After signing Phil Kessel to a franchise record 8-year, $64 million contract to start the season, the next most important item for Dave Nonis is deciding what to do with Dion Phaneuf. If he decides to sign the soon-to-be free agent, it won't be cheap.

Is #Leafs Phaneuf worth 50M over 7 yrs? I'm hearing bar has been set in talks and that's where it starts. More on HC@ noon+ @Sportsnet 2nite
— Nick Kypreos (@RealKyper) October 29, 2013

Pierre Lebrun said he doesn't think "the Leafs are comfortable going north of $7 million." As for term, Lebrun added, "I would suspect that Newport Sports Management would start at eight years and that the Leafs would be more comfortable at six."

So Kypreos' tweet is largely confirmed, although it sounds more like "where it starts" would apply more so if Phaneuf made it to free agency without a contract, because if the Leafs aren't comfortable going north of $7 million and much longer than six years, then $50 million over seven years is more of a starting point for Phaneuf's camp, not Toronto's. Ultimately, $7 million a year over seven years probably sounds about right.

There's definitely some sticker shock to giving Phaneuf a $500,000 raise per season, just like some balked at the $8 million figure Kessel received. Many who will take issue with Phaneuf getting a deal of this size will point out that only four defencemen make $7 million or more—Shea Weber, Ryan Suter, Brian Campbell, and Drew Doughty. Zdeno Chara, probably the best defenceman of this generation, doesn't even make $7 million a season.

Referencing these contracts without any context isn't a fair comparison, however. Simply comparing cap hits doesn't take into account UFA/RFA status, a player's age, how large the salary cap was in the year in which the deal was signed, and whether teams were still able to circumvent the cap. As I previously showed with Kessel's contract, those factors can make a huge difference in a player's cap hit.

When you adjust for all these factors, Phaneuf's $7 million figure is nowhere close to the top earners. Below is a chart with the salaries for the defencemen with the largest adjusted cap hit. The cap hits for Chara, Kimmo Timonen, and Jay Bouwmeester are based on the contracts they signed when they first hit free agency, and when they were closer in age to Phaneuf is now.

For the methodologically inclined, I came up with the adjusted salaries by looking at cap hits as a percentage of the cap in the first year they were signed. For back-diving contracts, I used only the first eight years of the deal and calculated what those new cap hits looked like as a percentage. Finally, I added a premium to any RFA contract, which ended up being around $1.14 million, based on the difference in average cap hit percentage of the top UFA and RFA deals for the No. 1 defencemen in the league. It's not perfect, but it should be sufficient for our comparison.

Name	Adjusted Salary*
Zdeno Chara	$10.96m
Shea Weber	$10.53m
Ryan Suter	$9.16m
Duncan Keith	$8.95m
Kris Letang	$8.14m
Drew Doughty	$8.14m
Brian Campbell	$8.10m
Kimmo Timonen	$8.09m
Alex Pietrangelo	$7.64m
Erik Karlsson	$7.64m
Dan Boyle	$7.56m
Jay Bouwmeester	$7.56m
Mike Green	$7.22m
Brent Seabrook	$6.94m
*Salary adjusted for what a player's contract would look like if signed as a UFA under the $64.3 million salary cap of 2013-14.

Considering contextual factors, Phaneuf's cap hit would actually be the 14th highest cap among defencemen, not the fifth. Because of salary inflation, $7 million doesn't buy you what it used to. Quick aside: The deal that paid Chara $7.5 million a season starting in 2006-07 looks crazy under today's salary cap... that is until you consider that it probably worked out better than any other UFA deal in NHL history

ESPN.com ranked Phaneuf in a tie for the 17th best defenceman in the NHL this summer, and although I might put him higher than one or two guys (namely, Keith Yandle), that's a pretty fair rating. He's a No. 1 defenceman, but an average one. So a $7 million cap hit would be perfectly fair for Phaneuf. Repeat, $7 million doesn't buy what it used to. Not when the salary cap has gone up; not when a player is hitting unrestricted free agency; and not when teams are unable to circumvent the cap.

And for the Leafs, there really isn't another option. Phaneuf handles the toughest defensive assignments for the Leafs, matching up against the opposition's top line on a nightly basis. In fact, so far this young season no defenceman has matched up as consistently against strong competition than Phaneuf, much like last season.

Phaneuf is also one of the rare defencemen who logs huge minutes on both the power play and penalty kill. Oliver Ekman-Larsson is the only other defenceman logging at least 3:30 on both special teams units.

There aren't any real options to replace him if Nonis decides $7 million is too rich. The only potential replacements in free agency are flawed, either because of age—Brooks Orpik, Stephane Robidas, Kimmo Timonen, Dan Boyle—or limited offensive upside—Dan Girardi. Plus, despite the influx of young defencemen in the Leafs' system, none are ready to step up and take over Phaneuf's minutes. Phaneuf may not be perfect, but the Leafs really can't afford to lose him.