Sharks Facing Harsh Reality About Karlsson’s Trade Value

Is it going to take a third team to complete an Erik Karlsson trade?

“I heard it’s going to take three teams to get it done,” a source told San Jose Hockey Now two weeks ago.

So what will that cost the San Jose Sharks?

I talked with an NHL executive, a scout, and Hart Levine of Puckpedia to get a sense.

There’s also a scary implication, at least for the Sharks, about the cost of doing business with a third team. But we’ll get to that later.

What Could 3-Team Trade With Pens Look Like?

Let’s start with this hypothetical: Say the San Jose Sharks trade Karlsson to one of the most-mentioned suitors up to now, the Pittsburgh Penguins or Carolina Hurricanes.

What might a three-team deal look like with the Pens, and including Jeff Petry and his $6.25 million AAV for two more years?

It’s worth noting that it was recently reported Petry, armed with a 15-team No-Trade Clause in his contract, wouldn’t want to go to San Jose because it’s too far from his family. So in this case, a third team would be necessary to take on Petry.

REPORT: Sharks Want Marcus Pettersson in Karlsson Trade?

The basis of my three-team idea is the purely speculative Karlsson to Pittsburgh trade proposal that I concocted two weeks ago. For what it’s worth, my proposal was vetted by an NHL executive (a different one) and scout, who deemed it “good” and “reasonable” for both sides.

SPECULATION: What’s Reasonable Karlsson to Penguins Trade?

This was the two-team proposal:

To Pittsburgh Penguins:

Erik Karlsson
Sharks retain $4.5 million per season for the remaining four years of Karlsson’s contract (39 percent)

To San Jose Sharks:

Jeff Petry
Penguins’ 2024 first-round pick (top-5 protected)
Ty Smith
Sam Poulin
Penguins’ 2025 second-round pick (will upgrade to first-round pick if the Pittsburgh wins either the 2024 or 2025 Stanley Cup, and Karlsson plays at least half of the playoff games in the championship-winning run)

Yes, a 39 percent retention is almost double the rumored 20 percent that the Sharks appear to be stuck around right now.

They’ll have to retain more to get any value back for Karlsson – that’s just the reality of it, insiders have been saying that for months, and San Jose Hockey Now has confirmed that thought process with league sources.

So what would a Karlsson trade look like with three teams?

Let’s say the Chicago Blackhawks are the third team. They’ve shown a willingness to take on bad contracts this off-season (Josh Bailey), have cap space (over $14 million right now, per Puckpedia), need defensemen on their roster, and are close to Petry’s Michigan home.

To Pittsburgh Penguins:

Erik Karlsson
Sharks retain $4.5 million per season for the remaining four years of Karlsson’s contract (39 percent)

To San Jose Sharks:

Ty Smith
Sam Poulin
Penguins’ 2025 second-round pick (will upgrade to first-round pick if the Pittsburgh wins either the 2024 or 2025 Stanley Cup, and Karlsson plays at least half of the playoff games in the championship-winning run)

To Chicago Blackhawks:

Jeff Petry
Penguins’ 2024 first-round pick (top-5 protected)

Is a first-rounder too rich a reward to take on Petry’s contract? He still played over 20 minutes a night last season and posted 31 points in 61 games.

“He does have some value and only two years left. So hard to peg the cost because someone might actually be fine with having him, which mitigates the cost,” Levine suggested. “I don’t think Petry requires a first to take him. He still has some positive value.”

The scout, however, countered: “He’s got value, but aging with injuries and not at the same level he once was. I’d still want the first.”

The exec also agreed that the 35-year-old defenseman would require a first attached with him to move.

So if you’re the Sharks, you lose the reigning Norris Trophy winner in this deal, and you don’t even get back a sure first-round pick.

This story perhaps repeats itself with another potential Pittsburgh salary dump, Mikael Granlund. Granlund, 31, has two years left on his contract at $5 million AAV. Let’s say the Sharks re-routed him to a third team.

“Granlund would merit a first,” the scout opined. “Surprised Pittsburgh gave up what they did to get him.”

Last Trade Deadline, now-fired GM Ron Hextall acquired Granlund from the Nashville Predators for a 2023 second-round pick. The Finn, however, didn’t help Hextall’s cause with just five points in 21 games, as the Pens missed the playoffs in the final days of the season.

It’s worth noting that Granlund, unlike Petry, has no trade protections, so he can be dealt anywhere. So a third team might not be necessary with him.

Looking over the rest of the Penguins roster, there aren’t any other obvious salary dump candidates. Marcus Pettersson, 27, a defenseman with two years left on his contract at $4.025 million AAV, has been rumored to be of interest to the Sharks, but he’s still got clear positive value.

How About Hurricanes?

The same could be said about the Carolina Hurricanes’ most likely salary dump candidates.

