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Thursday, August 18, 2011

LA Kings Drew Doughty Contract: Holdout, Trade or Re-sign? And for What?

Update 9/28/11:
Helene Elliott's latest report on Drew Doughty includes an extensive interview with Tim Leiweke, president of the Kings’ parent company, AEG. In the article, Leiweke makes what amounts to a personal plea to Doughty to not listen to his agent, mixed in with some clever PR for his management team:

“What Dean has said and what I’m going to reiterate on behalf of ownership is that we’re going to be a cap team. This is not a matter of the Kings or AEG saving money. That is zero of the conflict here...This is a matter of allocation of dollars and the fight here is how do we ultimately respect Drew. And we respect the world out of Drew. I think the world of the kid. He is the cornerstone of the franchise long term and we’re not going to let him go anywhere. Dean’s 100% [correct] that a trade solution’s not in the cards…
Dean Lombardi & Tim Leiweke
 "The difference of opinion here is that Drew may see this as disrespect, and it’s not at all. We have offered to make him the fourth-highest-paid defenseman in the NHL and equal the highest-paid King in our history. When I look at that, I think there either has to be a miscommunication or Drew’s a 21-year-old and probably hasn’t done what he may need to do here, which is stand up and take charge of the decision...We love Drew. I love Drew personally. I think he’s a great kid and I think he’s going to be a great player in the league long-term. That said, what Dean’s offered him we’re 100% supportive and in fact, I think Dean was aggressive. And if our mistake is we offered it too quick, then Drew needs to take a step back and understand it’s not about a lack of negotiation. The fact is we offered it quickly because we didn’t want to negotiate. We had other things going on this summer. And so I support Dean 100%. If someone’s whispering in Drew’s ear that ownership is going to get impatient and blink, they’re wrong.

"I think it’s the allocation issue and I’m not saying Dean doesn’t have the right to budge here. That’s Dean’s decision and I’ll support it...I don’t know if Dean’s going to do that because it gets back to the same problem. We don’t have that much money left in our cap right now and so when you factor in injuries and you factor in February moves at the trade deadline, we’re cutting it tight. More importantly, tell me which player we’re now starting to carve this $300,000 or $400,000 out of. We’re carving it out of someone’s salary next year and it’s no secret we’ve got some restricted and unrestricted free agents that we have to deal with in the next two years. So who is it on this team we go look at and say, ‘We just gave Drew your extra money, because $6.8 [million] wasn’t good enough'? That’s not good for team chemistry. I support Dean on what he’s trying to do here. He’s not trying to be cheap. He’s not trying to be disrespectful. We love Drew. It’s an allocation issue here and everyone, including most of the players I’ve run into in the last week, they get that we are desperate to try to keep enough resources to keep this team together long term. So from my standpoint I want Drew to come back. Please, Drew, come back. We love you...Let’s not destroy this relationship or his reputation or our reputation over something like this. We need to get this done. He needs to get back in here. And we need to get him ready to go to Europe. He should not miss that trip. It would mean that we would begin to move on without him and that’s a bad thing.”

Elliott added "Doughty is believed to be seeking over $7 million per season." There is no longer any reason  to preface this speculation with "believed". Leiweke pretty much spilled the beans. The Kings are offering $6.8M average per year and Doughty wants about $350K average per year more than that.

With this attempt to talk to Doughty through the media, Leiweke was using the old carrot and the stick tactic to compel Doughty to take LA's offer. The carrot was all the "we love you" and "I love you" talk. The stick was the bit at the end where he said they "would begin to move on without [Doughty] and that's a bad thing."

What Leiweke is being coy about is how many years the LA Kings offer of $6.8 required Doughty to commit to. Elliott stated, "The Kings' offer, believed to be for six to eight years." If that's the case, I don't blame Doughty for holding out for more. Those UFA years beyond the first 4 RFA years are worth enough to push the annual average north of $7M (see the Doughty contract escalator table below).

Now if Dean Lombardi offered Doughty $6.8M on a four or five year deal, I'm sure this negotiation would be over quite quickly. But the fact is, the LA Kings management team is wanting it both ways. They want the lower cap hit AND they want the player to commit to a term that would have Doughty miss out on a bigger pay day to make up for it. 

