Projecting Alex Ovechkin’s Contract Extension

Alexander Ovechkin has been a premier player in the National Hockey League for 15 years now. While he has maintained solid point totals throughout his entire career, he has also helped to grow the game not only in Washington, D.C., but all over the United States and the rest of the world. Because of this, it seemed right that when his entry-level deal expired, the Washington Capitals would compensate him accordingly, which they did when they signed him to what was the most expensive contract in the history of the NHL at the time.

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On Jan. 10, 2008, former general manager, George McPhee, and owner, Ted Leonsis, locked up their superstar left-winger to a 13-year, $124 million contract that would see him remain in the nation’s capital until the conclusion of the 2020-21 season. At the time, it seemed like that meant Ovechkin would be a Capital until his career was over. However, as we enter the playoffs, and ultimately the conclusion of the 2019-20 season, he has only one season remaining on his lucrative contract.

Of course, the Capitals plan on re-signing Ovechkin. He is the face of their franchise, and they are not a declining team by any means just yet. Ovechkin has made it clear he’d like to come back to D.C.

“Of course I would love to stay in Washington, but I would say before, we’ll see what’s going to happen,” Ovechkin said. “I said I don’t want to play for a different team than Washington,” Ovechkin told J.J. Regan of NBC Sports Washington.

Alex Ovechkin Washington Capitals
Alex Ovechkin, Washington Capitals (Jess Starr/The Hockey Writers)

Negotiations could begin as early as the end of the Capitals’ postseason, whenever that may be. This got me thinking… what is a realistic contract extension for Ovechkin?

The Facts

As previously mentioned, Ovechkin is on an expiring contract. His next contract, and the rest of the Capitals’ upcoming contracts, will really depend on what the Capitals decide to do with Braden Holtby this offseason.

Holtby’s $6.1 million contract is set to come off the books after this season’s playoffs. There has been some heated debate amongst Capitals’ faithful as to whether or not the team should re-sign Holtby or hand the starting goalie job to rookie, Ilya Samsonov. To most, it would seem like a no-brainer to re-sign the former Vezina winner. The original problem with re-signing Holtby was that, thanks to goalies like Sergei Bobrovsky signing for $10 million with the Florida Panthers this past offseason, Holtby might just cost too much money.

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However, some additional issues have come to light ever since the COVID-19 pandemic. It appears that the NHL will have what is referred to as a “flat cap,” which means that the salary cap will not raise to the $84-$88.2 million it was rumoured to go to, as reported by Sportsnet back in March. Instead, the salary cap will most likely remain at the $81.5 million it resides at now, meaning Holtby will most likely sign with another team when his contract expires.

Braden Holtby Capitals Washington
Braden Holtby, Capitals Washington (Jess Starr/The Hockey Writers)

This will give the Capitals an extra $6.1 million in cap space for the upcoming season to extend some other players on expiring contracts, such as Jonas Siegenthaler and potentially the new kid in town, Brenden Dillon. What this will also mean is that the team will not only have that $6.1 million off the books, but they will also not have Holtby’s potential $10 million-plus extension on the books. So, they have more money to re-sign Ovechkin. Don’t worry, I didn’t forget the focal point of this article.

The Factors

Let’s look at a recent contract extension given to another franchise player of the Capitals. This past January, Nicklas Backstrom inked himself a five-year, $46 million contract with an average annual value (AAV) of $9.2 million per season. He is coming off a 10-year, $67 million contract with an AAV of $6.7 million per season. This means that he received a pay raise, even though he is most likely on the back nine of his career. However, although Backstrom did indeed receive a $2.5 million raise per season, his percentage against the salary cap is almost the exact same as his former 10-year, $67 million contract.

With that contract, Backstrom occupied 11.28% of the salary cap, whereas his new contract occupies 11.29% of the cap. So, since the salary cap has risen substantially since he signed that 10-year deal, he is taking the exact same percentage out of the salary cap on his new deal despite making an additional $2.5 million. It is a raise that does not truly affect the team’s financial situation all that much.

Since these two have been joined at the hip since Backstrom arrived in D.C., it is safe to think Ovechkin would consider doing something similar in order to keep a winning team on the ice for the Capitals. What I mean is that it is unlikely that Ovechkin asks for an amount of money so high that it will tie the Capitals’ hands financially with their other player’s contracts.

So, let’s break down a potential Ovechkin contract extension.

The Numbers

As previously mentioned, Ovechkin is in the final year of his 13-year, $124 million contract. This contract has an AAV of $9,538,462. This accounts for 18.96% of Washington’s salary cap. If Ovechkin were to go the same route as Backstrom and aim for a salary that is 18.96% of the cap, he would be looking at a $15,452,400 contract extension. Although he is a generational talent and arguably the greatest goal scorer of all-time, this just doesn’t seem realistic for a player who is turning 35 this September.

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That also brings up the question of how long do you re-sign Ovechkin for? My best guess would be to sign him close to, or as long as Backstrom re-signed for. Give Ovi a three-to-five year deal that’ll keep him around until he is 38-to-40 years old. At this point, he deserves the trust of the team to not just give him a one or two-year deal. He has done enough for the franchise.

Alex Ovechkin
Washington Capitals Alex Ovechkin hoists the Stanley Cup (AP Photo/John Locher, File)

In terms of an actual dollar amount to give Ovechkin, it becomes tricky. He is still roughly a point-per-game player and was on pace to score 57 goals, which would be his second-most goals scored in a season. At age 35, that is rather spectacular. So, he deserves to be paid like a star in the league, and also deserves a bit of a raise because, like I said in regards to the term of the deal, he is the face of the Capitals.

He has done a lot for the organization and should not have to take a pay cut just because he is getting up there in age. He also shouldn’t be making the $15-plus million I mentioned before. He should be making a little more than he is now, but not too much more because even though he has been able to fight it off for so long, a decline of some kind is inevitable.

In my opinion, an ideal extension for Ovechkin would be something along the lines of a five-year contract worth roughly $50-$52.5 million over the five years. This would give him an AAV of $10-$10.5 million. Backstrom’s contract is a slight over-payment for a player who will be 38 when the contract expires, but like Ovi, he has done a lot for the franchise. If Backstrom will be overpaid, Ovechkin deserves to be overpaid.

This is not even too much of an over-payment. I could see him making north of $11 million if he really wanted and I wouldn’t be upset if he did. However, I believe Ovechkin is a player who does not play for the money. Maybe he did a little more so when he was younger, but I believe he has a burning passion to score goals and win championships. Taking a contract like I mentioned would give him a slight pay raise, but also allow some wiggle room for Washington to at least try to ice a competitive team that will continue to contend for championships. It is also the same length as Backstrom’s, so these two could ride off into the sunset together when their contracts expire.

It will be a wild time for Capitals fans when Ovechkin’s expiring contract looms closer and closer, but for now I think we should all just gear up for what will hopefully be a long postseason.

P.S. If Backstrom and Ovi want to come back for a sixth year, I say they get a one-year, two-way deal worth league minimum. It would just be best for the club. Yes, I am kidding.