28-year-old defenseman Brett Pesce, one year left at $4.025 million, and 29-year-old defenseman Brady Skjei, one year left at $5.25 million, both have positive value. Both are UFAs after this coming season.

Reportedly, the Canes are trying to extend Pesce.

The scout suggested that Pesce is worth a first-round pick in a trade, while Skjei should garner at least a second.

If the Hurricanes don’t think that they’ll reach an agreement with either pending UFA, they could, in theory, trade either to the Sharks for Karlsson, in lieu of a high pick. San Jose could then re-route either Pesce or Skjei and get a first or a second-rounder back.

Besides Pesce and Skjei, 28-year-old winger Teuvo Teravainen, one year left at $5.4 million, is also considered a Carolina salary dump candidate.

After suffering an injury-plagued season, Teravainen’s star has definitely fallen. But not enough to be a negative value – he was a reliable 60-point producer in the previous five years.

“I don’t think so,” the scout said, when asked if he thought that Teravainen would need a pick attached to move him. “He was unhealthy but is a good top-six complementary winger. Think he just had a tough year.

“Teravainen’s contract is fine, as long as he’s healthy.”

What’s Scary for Sharks?

Talking with SJHN’s league sources – and hearing what insiders like Elliotte Friedman and Frank Seravalli are saying – it’s the same drumbeat, Karlsson isn’t worth what the San Jose Sharks were hoping.

Think about what Seravalli said two weeks ago: At 20 percent retention, around the league, perhaps only the Penguins would take Karlsson. And that’s without trading anything for Karlsson.

REPORT: Karlsson Prefers Pens? Seravalli Not Sure Trade Will Happen

At 20 percent retained, Karlsson sounds like Marc-Andre Fleury for Mikael Hakkarainen.

In Jul. 2021, the Vegas Golden Knights traded the reigning Vezina Trophy winner to the Chicago Blackhawks for, no disrespect intended, barely a prospect Hakkarainen. Like Karlsson, Fleury was coming off an award-winning campaign, but his age and contract kneecapped his trade value.

So does Karlsson sound like a valuable trade asset?

How long would the line be, for example, if the Edmonton Oilers put Connor McDavid, three years left at $12.5 million, on the trade market – and with 20 percent retained?

Just a reminder too: I’m not discounting what we saw from Karlsson last season, it was amazing.

It’s the other stuff that’s making him hard to move.

“When you look at then adding on pieces [for] a player who’s approaching his mid-30’s and has significant injury history – teams just aren’t willing to pay it,” Seravalli said.

At least at $9 million AAV.

Karlsson’s league-wide trade value is also suggested by the three-team proposal that I made with Petry, Pittsburgh, and Chicago – once again, based on a proposal that I vetted with league sources.

To refresh: The Pens would get Karlsson at 39 percent retained. The Sharks would get reclamation prospects Ty Smith and Sam Poulin, along with a 2025 second-round pick, that would upgrade to a first if Pittsburgh wins either the 2024 or 2025 Cup. The Blackhawks would get Petry and a 2024 top-five protected first-rounder for their troubles.

Two teams win this trade, and it’s not the Sharks, even retaining 39 percent. Chicago receives a certain first-rounder, while the Pens, at least, get the reigning Norris Trophy winner.

And the most valuable trade asset here, and it’s the reality of the salary cap era, isn’t the future Hall of Famer, but it’s the cap space to absorb $6.25 million AAV for two years.

What Should Sharks Do?

I have three pieces of advice for the San Jose Sharks, one I’ve said often, the other one new.

First, obviously, retain more.

Related to that, second, get what you can for Karlsson this off-season.

Third, don’t trade for Jeff Petry.

That’s a joke.

But you want to avoid involving a third team and letting them get the best non-Karlsson piece in a Karlsson trade. Maybe that means opting for Granlund instead of Petry, and forcing the Pens to find another taker for Petry? Or making a flip of Pesce/Skjei the centerpiece of a Karlsson return?

The alternative, which I’ve heard a lot in the past few days from Sharks fans perhaps fatigued with hearing how little their 101-point defenseman is worth on the open market, is simply to keep Karlsson.

But of course, the truth is that Karlsson may never be worth “this much” again. Sure, it’s not a lot. But Karlsson has rebounded from having perhaps less trade value than anybody in the NHL in 2021-22 to a degree of value. You put that all at risk if you force Karlsson to play for you this fall.

And sure, Karlsson could continue his 100-point pace, and keep steadily building his open-market value by the 2024 Trade Deadline. Or he can get hurt. Or the 33-year-old can start to decline because of age. Or he can just perform at a good-but-not-great level.

Something is better than nothing, which is what San Jose will get for Karlsson next season if he takes a significant step back.

The Sharks caught lightning in a bottle with Karlsson’s renaissance last year. I don’t think anybody, except Karlsson himself, expected that.

Are you ready to count on lightning in a bottle from Karlsson once again?