Now senior management thinks they can get Doughty to go over the head of his agent, Don Meehan, and take their offer. Perhaps Doughty will bite. But my recommendation would be to stick it out, kid. If "allocation" is truly that important to Lombardi, he'll offer a shorter term that better matches the $6.8M AAV. If not, he should pay Doughty what the market has set for those UFA years from an all-star blueliner about $8M.

Personally, I think the Kings should go with the shorter term as a matter of protection for themselves. I'm not convinced Doughty is going to attain Norris trophy status on a consistent basis. In fact, his slight regression last season over his Norris nominated season of 2009-10 follows the trend he set in his junior days of up and down seasons. If the Kings are also worried about Doughty ability to play up to a contract that has him being paid $8M per UFA year, then a 5 year, $6.75M contract should be a win-win scenario.   

Update 9/14/11:
@TSNBobMcKenzie Bob McKenzie Tweet:
LAK adamant on 2 things with Doughty: deal needs to be at least 7 years long and cannot be more than $6.8M, same salary as Kopitar.
IMO, the $6.8M rate at that length is just okay. As for the term, if the Kings remain insistent on 7 years, Doughty will likely wait it out until mgmt lowers their demands to something around 5 years (at a rate of at least $6.5M per). That would be more in line with the 5 year term Tyler Myers is getting from Buffalo on his rumored early extension. If the Myers deal gets done in the next couple days, it will be difficult for the Kings to continue to justify their rumored position (7-years but at no more than $6.8M) at the opening of training camps even if Doughty is not there.

Update 9/11/11:
Helene Elliott's latest article has a couple of fresh quotes from Lombardi who states the obvious, the points of contention are term and dollars. Elliott also states that Kypreos' tweet last week was about an offer rejected much earlier in negotiations. Here's an excerpt:
"I still have hope he'll be here Friday (pre-training camp physicals). I don't know if I expect it but I have hope," Lombardi said after fielding questions from a crowd of about 3,000. "It's better than no hope."
Lombardi said he spoke to Doughty's agent, Don Meehan, three times last week and agreed they won't comment publicly. But when asked what the problem is, Lombardi responded quickly. "You can figure out the problem. It's how much and length," he said. "That's the two issues. … There's a couple of variables."
He said they haven't discussed no-trade or no-move clauses. He also said he might speak to Doughty directly to convey his commitment to winning and willingness to pay Doughty fairly.
A report last week by Nick Kypreos of Canada's Sportsnet network said Doughty rejected a nine-year, $61.2-million offer. However, that was proposed early in negotiations and is longer than Doughty wants.

Update 9/8/11:
RealKyper Nick Kypreos Tweet:
Where does LA goes next after Doughty rejects summer offers including 9 yrs/61.2M. The 6.8M aav would have matched Kopitar as #Kings highest

Though that's obviously a lot of money, by my projections, its a bit of an underpayment for Doughty's final two or three UFA years. However, the upside is the level of security he'd have -- a guaranteed 9 year contract! Having rejected it though, it may be reasonable to assume Doughty is looking for something shorter -- perhaps a Stamkos type deal where he commits only his RFA years to the current club. After which, he'd have the choice to move on or stay as a UFA.

Update 8/30/11:
LA Times reporter, Helene Elliott confirmed today that LA Kings GM Dean Lombardi recently made an offer to his RFA blueliner Drew Doughty. Lombardi said:
"(The offer) codifies what we've been talking about for a while...(provides) different lengths for (Doughty) to consider...We're waiting to hear back from (Doughty and his agent Don Meehan). They said they'd get back to us in a day or two...So in terms of distance, I'll probably have a better handle on that when we hear back...Everything's been amicable...but we were so far apart it never really got to the fine tuning." 
Elliott adds her own speculation:
The Kings made an offer to Doughty before July 1...Lombardi said he spoke Monday with Doughty's agent, Don Meehan, and made an (new) offer...He wouldn't specify a salary figure but a long-term deal could vault Doughty above center Anze Kopitar's team-leading average annual value of $6.8 million...likely six to eight years.

Original article continued:

Drew Doughty
There has been a lot of speculation and rumors in LA about Drew Doughty and his contractual status. Has he re-signed or does he have an incredible offer in front of him? Is he holding out? Will he be offer-sheeted? Will he be traded if things get worse?

