Michal Neuvirth’s Extension: Asset Management

Saturday morning, the Washington Capitals signed young goaltender Michal Neuvirth to a two-year contract extension through the end of the 2015-16 season.  Carrying a total value of $5 million, the deal will put the 25 year-old Czech’s annual cap hit at $2.5 million for the next two seasons.

At first glance, this deal seems a tad bit curious for a couple of reasons.  For one, Neuvirth is now making more than Braden Holtby for the next two seasons, which doesn’t seem right considering Holtby has grabbed the number one role on this team and run with it like he stole it.  He’s fully deserving of that role and barring a complete collapse, Holtby will be the man in the playoffs and probably the beginning of next season as well.  However, when you consider that this was Neuvirth’s third contract versus Holtby’s second, it makes more sense.  That’s how the NHL’s market works in terms of age and experience, and though it’s not exactly fair for Holtby, he really has only been in the NHL for a year.

Read on for more notes on the extension.

Another reason it might seem curious that George McPhee is willing to commit such a cap figure to a de facto backup goalie with so many other players left to re-sign this offseason.  As of this writing, the Capitals have about $5.65 million in cap space heading in to next season with Mike Ribeiro, Karl Alzner, Marcus Johansson, Matt Hendricks, and a few other players to sign.  Of course, the expected departure of Jeff Schultz would clear $2.75 million in cap space, but that’s a quite the crunch regardless.  Yes, it could be possible, but cap flexibility and not being right up against the ceiling is almost a necessity.  The immediate reaction is that this will make it very difficult to re-sign Mike Ribeiro, something that has been true since Washington moved for Martin Erat at the trade deadline.

The reality of the situation, as I have written many times, is that while a good player having an exceptional season who has made the Capitals better this season, Mike Ribeiro is not the long-term solution to the second-line center issue that has plagued Washington for the better part of a decade.  He’s 33, not a great two-way player, likely having the last great year of his career, and as the best center on a thin market, will get massive money and term this summer – that’s not something the Capitals can afford.  George McPhee knows this; it’s likely one of the reasons that he went out and got Erat, who is a top-six forward, at a respectable cap hit.

Another thing to note is that while Neuvirth is the de facto backup, he is making backup money.  $2.5 million is really not that much at all when you look at in the grand scheme of things, and he and Holtby paired together at their respective salaries might honestly be the best tandem of goalies in the NHL in terms of value.  Just because he's making more than the current starter in DC doesn't mean he is making market starter money.  Excellent, cheap, young goaltending talent has spoiled the Capitals and their fans in the last five years, so one backup being paid backup money is not a travesty.  This is a fair deal, for player and for team, because Neuvirth does have the potential to be a starter in the NHL.  All the scouts say the same thing and his play since the first two weeks of the season has indicated likewise.  He was poor last season, but has righted the ship this year and deserves credit for doing so.

Which brings me to the final piece of this reaction: Neuvirth’s trade value.  As a player who has not seen a ton of ice in the last two seasons despite basically winning the top job in the spring of 2011, it is not out of the question to assume that Neuvirth would have been disgruntled enough to take his talents to Europe this summer if the Capitals had not signed him.  That would mean that the Caps lose a potentially valuable player for nothing, which they came perilously close to doing with Semyon Varlamov in 2011 according to reports.

With this contract in place, the Capitals have secured a young, talented, tradable asset for the next two years at a reasonable, if slightly inflated, price.  Neuvirth is insurance if Holtby does falter, as Phillipp Grubauer is not ready for full-time NHL duty, and if Holtby holds steady as expected, you deal Neuvirth to a team that needs a goalie.  Several come to mind that would want a young, relatively cheap, talented goalie – New Jersey and Edmonton, just to name two.

There is no doubt that the timing and the money involved in this contract seem off at first glance.  But from a larger viewpoint, it certainly seems like this is a great asset management maneuver.

What do you think?  Let us know below.

Harry Hawkings is a college student credentialed to cover the Capitals for RtR.  Follow him on Twitter here for all your news needs this season.

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