upside is significant enough that it would probably be worth the gamble. 

It’s possible Brodie won’t develop much or will in fact regress as a player, but that strikes me as unlikely given his performance since turning pro, his impressive package of skills (including mobility, hockey sense and puck distribution) and his young age. In the typical player’s career arc, Brodie is on the ascension and is probable to improve – and get more expensive – than devolve. Calgary has more leverage currently because of his limited track record and the unncertainty about his future performance. Of course, once the Flames management have that certainty in hand, they’ll have to pay a lot more to retain it, which is why it would be cheaper to make a long-term play with him now.

In addition, if the rebuild goes to plan, the Flames are going to need some bargains down the road to help manage future cap concerns. It never hurts to have highly efficient (read: underpaying) deals on the books since it means you can pay more elsewhere to attract or retain other high priced talent. If Calgary is still bad in 5 years, none of this will matter much (and Feaster and company won’t be around anyways), but if the Flames have experienced their renaissance and Brodie is a cornerstone on the blueline, the price to keep him around will skyrocket at precisely the wrong time.

A long-term deal means the Flames protect themselves against Brodie’s salary inflation due to player improvement or cap growth and they also lock in a few UFA years from a guy who figures to be a meaningful piece of the team moving forward. If Feaster and company are more confident that Brodie will be a top-4 defender or better rather tha a bottom pairing defender or worse, they should be pushing for a Josi type deal.