Some Thoughts on the Dion Phaneuf Trade

Editor’s note: I was wrong about the salary retention part of this transaction. The Sens are on the hook for the signing bonus. The article has been changed to reflect that.

And so it begins.

By agreeing to trade Dion Phaneuf (while retaining 25% of the salary owed to him) and Nate Thompson to the Los Angeles Kings for Marian Gaborik and Nick Shore, the Senators tonight signaled that they are beginning...something in earnest. At this stage, it’s hard to know exactly what we’re getting into because virtually every player on the Sens’ roster not named Mark Stone or Matt Duchene has been mentioned in a trade rumour at some point. Bobby Ryan, too, appears to beppears to be impossible to trade given his contract and Thomas Chabot and Colin White won’t be going anywhere. After that, though, it’s anyone’s guess as to what the newly extended Pierre Dorion has planned.

Indeed there’s been talk of a rebuild, but a full tear down seems unlikely given ownership’s cash flow needs. In the Sens’ perfect world, they would bottom out this year, get younger, cheaper, and then gather themselves to contend for a play-off spot again next year with a newly extended Erik Karlsson leading the way. But that’s the best case scenario, and the road between that and where we stand today is winding and treacherous.

Back to the specifics of this deal: it’s a salary dump, plain and simple. Phaneuf had seen his ice-time somewhat diminished this season, but was still a mainstay on the second pair and played just over 20 minutes a night. The coaching staff, at the very least, saw value in his on-ice contributions and his departure leaves a hole that will need to be filled. If Phaneuf was owed a few million dollars less per season, he might still be an Ottawa Senator; he certainly wouldn’t have been the first one out the door.

To fully understand the Sens’ reasoning for this transaction, it’s important to emphasize the difference between the cap hit for Gaborik’s and Phaneuf’s respective contracts and the real dollar values that are paid out. For Ottawa, real dollars are vastly more important than any cap hit — it’s part of the reason why they traded for Phaneuf in the first place. Throw the cap hit figures out the window and look instead at what each player will personally get paid.

The Sens save money despite retaining 25% of what’s still owed to Phaneuf. Gaborik is owed $10.8M over the next three seasons, all in base salary with no bonuses. Add in the $4.6M in retained salary from Dion’s pay for the next three seasons and Ottawa is now on the hook for about $15.4M; Dion is owed $18.5M over that same time, so the savings are non-negligible. Something worth noting is that the structure of Gaborik’s contract makes it much easier to buy out than Phaneuf’s since signing bonuses must be paid in full and all of the money still owed to Gaborik is in the form of base salary. The Sens have been loathe to go down the buyout route in the past, but if they really want to take the cost savings from this trade to the maximum they are well positioned to do so this summer.

As for Shore and Thompson, the Sens secured at the very least a moderate upgrade for their bottom six. Shore will be a restricted free agent at the end of this year, but given his paucity of scoring I wouldn’t expect him to command too hefty of a price tag. He’s not the type of player that moves the needle particularly, but he’s been useful on a good team. Given the dreadful performance of virtually all of the other bottom six options, he might yet earn his keep.

Ultimately, however, this all comes back to saving cold, hard cash. Given that mandate, I actually think Dorion did pretty well here. Taking back Gaborik’s contract isn’t ideal, but as explained above it’s much easier to deal with than Phaneuf’s. Dion is on the wrong side of thirty, and at this stage clearly in rapid decline. His contract is one of the league’s very worst, especially given that the bonus structure renders any buyout unappealing. Any trade involving Phaneuf was always going to involve taking back a poisonous contract, then. Opinions vary on how in decline Phaneuf really is, but it is clear at the very least that the big defenseman has lost a step from his prime that earned him the contract he has today. His pairing with Cody Ceci has been one of the league’s worst by many measures for going on two seasons. A trade for Phaneuf wasn’t going to garner a return. Los Angeles was a willing partner because they had a need on their blueline and what was essentially dead money to them in the form of Gaborik. They’re gambling that Dion’s bad contract will be worth more to them than Gaborik’s was.

The Sens needed to act as soon as possible and the fact that they did so without giving up any assets can only be seen as a good thing. Ottawa is already out a first round pick either this year or next, any potential rebuild will require as many picks and prospects as possible. Sweetening the deal to save more money simply wasn’t reasonable in this situation.

What is left unsaid in all of this is how, exactly, the savings will be spent. Everything comes back to money, but what are the Sens saving it for? If the cost savings from this trade, and all the rest of the trades that are sure to come before the deadline now that the floodgates have opened, are put towards re-signing Erik Karlsson and Mark Stone then fans will understand. A good plan, a proper rebuild, might very well require some pain and that’s O.K.  If, however, the money is used to re-sign say Ceci (or line Melnyk’s pockets) the reaction will be very different.