The fourth year pro, Doughty is coming off three solid NHL seasons, two as a teenager, including a sophomore year that earned him a Norris Trophy nomination.

Thus, considering his status as an elite NHL defenseman at such a tender age, the intense scrutiny regarding the status of his contract is certainly expected -- but sometimes unfortunately many times it can take on a negative undertone. It didn't help that a senior person in the LA Kings management group made some controversial remarks earlier this month.

Jack Ferreira

LAK Asst GM Jack Ferreira perhaps spoke out of turn when he had the following to say to southern California newspaper that was doing  profile piece on him:
"This year we were up in Toronto for the scouting combine and Dean had some meetings with Newport Sports (Don Meehan)...He came back and they were discussing what went on, and I just looked at him and said, 'Dean, they don't want to make a deal. They're not ready to make a deal.' That's gonna be a tough one. I would not be surprised if he was a holdout. I went through it with Paul Kariya, and Dean's been through it."

Just yesterday, Doughty responded with the following during a TV interview, transcribed here:
"For all those people that think I'm holding out and all these things, there so many rumors floating around and I haven't seen one true one...Like I said, its going to get done, its just a mater of time...No ones panicking -- there's no urgency. I'm sure it will be done before the season, so there's no worries about it."

So there you go, judging by his statement and by his demeanor, Doughty doesn't sound like a player who will put into jeopardy any games (nor even training camp) by trying to hold out for ideal contract terms. In my opinion, the perceived delay in signing is all just a part of the negotiating process. Doughty said it himself in the same interview, "We kind of had a number ourselves in place and I'm sure LA has a number as well." When crunch time rolls around, both sides will get back to the table and with renewed urgency and hammer out a deal.

My question is, what number does each side have in mind? Doughty stated that "the (Shea) Weber deal really has nothing to do with it." So I'm not to sure if this is a situation where he's asking for the moon (~$7.5M), like certain Kings bloggers have been suggesting recently via their "sources".

Don Meehan
To get a better feel for what those true "numbers," perhaps we need to find a better comparable. In my opinion, Dion Phaneuf, seems like the best choice. Phaneuf like Doughty, is one of those rare blueliners to shoot out of the gates scoring at an near elite level, immediately after graduating from junior hockey. That type of production level continued to the conclusion of Phaeuf's rookie contract.

Doughty has seen similar success in his first three seasons, perhaps with a few more peaks and valleys. Nevertheless, Phaneuf's contact should serve us well as a guide. Coincidentally, Phaneuf's contract was negotiated by super agent, Don Meehan, who is also representing Doughty in these negotiations.  I would bet he's using Phaneuf's deal as a bit of a template for Doughty's.

Upon expiry of his Entry Level (rookie) Contract, Phaneuf was justifibly rewarded with a lucrative 6 year, $39M contract, signed in 2008. He scored about 160 points in three near complete seasons. Doughty has about 130 points during his first three seasons (see detailed stats at the bottom of this post).

Before we can utilize Phaneuf's deal as a template for Drew Doughty, we'll need to take into consideration the dynamics of that earlier salary cap period. For instance, in 2008 the NHL cap was significantly lower. However, it was rising much quicker on an annual basis, than more recent times. As a results, owners, managers, players, agents and fans had a sense that the cap was going to climb at that rate indefinitely -- see table below.

NHL Salary Cap Analysis
SeasonNHL CapPeriodicPerdc ChngYr over Yr
2005-06 $   39,000,000-
2006-07 $   44,000,00012.8%
2007-08 $   50,300,00022%7.5%14.3%
2008-09 $   56,700,00012.7%
2009-10 $   56,800,0000.2%
2010-11 $   59,400,0004.6%
2011-12 $   64,300,00013%3.4%8.2%
Gray area (pre-Phaneuf deal); Blue area (post-Phneuf deal)

Phaneuf's deal was signed in 2008, just a year short of the big drop in the year to year growth rate of the cap. That sort of staggering rise (22% from the first year of the salary cap era) was undoubtedly taken into consideration by Phaneuf's agent, Don Meehan, especially when calculating how much the contract's annual salary should grow year over year.

