Analyzing The Ryan O’Reilly Offer Sheet

Edmonton Oilers v Colorado Avalanche

Yesterday afternoon, word came that the Calgary Flames had submitted an offer sheet for Colorado Avalanche restricted free agent Ryan O’Reilly, effectively ending the most publicized contract negotiation of the year. At an average annual value of 5 Million dollars, many people, myself included, thought the Avalanche would bid adieu to arguably their best player. The Calgary offer sheet specifics included a 1 Million dollar salary for the 2012-13 season, a 2.5 Million dollar signing bonus, and a 6.5 Million dollar salary for the 2013-14 season. Colorado wasted no time matching the Flames’ offer sheet, doing so in under 12 hours. Had the Avalanche decided to let O’Reilly walk to Alberta, the compensation would have been a 1st, 2nd, and 3rd round pick in this season’s draft.

Now, some might say that the money committed to O’Reilly is ridiculous for a player averaging under a point-per-game in 3 full NHL seasons. While I would agree, I would also argue that Flames’ GM Jay Feaster knew exactly what he was doing in submitting this offer sheet. Feaster likely knew that the Avalanche would not allow a division rival to swoop in and take their young star. The NHL’s rules for qualifying RFA’s include one often overlooked facet. Ryan O’Reilly’s final season under this contract pays him 6.5 Million, which means that following the 2014-15 season, should the Avs wish to submit a qualifying offer, it will have to START at 6.5 Million, effectively putting the screws to their salary cap numbers for the future.

From Calgary’s point of view, submitting this offer sheet is a win-win situation. Had Colorado chosen not to match the offer, they would have received a very good young player from a divisional rival. Even though the contract carries a high cap hit, the deal is only for 2 years, thus making it manageable from a cap perspective. Even though the Flames offer to O’Reilly was matched, you could also argue that they walk away feeling like winners by throwing a wrench into Colorado’s salary cap. There is now less money for a divisional rival to play with in going after free agents, or even signing their own RFA/UFA’s, especially given the qualifying offer that they will have to submit to Ryan O’Reilly after next season.

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