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Erik Karlsson says he wants ‘market value’ on his next contract. How much is that?

Karlsson’s next deal could be the largest in the NHL when it’s done.

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NHL: New York Islanders at Ottawa Senators Marc DesRosiers-USA TODAY Sports

There’s more than a year until Erik Karlsson can hit the open market as a free agent, but he’s already saying that there will be no hometown discount for the Ottawa Senators. “When I go to market, I’m going to get what I’m worth, and it’s going to be no less, no matter where I’m going,” Karlsson told the Ottawa Sun on Thursday.

That’s a strong indication of how Karlsson plans to approach what could be his final opportunity to land a monster long-term contract. The two-time Norris Trophy winner may enjoy playing in Ottawa, but he’s looking to get paid. And for a team in a smaller market that typically doesn’t keep up with the big spenders, it’s fair to wonder what it means for the future.

Losing Karlsson would be devastating for the Senators. He’s been their best player, and one of the best players in the entire league, since arriving as a teenager in 2009. But he’s been playing on just a $6.5 million cap hit under the seven-year extension he signed in 2012. In the current climate, that’s a complete bargain, and it seems that Karlsson knows it. As a result, he’s looking for a major raise on his next contract.

But what would it take for the Senators to lock up Karlsson again? We already know that something close to his previous deal won’t cut it. The salary cap is significantly higher than in 2012, and guys like Connor McDavid and Carey Price have recently began to push the market for stars into a new echelon.

By all indications, Karlsson is a lock for max term and has a real shot at becoming the highest-paid player in the NHL in 2019. Here’s a look at how contract talks might get there.

Who are Karlsson’s comparable players?

One of the first steps that occurs in contract negotiations is typically finding comparables for the player in question. There’s usually a precedent set for a certain type of player in a given situation, and both parties involved will try to point to previous data points in order to explain why their offer is valued the way it is.

For Karlsson, the comparables are the top defensemen in the league. So in terms of annual cap hit, that would be P.K. Subban ($9 million), Brent Burns ($8 million), and Victor Hedman ($7.875 million).

However, it’s worth noting here that Karlsson is really in a class of his own. If those are the comparables, then those should merely be the starting point for a contract that surpasses all of them.

Among NHL defensemen over the past four-plus seasons, Karlsson has 51 more assists and 81 more points than anyone else. He’s also first in even strength goals, shots on goal, and 5-on-5 Game Score, per Corsica. At even strength, nobody comes close to the Senators star from the back end.

Karlsson is the best defenseman in the NHL, and if he wants to be paid accordingly, that’s going to push him well above any other player at the position. His comments are particularly interesting after another potential 2019 free agent, Kings defenseman Drew Doughty, told The Athletic that he’s hoping to reset the market for star blue liners in less than two years. “Right now, I guess we’d be gauging off what P.K. [Subban] makes,” Doughty said of him and Karlsson. “I think both of us deserve quite a bit more than that.”

There’s your starting point. Eight years at “quite a bit more” than the $9 million annual cap hit given to Subban. And that’s assuming that Karlsson doesn’t decide that he’s actually worth more than Doughty, too.

Setting a new market

Going off of that starting point, the next question will be just how much more than his peers Karlsson deserves to get. This is probably the point where you start looking at other players, regardless of position, and how much of the salary cap they’re eating up.

The biggest contract in the league now, based on cap hit, is Connor McDavid’s eight-year extension with a $12.5 million cap hit. Assuming the salary cap increases from $75 million to, say $78 million, then McDavid would be eating up 16 percent of the Oilers’ salary cap. Per the collective bargaining agreement, the most salary cap space one player can fill in a season is 20 percent.

We’re talking about a deal that would go into effect in 2019-20, however, when the cap will likely be even higher. So even if you assume Karlsson’s content to pursue a cap percentage similar to McDavid’s 16 percent, if that’s under an $81 million salary cap, Karlsson would be getting closer to $13 million annually.

And again, that’s assuming that Karlsson would be fine not pursuing the max of 20 percent. If he truly wants to go for as much money as possible, that could conceivably mean an annual cap hit that pushes past $15 million.

What should Ottawa do?

This is going to be a defining decision for the next era of Senators hockey. Karlsson is arguably the best player in franchise history, and losing him would likely signal the need to rebuild around a younger core.

At this point, the Senators really have three choices:

(a) Give in to Karlsson’s demands and re-sign him at a premium price
(b) Trade him next summer with one year left on his current deal
(c) Let him play out the contract in hopes of winning a Cup, which might convince him to stay

The obvious one for the team would be to just re-sign Karlsson and let the good times roll. However, that’s complicated by the fact that in 2019-20, Ottawa will still have nearly $20 million committed to Bobby Ryan, Dion Phaneuf, and a 38-year-old Craig Anderson. Paying Karlsson what he’s worth would be a lot easier if there wasn’t all that money tied up in overpaid veterans.

But losing Karlsson as a result of that would be a brutal development for the team, which underscores why this is going to be such a difficult situation. Karlsson wants to get paid, and he deserves it. Somebody is going to pay up to push the defenseman market to a new level.