The Avalanche filed for salary arbitration on forward Ryan O'Reilly (90). (USATSI)
The Avalanche filed for salary arbitration on forward Ryan O'Reilly (90). (USATSI)

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The Colorado Avalanche and Ryan O’Reilly have a rather rocky recent history when it comes to contract negotiations. O’Reilly, who will become a restricted free agent on July 1 is due a new deal. The Avs must give him a qualifying offer of $6.5 million to retain his rights, or sign him to a longer-term extension.  There’s a lot of money at stake here and the Avs would likely prefer to save a few bucks by avoiding that lofty qualifying offer.

According to TSN’s Bob McKenzie, the Avs have filed for club-elected salary arbitration with O’Reilly. The hearing would be held in July. Adrian Dater of the Denver Post reports that the Avs are merely filing as a precaution as they work toward a new contract with O’Reilly, which is probably going to be a tough negotiation.

Should the Avalanche make it to arbitration before a deal is reached and win (and in all likelihood, they would), O’Reilly could be awarded no less than 85 percent of last year’s contract, which was valued at $6.5 million. So the minimum O’Reilly could receive is $5.525 million. He would be able to choose a one- or two-year award.

What makes this more complicated is that O’Reilly and the Avs already have one contract dispute in their recent past.  

It’s also important to note why O’Reilly made $6.5 million last season. He was signed to an offer sheet by the Calgary Flames while he was holding out during a contract impasse with the Avalanche during the early part of the 2012-13 season. That put the Avs in a situation where they had to match the offer sheet, which created some terms unfavorable to their situation and where they value O’Reilly, but they obviously preferred that over losing him completely. His total cap hit the previous two seasons was $5 million, which is a figure the Avs are undoubtedly more comfortable with and probably would hope to stay in that range.

At only 23 years old, O’Reilly has become an important part of the Avalanche’s lineup. He had 28 goals and 64 points and is a strong two-way center. The problem is that he’s probably not worth $6.5 million at this point. The best way for the Avalanche to get that number down is to negotiate a long-term contract with O’Reilly.

The situation is further complicated by the other players the Avs need to sign as it is believed the Avalanche would like to retain pending unrestricted free agent center Paul Stastny, who is coming off a five-year deal worth $6.6 million annually. It is hard to imagine the club granting a raise from that total as Stastny’s point totals have not warranted that kind of money, but it’s hard seeing the player except much less at this point in his career with free agency just weeks away.

The other fairly interesting angle to the O’Reilly situation is that if the club does not sign him to a enw deal prior to July 1, the CBA allows other teams to sign him to an offer sheet until July 5. A team with cap room might be willing to overpay O’Reilly with the Avalanche possibly being unable or unwilling to match by then. That’s an extreme hypothetical at this point though with so much left to play out.

With the rocky negotiation last time around, the Avs could be in a fight to retain a player that should be a key piece of their core for years to come. Other teams around the NHL will certainly be watching this play out with intense interest right along with nervous Avalanche fans.