On Monday, Penguins General Manager Kyle Dubas gave a very poignant response to questions regarding defenseman Erik Karlsson. "His actions much match his ambitions," said Dubas, no doubt a retort to Karlsson's comments that the team was inconsistent and that playing in the final few games was not enjoyable.
Dubas also added that "there were moments of great play with too many inconsistencies, and we have to push him to get there. That's the expectation that's dictated by his talent level and the impact he can make." Dubas thus acknowledged that Karlsson needs to play better if the Penguins want to make the playoffs. A pretty obvious statement, considering Karlsson is the highest-paid defender in the league.
However, with the Penguins entering a retooling phase bordering on a rebuilding era of the franchise, does it make sense to keep Karlsson? Should the Penguins trade the Swede this offseason? It is not an easy question to answer.
Option 1: Keep him.
While Karlsson has struggled since he was traded to the Penguins before the 2023-24 season, his talent is undeniable. When the Penguins traded for him, Karlsson had just won the Norris trophy as the league's best defenseman. He did not lose all his ability overnight.
Kyle Dubas admitted as much, adding that Karlsson "has shown he has another level to him, he did so at times for us, certainly playing for Sweden at the Four Nations." While he has lacked consistency, especially on the defensive end, we must be fair to Karlsson and admit that the Penguins as a whole were terrible defensively at the beginning of the year.
Coupled with Karlsson missing all of training camp with an injury, it is understandable that Karlsson's performance suffered as a result. A full offseason training regimen and training camp should eliminate the early-season woes. If the Penguins do keep Karlsson, they will hope he returns to form, as Andy Dufresne in The Shawshank Redemption said, "hope is a good thing, maybe the best of things."
Even if the Penguins do not want to retain Karlsson's services, they may have no choice. Karlsson has a total cap hit of $11.5 million for each of the next two years, which the Penguins pay $10 million because San Jose retained $1.5 million per year. Even with the Penguins retaining half of the total cap hit, Karlsson would still be owed $4.25 million against the cap, for a player who, at this stage of his career, is a second or third pair defender, many teams may not pull the trigger on a trade.
For the Penguins, in all likelihood, would have to retain $5.75 million against the cap each of the next two years if they trade Karlsson. That is a steep price to pay for the Penguins and would hamper them financially. There is also the question of what the Penguins would get in return for Karlsson. It is unlikely that teams will offer a top prospect or early-round draft pick for him. In that case, it is better to keep Karlsson and hope he returns to form.
Option 2: Trade him
Benjamin Franklin once said, "he that lives upon hope will die fasting." While the Penguins can hope Karlsson will play better, the truth is that Karlsson will be thirty-five years old when the season starts, and if recent trends hold, he will see another dip in performance. It is an open secret that Kyle Dubas regrets the Karlsson trade and is open to trading him. Therefore, it makes sense to deal the defender this offseason.
A trade would make sense for a couple of reasons. First, the Penguins would be able to move off Karlsson's contract entirely or a portion of it with a trade. If he is traded, Karlsson will be dealt to a contender, he has voiced that he wants to be back in the playoffs and due to his full no-movement clause, Karlsson has total leverage over his final destination.
A good frame of reference is the Seth Jones trade. At the deadline, Florida acquired Jones from Chicago for Spencer Knight and a 2026 first with the Blackhawks retaining 26% of Jones' $9.5 million AAV contract, meaning the Panthers are paying Jones over $7 million a year for the next five years. Jones and Karlsson are similar in the fact that they are grossly overpaid but also trapped on a below-average team. Florida traded for Jones with the belief they could revive his career. Could a team view Karlsson in the same way?
Jones is not the only example of a player who needed a change of scenery to save their career. Dylan Cozens has seen a resurgence in form since he was dealt from Buffalo to Ottawa. The same can be said of Jack Eichel, who was a great player in Buffalo but has reached new levels in Vegas and has become a top-five two-way player. For Pens fans, the Steel City was just what Phil Kessel needed after he saw a downturn in production on a bad Maple Leafs team.
For any trade to happen, the Penguins will have to retain 50% of Karlsson's salary, meaning the acquiring team will be responsible for absorbing a cap hit of $4.25 million each of the next two years. For a second or third pair defenseman, this is not an unfair price given that Karlsson would not be asked to shoulder the offensive and defensive load he has in Pittsburgh.
However, would Pittsburgh get a fair asking price in return? The Penguins would still be on the books for $5.75 million and will likely want a high pick or a young player, which Dubas has preferred in previous trades. The team acquiring Karlsson will also need the necessary cap space for his contract, which may eliminate several possible teams.
Lastly, the Penguins may opt not to retain 50% of the salary or any at all in an effort to get the entire $10 million off their books. If this is the case, the Penguins would have to attach a high draft pick, likely a second-rounder, to another team in a salary dump. The only problem with that Karlsson has to agree to a trade, and it is extremely unlikely a contending team will have $10 million in excess cap space.
Option 3: Buy him out.
There is a real possibility that the Penguins do not find a trade partner that offers fair value for Karlsson, and if the Penguins are actively shopping Karlsson, it is hard to imagine he would want to stay. This leaves an option that can benefit both sides. A contract buyout.
Before we proceed, we must discuss how a buyout works. If a team decides to buy out a player's contract, they are obligated to pay that player 2/3rds of their remaining salary over the course of twice their remaining contract. For Karlsson, his salary was front-loaded by San Jose, meaning he only has $5.5 million in salary for the final two years of his deal. If the Penguins and Karlsson agree to a buyout, they would pay him $3.66 million over four years.
This would be beneficial for both sides. For the Penguins, they would save over $2.5 million next season and slightly over $500,000 in 2026-27. The last two years of the buyout would cost the Pens $797,101 for the 2027-28 and 28-29 seasons. However, given the drastically rising cap, this is basically crumbs.
This also is not a bad deal for Karlsson. Assuming he cleared waivers, he would be free to sign for whatever team he wants. He also may be willing to sign for less money because he will still be getting paid by both the Penguins and Sharks to the tune of over $3 million next year. Karlsson has made it known he wants to be in the playoffs and play for the cup; this would provide him an opportunity to sign with several contenders.
There are two downsides to this option for the Penguins. First, just because Karlsson is bought out, it does not mean his cap hit disappears; rather, the Penguins would incur a cap hit of $7.3 million this upcoming year and $9.4 million in 2026-27 just for him to not play. Second, Karlsson will sign with someone; he would provide a contender with an offensive-minded blueliner, and many teams are desperate for a Karlsson-type player. For the Pens, this means they would lose him for nothing.
What should the Penguins do?
Tiger Woods once said, "Winning solves everything." For the Penguins and Karlsson, morale is low because of recent failure. A new season means new opportunities and the chance to win. Erik Karlsson, without a doubt, helps the Penguins win. Despite his defensive shortcomings, I shudder to wonder how bad the Penguins would have been without him this year. Karlsson is still a high-level player; he showcased that at the Four Nations and the Penguins are better with him.
Dealing Karlsson for peanuts or pennies on the dollar just to trade him would cause morale in the Pens dressing room to plummet. We saw it after the team trade Jake Guentzel in March of 2024. When a team trades star players, it adversely affects morale. The Penguins cannot take steps backward. Unless the Penguins are offered the moon and the stars for Karlsson, they should keep the Swedish Defender and surround him with better players and allow him to do what he does best, provide offense from the blueline and kickstart breakouts with his elite passing abilities.