Dion Phaneuf
Since Phaneuf's deal was signed, the cap, however, has only grown 13% overall. My sense is that even using that as an inflation rate to apply against Phaneuf's salary to come up with a base salary amount for Doughty's contract is quite generous. Nevertheless, lets do that to see if we can come up with a range (Kings management's number vs Meehan's Doughty number) since Meehan is likely playing a cap inflation card as part of his negotiating strategy. In fact, the inflation component part may may just be the current sticking point in the Doughty negotiations.

To determine a yearly inflation, I took the 13% and divided it by the number of years it represented (four years). That caluclation gave me 3.4% as an annual inflation rate (and as an escalator for subsequent years) to use on Phaneuf contract to determine Doughty's.

Dion Phaneuf Contract Details (DOB: Apr 10 1985)
SeasonAge Jul 1YearAnnl SalarySalary SortedCap Hit*
*sub Cap Hits represent annual average of both RFA yrs (white) & UFA yrs (gray)

I took the lowest annual salary amount in Phaneuf's contract as the base ($5.5M), and multiplied it by 3.4%. That gave me $6.237M as a base starting point for Doughty's contract. I then used that 3.4% inflation rate  again for every subsequent year, with the previous year's salary as a base. For the UFA years though, I did that same but with a different base number. I used $8M as the UFA base, since that seems to be the going rate for UFA tier one d-men these days. And in addition to being a nice round number, $8M is conveniently just over 13% higher than what Phaneuf theoretically received for his UFA years.

Drew Doughty Contract Escalator (DOB: Dec 8 1989)
SeasonAge Jul 1YearEsclating Sal.Sal TotalsCap Hits
2016-17266$8,268,078 $42,499,224  $7,083,204 

Once inflation and escalators were applied, I now had a functional range. On one end is Phaneuf's contract numbers ($6.5Mx6Y), which I'm guessing may be LA management's number. At the other pole is the inflation adjusted version (~$7Mx6Y), which I'm thinking Meehan and Doughty have in mind as a number.

Dean Lombardi
Since these recent rumors suggested Kings management offered two deals, one being a seven year deal and another being a nine year deal, I projected that far out as well to see if these rumors are based in any sort of logic. My conclusion, I can't find the logic according to my analysis.

Firstly, based on my cap inflation adjusted numbers, I have a hard time believing the Kings GM, Dean Lombardi, presented Doughty with a deal worth $52M over 7Y. That figure goes beyond any sort of precedence that has been set for a star RFA defenseman, even after an inflation adjustment. My guess is, if Doughty was offered anywhere close to that, he would have taken it and ran, as it goes well beyond any logical number that Doughty and Meehan must have in mind.

Secondly, rumor's source reported that the 9 year offer had a cap hit signficantly lower than the 7 year offer. Well that makes the rumor even harder to believe is that the. It just doesn't make any sense. At the nine year mark, Meehan is going to consider Doughty to still be in his prime. That's not the typical time the annual amount starts to start to drop. Typically you wouldn't see such a trend until the player is well into his thirties. If anything, the annual average should rise as the offer increases over seven years up until at least the 12 year mark.

Now I'm no agent, and I'm sure an agents projections take into consideration more variables. Nonetheless, even my rudimentary math demonstrates a low probability of such an offer being on the table (especially one with a lower cap hit for the nine year version. Bottom line, I think the "source" is playing with the bloggers for some reason. I think Helene Elliott trying to nip these rumors in the bud was quite justified considering my calculations.

Thus, until a deal is announced, I'm going to use a more conservative figure (Dion Phaneuf's $6.5M cap hit) for Doughty, in my LA Kings cap projections.

Los Angeles Kings
Left WingCapGPPTOICenterCapGPPTOIRight WingCapGPPTOI
Dustin Penner$4.3814518:07Anze Kopitar$6.8757321:35Dustin Brown$3.2825719:22
Simon Gagne$3.5634016:53Mike Richards$5.8816618:52Justin Williams$3.7735717:15
Brad Richardson$1.2681911:45Jarret Stoll$3.6824317:09Scott Parse$0.95413:47
Kyle Clifford$0.976149:30A. Loktionov$0.819714:45Trevor Lewis$0.7721311:29
Colin Fraser$0.867510:16Kevin Westgarth$0.55635:26
Left DefenseCapGPPTOIRight DefenseCapGPPTOIGoalCapGPWSV%
Jack Johnson$4.4824223:11Drew Doughty*6.5764025:38Jon Quick$1.86135.918
Rob Scuderi$3.4821520:17Willie Mitchell$3.5571021:48Jon Bernier$1.32511.913
Alec Martinez$0.7601615:16Matt Greene$3.0711116:58
Davis Drewiske$0.638514:21
Salary Cap$64,300,000
Cap Payroll$61,672,976Bonuses: $348K
Cap Space$2,627,024Roster Size: 23 players

