Karlsson trade accelerates Sharks rebuild

San Jose Sharks general manager Mike Grier continued to rebuild their roster, trading three-time Norris Trophy-winning defenseman Erik Karlsson to the Pittsburgh Penguins on Sunday.

The Sharks acquired forward Mikael Granlund, defenseman Jan Rutta and a conditional first-round pick in the 2024 NHL Draft from the Penguins, and forward Mike Hoffman from the Montreal Canadiens in the three-team trade.

Moving Karlsson was necessary to free up space under the NHL salary cap ($83.5 million) for the Sharks, who have embarked on a youth movement with an eye on getting back to the Stanley Cup Playoffs for the first time since 2018-19. San Jose retained $1.5 million of Karlsson's $11.5 million average annual salary for the next four years and also sent forward prospect Dillon Hamaliuk and a third-round pick in the 2026 NHL Draft to Pittsburgh.

"I think the fans here are knowledgeable enough to realize what we're doing here," Grier said. "We were lucky enough to have such a long run of sustained success and playoff success and regular season success and at some point, you have to pay the price for all that and that's kind of where we are in the cycle as a franchise."

San Jose qualified for the playoffs in 14 of 15 seasons before missing for the first of four consecutive seasons in 2019-20. They made it to the Stanley Cup Final in 2016, losing to the Penguins in six games.

Grier was hired as Sharks general manager on June 5, 2022, and tasked with overseeing a rebuild, which meant moving on from veteran core players. He traded defenseman Brent Burns to the Carolina Hurricanes on July 13, 2022, which started the process of revamping the Sharks roster.

San Jose was seventh in the Pacific Division last season, 35 points behind the Winnipeg Jets for the second wild card into the playoffs from the Western Conference.

"I think the guys played hard all last year, they were competitive, they were entertaining games, we probably should have finished a little better than our record showed," Grier said. "The other part of it is, players like 'Burnsy' and Erik, those are guys that are heading towards the twilight of their careers, and they wanted a chance to try and compete for a Stanley Cup and I understand that and unfortunately, that's now where we are, so some of these things have to happen business-wise."

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Grier said there were a few teams interested in obtaining Karlsson, but in the end it came down to two serious trade partners. Karlsson, 33, had 101 points (25 goals, 76 assists) in 82 games for San Jose, winning his third Norris Trophy as best defenseman in the NHL. He became the sixth defenseman in NHL history to reach 100 points in a season and the first since Brian Leetch of the New York Rangers had 102 points (22 goals, 80 assists) in 1991-92.

Karlsson revealed on June 26 at the 2023 NHL Awards in Nashville he requested a trade out of San Jose to a Stanley Cup contender.

Eventually Grier and Kyle Dubas, the president of hockey operations and general manager of the Penguins, were able to come to an agreement.

"Throughout the process, teams were asking us to retain a lot of salary and that was something we didn't want to do," Grier said. "We wanted to be able to have some cap flexibility and financial flexibility to add players down the road.

"We really didn't want to go down that path of retaining a lot of money, and Kyle was aggressive, and he was willing to make some concessions on his end in order to make this whole thing work. I think both sides made some concessions on not only the retention number, but the package in general to get the deal done."

Trading Karlsson frees up $10 million of salary cap space for San Jose. It also makes room on the roster for younger players to earn more ice time.

"It's important for us to have the flexibility to go out and either acquire players in free agency or through trades," Grier said. "Whenever these situations come up when there is a good player available, we'll have the resources with the money and assets to acquire those types of players. The flexibility was extremely important for us."

Retaining 13 percent of Karlsson's salary was something Sharks owner Hasso Plattner agreed to, according to Grier. The Sharks retained $2.72 million of Burns' $5.76 annual salary when he was traded to Carolina.

"Hasso, he's very passionate about the Sharks and he wants to win," Grier said. "We went through this whole thing together and we decided that the best path forward was to maintain that financial flexibility down the road and be able to move forward that way, and be involved and hopefully acquire some players down the road and not having a ton of dead money on our books hanging over our heads that would prevent us in not doing something or getting in the way of doing something we'd like to."