One of the more interesting sagas of this offseason in the NHL is that of the ongoing contract negotiations between the Colorado Avalanche and restricted free-agent center Ryan O'Reilly . The two sides have not been able to reach an agreement according to Adrian Dater of the Denver Post, meaning the contract talks are likely headed to an arbitration hearing on July 23.
The Avalanche pulled an unusual move earlier this summer when they filed for team-elected salary arbitration. That was due to the fact that the qualifying offer they would have had to extend O'Reilly to remain the team's property as a free agent was $6.5 million. In that regard, it's completely understandable why the Avs were trying to protect themselves by exercising their right to team-elected arbitration, but it does suggest that talks with their restricted free agent center have been difficult.
This uncomfortable process has been two years in the making after the last contract negotiation didn't get resolved until the Calgary Flames signed O'Reilly to an offer sheet that was then matched by Colorado after the forward held out for a portion of the season. The $10 million deal paid O'Reilly $6.5 million last season. He likely wants to stay in that range going forward.
That would likely be too rich for the Avalanche's liking and is probably an overpay for the young veteran forward. A way to avoid O'Reilly coming away with an unfavorable cap hit is to reach a long-term agreement in which the annual average is below the $5.5 million mark.
Per the rules of the CBA, O'Reilly can make no less than $5.525 million next season as the arbitrator can award no less than 85 percent of the player's contract's actual value in the preceding year. Though O'Reilly made $6.5 million last season, he carried a $5 million cap hit, which is a much more comfortable figure for the Avs for sure. The player can then choose to take a one-year or two-year award.
In O'Reilly's case, accepting a one-year award would put us right back here next year as he is not eligible to hit unrestricted free agency until the end of the 2015-16 season, which he would get to if he accepted a two-year award.
Odds are, if O'Reilly and the Avalanche are still at an impasse before the hearing, the 23-year-old forward is looking at making less money for a season or two. It's hard to see an arbitrator valuating O'Reilly at anything above $6 million and it's probably more likely he'll end up closer to that $5.5 million figure when looking at comparable players.
As good as he's been, O'Reilly does not stack up favorably against some other players making $6 million or less in his age range like Jamie Benn, Tyler Seguin, Taylor Hall, John Tavares and his own teammate, Matt Duchene.
O'Reilly did have 28 goals and 64 points in 80 games last year, but he lagged behind each of those players in terms of production and role on his team.
This still leaves the door open for an unhappy O'Reilly to be traded if things get bad enough between the two parties. He's the type of player that undoubtedly would bring in heavy interest coming out of a rather terrific year in Colorado. That should be the last resort for the Avs, however, particularly after losing Paul Stastny to free agency.
This is going to continue to be a fascinating situation to monitor as it progresses this summer.