Mike Richards and Michal Handzus
Looking at the depth chart, the team look a whole lot stronger with the new acquired Mike Richards slotted in as the 1B center. Injuries could play a big role in determining how well LA does during the regular season. Richards former PHI teammates, and now Kings potential linemates (based on TOI), Simon Gagne and Justin Williams, both have missed large portions of the regular season due to injuries. Also, the third line right winger, practically missed the entire season last year because of injury. Its likely then, LA's depth is going to be tested.

Losing Wayne Simmonds to PHI (part of Richards deal) certainly hurts from a depth perspective. Former promising prospect, Oscar Moller left for Sweden because he couldn't seem to overcome his "tweener" status (almost good enought to be a top sixer but not quite, and not an effective NHL bottom sixer either). Ryan Smyth had to be returned to EDM because for cap reasons (and his desire to go back home). Here are the players they chose not to retain:

Relinquished Players
LRyan Smyth82232447-118:02Trade, EDM
CMichal Handzus82121830-517:20UFA, SJS
RWayne Simmonds80141630-213:27Trade, PHI
LAlexei Ponikarovsky6151015112:35UFA, KHL
ROscar Moller13134-114:35UFA, SEL
CBrayden Schenn8022-111:14Trade, PHI
RJohn Zeiler4000-15:36UFA, GER
DPeter Harrold19134312:15UFA, NJD

Fortunately for LA, Kyle Clifford was able to stick with the club all year and maybe ready to leap forward and take on the responsibility of third line minutes. Andrei Loktionov also got into a fair number of games to acclimatize to the NHL. Dwight King got a cup of coffee in the NHL, but maybe ready to step as a fourth liner. Any of those three could be utilized as depth players and injury fill-ins as players inevitably start going down.

As for the blueline could use another vet who can potentially log plenty of minutes in case of injury to any of the current top four. Alec Martinez and Davis Drewiske are adequate all things being equal, but if multiple injuries strike, without anyone else, LA will have to dip into the farm for Jake Muzzin or untested players such Vyacheslav Voynov and Thomas Hickey.

Paul Mara
If LA is to grab a UFA, players like Bryan McCabe, Chris Campoli and Anton Stralman may be considered. However, their potential ~$2M cap hits may not allow LA to bank any space during the season to add an impact player at the trade deadline.  Therefore, a blueliner like Paul Mara may be a better alternative since he can be had for ~$1M. All of the above are left handed shooters except for Stralman. The current d-corp has two 'righties' in Doughty and Green.

Overall, I'm impressed with this LA Kings lineup on paper. The goaltending is adequate to very good (especially if Jonathan Bernier can fulfill his potential). The defense is solid even if not deep on experience. LA is strong down the middle (with Jarret Stoll as the 3rd line center) -- many times an important ingredient to lasting playoff success. The first line wingers have a lot of bulk (with Dustin Brown is a hitting machine). The second line wingers may be a bit fragile, but as long as they are healthy for the playoffs, the Kings should have no problem making the post season cut even without them for stretches at a time.

Bottom line, the Kings are better than last season and could make some serious noise this year especially if they are able to add a couple pieces by the trade deadline.

Ethan Moreau
Update 8/21/11:
@mayorNHL LAKings Mayor Twitter:
As discussed this am on ManorsManor - - it's now official, Ethan Moreau signing 1yr deal w/ LA Kings, pending physical

@helenenothelen Helene Elliott Twitter:
Kings and F Ethan Moreau verbally agree on 1-year, $600,000 deal pending results of a physical he will undergo on Monday.

Update 8/22/11:
@helenenothelen Helene Elliott Twitter:
Ethan Moreau passed physical, expected to sign with Kings tomorrow, club spokesman says

Dion Phaneuf

Drew Doughty


  1. Wow! they're really on the go! looking forward to see Kings team on top! excited to get my Los Angeles Kings Tickets