The two parties are trying to negotiate an extension, but have been unable to come to an agreement.
According to Pierre LeBrun of ESPN, Letang rejected an offer from the Penguins:
Pierre LeBrun also reports that the Penguins rejected Letang's counter-offer:
If Letang and the Penguins do not come to an agreement, the star could be headed to Toronto. Rob Rossi of the Pittsburgh Tribune-Review reported that if Letang is traded, Toronto could be a possible destination. The Penguins would request an NHL-ready prospect, another top prospect and a first round pick in return for Letang, according to Rossi.
The Penguins, who do not currently have a first round pick, could acquire Toronto's 21st overall pick in this year's draft.
Bob McKenzie of TSN tweeted that Letang's agent has not yet discussed the Maple Leafs with his client:
Letang is an elite puck-moving defenseman who scored five goals and had 33 assists last season. While he's not the best in his own end, he would certainly improve the Maple Leafs' back end. A combination of Letang and Dion Phaneuf could be lethal on the power play.
In addition, the Maple Leafs, with a new goaltender and playoff experience, could be poised to make a deeper run next season. Adding a defenseman of Letang's caliber would go a long way.
The Penguins do have some intriguing young defense prospects, namely Derrick Pouliot and Simon Despres. Both could take over for Letang. With long-term commitments to both Evgeni Malkin and Sidney Crosby, trading Letang could leave the Penguins with more cap flexibility down the line.
If a trade is to happen, it could happen during the draft. Last season, the Penguins traded Jordan Staal to the Carolina Hurricanes during the draft once it became clear a contract extension was not going to be reached.
Letang could also be traded to a number of teams seeking defensive help. Edmonton, who has an embarrassment of riches at forward, but little depth on defense, could be a trade partner, but that is just speculation for now.
Still, the fact that the Penguins were unwilling to bump their offer up to $7.5 million from $7 million would seem to indicate that they would be fine with trading Letang. If the Penguins really wanted to retain Letang's services, an extra $500,000 would be very doable.
Instead, a deal involving Letang could be in the offing. If he does go to Toronto, the Penguins could get promising young defenseman Jake Gardiner.
It remains to be seen if a deal will eventually get done, but for now Letang's time with the Penguins is looking like it's coming to an end.