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Sharks set to make Karlsson NHL’s highest-paid defenseman – but San Jose is now in for a painful goodbye

Erik Karlsson is set to ink an eight-year deal with the Sharks that will pay him upwards of $11-million per season and keep him off the open market. But it's what comes next in San Jose that is now worth watching.

Some were of the mind that the math simply couldn’t work out. With Erik Karlsson set to become an unrestricted free agent and a laundry list of Sharks in need of new pacts – captain Joe Pavelski, breakout scorer Timo Meier, deadline acquisition Gustav Nyquist and veteran Joe Thornton among them – it didn’t appear there was any way San Jose could afford to hold on to the all-world offensive defenseman while also managing to retain their other notable free agents.

But that hasn’t stopped Sharks GM Doug Wilson from bringing Karlsson back.

On Monday, with two weeks remaining before the beginning of free agency, reports began to trickle out that Karlsson, 29, has put pen to paper on a new pact with the Sharks. TSN’s Bob McKenzie first reported that Karlsson was coming off the market, which was followed by a report from The Athletic’s Pierre LeBrun that Karlsson had signed a max-term deal – eight years – at upwards of $11-million per season. Sportsnet’s Elliotte Friedman added that Karlsson’s cap hit stands to match the percentage taken up by Drew Doughty following his massive signing with the Los Angeles Kings last summer. That deal, when inked, was valued at 13.84 percent of the salary cap. Depending on where the spending limit is set next season – and reports are that it will be either at or slightly below the $83-million range – Karlsson’s new contract will come with an annual payment of anywhere from $11.3 million to nearly $11.5 million.

Put another way, the Sharks are set to make Karlsson the highest-paid defenseman in the NHL, which isn’t an altogether unexpected development. He was guaranteed to be the most sought after free agent this summer and quite possibly the hottest free agent blueliner in league history. He was to this off-season’s free agent crop what John Tavares was to his group last summer, and given Tavares parlayed his status into a seven-year deal worth $11-million per season with the Toronto Maple Leafs, it was believed a similar contract was awaiting Karlsson. After all, his 326 points make him the second-highest scoring defenseman in the NHL over the past five seasons – he trails teammate Brent Burns, who leads the pack with 361 points – and Karlsson sits atop all rearguards with a production rate of .89 points per game. The market for his services was clear cut.

This past season, Karlsson proved his value to the Sharks, too, albeit during a season in which he was nursing injuries almost from the outset. In 53 games, he scored three goals and 45 points, averaged upwards of 24 minutes per game and added another two goals and 16 points in 19 playoff games while logging similar ice time. Among all players to skate at least 500 minutes at 5-on-5 last season, Karlsson boasted the second-best Corsi percentage (59.2), sixth-best shots percentage (57.9) and eighth-best expected goals for percentage (58.9). He brought everything San Jose hoped he would bring when they acquired him from the Ottawa Senators in an off-season blockbuster that sent Chris Tierney, Dylan DeMelo, Rudolfs Balcers and prospect Josh Norris the other way. With Karlsson re-signing, the trade package now also includes the Sharks’ 2021 second-round pick.

None of this is to say that there aren’t and won’t be concerns about this deal moving forward. As noted, Karlsson battled injury all season, to the extent Wilson told media following the season that the Sharks had a healthy Karlsson “for maybe six weeks.” He missed San Jose’s final game of the season, Game 6 of the Western Conference final, and underwent surgery to address a groin injury in early June. A full recovery is expected, but Karlsson has now dealt with groin, foot and Achilles surgeries over the past several seasons. That will result in some handwringing, particularly as it pertains to a defenseman whose mobility is among his best attributes, and will do little to assuage concerns about the length of the deal and the long-term outlook given the potential for decline in the back half of the contract.

As alluded to, though, the most pressing concern is the salary cap constraints that re-signing Karlsson puts on the Sharks. An $11.5-million cap hit leaves the Sharks roughly $12 million to spend this summer with a bevy of talented players in need of new deals, and there’s simply no two ways about it: someone is going to have to go as a result of Karlsson’s return. Among those you can bet on departing are UFAs Nyquist, Joonas Donskoi, Michael Haley and Tim Heed. It’s to the open market with them. But what cap space is left remaining must then be divvied up between Pavelski, Thornton, Meier and Kevin Labanc, and getting all four under contract without making a sacrifice to the Salary Cap Gods will be all but impossible.

Look at it this way: after finishing up a five-year pact that paid him $6-million per season, Pavelski is in for a raise. Meier, fresh off of a 30-goal, 66-point season, is due a significant payday. Thornton took a pay cut last season and he may be willing to again, but how low is he willing to go? And Labanc’s 56-point season and nine-point playoff output makes him worthwhile to retain. There is no world in which $12 million is enough to get all four locked up, not even if Thornton was prepared to take league-minimum.

Thus, in order to make the retention of all four players possible, money needs to be moved out. The prime candidates to be sent packing given their cap hit and lack of trade protection are defensemen Justin Braun and Brenden Dillon, as well as forwards Melker Karlsson and Marcus Sorensen. At $3.8-million and $3.27-million cap hits, respectively, Braun and Dillon represent the biggest cap savings to the Sharks, and with the latter a third-pairing blueliner in San Jose last season, he seems the most obvious trade chip. Wingers Karlsson and Sorensen, meanwhile, are bottom-six pieces who earn a combined $3.5 million. Cutting one or both from the bottom line would be beneficial.

The boldest move of all, though, would be to find a way to clear Evander Kane from the books. After much talk about the seven-year, $49-million deal he inked last summer, Kane did his part to prove his worth with a 30-goal, 56-point output, and trading him would not be a result of his play. However, the Sharks ridding themselves of his $7-million cap hit would provide San Jose the greatest amount of instant cap relief. The snag? His no-trade clause allows him to veto a trade to all but three teams. That vastly limits the Sharks’ options and likely makes such a trade a near impossibility.

But believe that the Sharks knew this was coming. Wilson and Co. were already facing a cap crunch, one that came with potential for a painful goodbye, and they were well aware that inking Karlsson, particularly at a high price, all but made certain that change was on the horizon. So, for a moment, San Jose will celebrate the re-signing of the prized free agent. After that, the difficult decisions begin.

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