I like to call Smyth the smart and defensive Bertuzzi, as he stands in front of the net on the power play and gets garbage goals, however is value goes much beyond that because of his hockey sense and strong defensive abilities making him a great two way player. If anyone was thankful you made it to the finals last season you should first thank Pronger, but quickly get to Smyth as he was possibly as important to the team as Pronger.
Before getting into the specific value of Smyth a word on long term contracts. Many people may be familiar with the Payday lottery or "million dollars a year for 25 years lottery", essentially what these lotteries do allow for a large initial dollar value ($25 million), but cost the lottery corporations significantly less by putting off a lot of the payments into the future. For example, at 6% the million dollars over 25 years is only worth about $12.8 million (this is what the it costs the lottery corp today). For the same reasons the a contract for Dipietro's over 15 years is only worth about $2.9M/year (when you look at it that way it looks like a steal). A 5 year contract for Smyth at $5.4M is really only worth $4.5M. The number can change for example if Smyth's contract is top or bottom heavy. Just because a very large contract is signed doesn't mean it's worth that much. Since the costs of these contracts are known explicitly it's easy to get a long term investment with good returns to cover them. Another good present example is Doan for 5 years works out to about $3.8M, most wouldn't have a problem paying Doan that much. In the end a "real $5.4M" contract would require $6.4M per year, I could easily see Smyth sign for $30M+ over 5 years...
There's been quite a bit of discussion about every aspect of Ryan Smyth. One of the primary questions has been was $5.4M enough [or $4.5M in present value], or was Smyth greedy. First of all player value varies from team to team. Carter for example this summer could've signed in Detroit or Vancouver for around $1.8M, but choose to sign on a team that needed [wanted] him more for $2.5M. RiversQ wrote a long post about comparable players, but the post mentions both Sullivan and Arnott who actually play together, meaning one doing well implies the other will do well. Of the players listed Sullivan is probably the most comparable in my mind, but he for whatever reason choose not to sign for market value. That being said he will get a lot more in 2009. Sullivan also is not the best player on the Nashville team, making his role significantly different to Smyth's.
However, Smyth's value may not be measured completely in terms of points. The nature of his game is both defensive and offense, but much of his offensive contributions can be considered invisible. In fact while Smyth may have ranked 58th in overall scoring in 2005-2006 he ranked in the top 20 in terms of goals while on the ice per game [1.5] (pp/pk/ev), he was above the likes of: Forsberg, Briere, Brind'amour, Sakic, Strum (anyway you get the drift). This year on a team that was reasonably poor he is ranked 32nd [1.3], since scoring is down slightly this year the drop has occurred for many top players. The players around him in the rankings include Zetterberg, Kunitz, Langkow, Afinogenov. Either way Smyth is on the ice for half of Edmonton's goals, what is that worth? Of course this doesn't get into the question of defensive ability.
The real question Edmonton should be asking of any comparable player is who would you choose instead. Would Koivu sign in Edmonton for under $5.5M? If you were to look at comparable players and ask yourself would you trade them straight up no questions asked: Naslund, Havlat, Hossa, Fedorov, Gagne, Gomez, Gaborik, Savard, etc. Who would you rather have as your best player?
An easier question might be to ask: of the forward RFAs where would you rank Smyth in terms of skill? A graph showing the ranking of different salary levels shows that in order to be worth >$5M you have to be a top 25 player (with last year's dollars). At a point per game, typically ranks you around the 20th position and 0.9 points per game around 40th, it appears the team agrees that he is a top 25 forward with their offer, but of course a one year contract is different from a 5 year contract.
One can also look at Smyth in terms of PP/PK/EV. I'm not sure of all the options in the NHL but Smyth would certainly be up there with guys I would want on the powerplay. This year, due to: coaching, players and who know what, Edmonton stopped shooting the puck at the net and this hurt their scoring on the powerplay. Who knows how many more assists/goals Smyth would've had if Edmonton had taken 100 more shots at the net on the powerplay. Smyth leads the team, pretty significantly, although I rate Hemsky about as good as Smyth on the powerplay. In terms of Penalty killing, Smyth may not have the best GA/hr rate, but that's due to the players he was stuck playing with on the penalty kill, by my measures he was the best penalty killer on the team. Just ask the Islanders, where he is averaging 4 minutes per game. Even strength Smyth demonstrates where he really differentiates himself from his team mates and other compatibles in my mind. He's a part of a rare group of forwards who is responsible for >1 goal differential per game at even strength [Vanek, Crosby, Heatley, Datsyuk, Alfredsson, Briere, Selanne, Kunitz, Kariya, Pominville, Erat, Roy, Havlat, Legwand, Mcdonald, Zetterberg, Camalleri]. Some are there because of luck, other skill. In my book the contributions made by Smyth this year peg him at $5.4M, which ranks him #24 in terms of "expected salary".
In terms of Hockey Analytics "Player Contribution" system Smyth scored a decent 51 in 2003, 62 in 2004 and I rated him a 72 in 2006, he's probably a 80+ this season. Each 20 points in the player contribution = 1 win and 1 win is worth about $1M.
A lot of people look at Smyth's numbers and don't consider just how bad a team the Oilers were this year. Ranked 25th in terms of EV GD/hr, 23rd power play, 12th in terms of penalty kill. Goaltending has been good considering how bad the defense was all year.
The problem is with a player like Smyth there are very few alternatives that are truly "available" in July, Smyth would have loved to play in Edmonton and would've signed there. However, goal differential is goal differential and if Edmonton can find a number of good cheap pieces they might be able to finish this complicated puzzle this summer. In general there are fewer elite players than there are teams. The beauty of a player like Smyth [an elite player] is you know his value, you know what you're getting. The problem with the $3M guys is that they've only done well in "perfect" situations or gotten lucky for a year or two [Carter]. You never know if you're getting a goal scorer or a liability.
Some people mention that he can still sign in Edmonton. The problem with trading a player as a rental is that their value generally doesn't go down when they play in the playoffs (unless you're Cloutier), if you lose in the first round your value is flat (no change or small negative change), after that it's all up, up up. So if Edmonton wants to sign Smyth after he loses this year in the conference finals good luck, he'll be expected to sign for $6.5M all of the sudden.
How much will Smyth sign for depends on who he signs with and the terms of the agreement, dollars aren't everything and dollars are never the entire story. I suspect he'll get in the neighborhood of $6M especially after NYI beats New Jersey in the opening round [long shot guess].
Good luck to Edmonton next year, you'll need it.