According to the team's release, the deal is worth $46 million.
"T.J. is an invaluable member of our team and we felt it was imperative for us to re-sign him in a competitive free agent market," general manager Brian MacLellan said. "T.J. is a highly competitive player with a tremendous skill set; he epitomizes the kind of player our team must have in order for us to continue to put ourselves in a position to compete in this League."
The 30-year-old forward is coming off the best scoring season of his NHL career. He contributed 33 goals to the Capitals, who were the third-highest scoring team in the league (261 goals). Oshie also assisted on 23 goals, bringing his total point count to 56—his second-most in a single season.
As a result of his strong performance, Oshie was one of the best attacking options on the free-agent market this offseason.
During an interview on 106.7 The Fan in May (h/t CBS DC's Chris Lingebach), CSN Mid-Atlantic's Alan May envisioned a major upheaval on the Capitals roster, with Oshie, Kevin Shattenkirk, Justin Williams, Evgeny Kuznetsov and Dmitry Orlov all hitting free agency:
"So there are and will be drastic changes. And the team will look dramatically different, but there's no reason you can't do a reboot right away with different players and a different mind, so I don't think you can just throw in the towel, but there will be huge moves during the offseason."
Because the Capitals have so many other considerations to make, some had already begun planning for Oshie's departure. And there's no question Washington would've been worse off in the short term had he signed elsewhere.
With that said, the Capitals are assuming some risk by giving Oshie a new contract when his value is almost certainly higher than it ever will be again.
At the very least, it's reasonable to expect Oshie won't get any better than he was in his two years with Washington. Oshie's 0.49 goals per game were nearly double his career average (0.29), per Hockey Reference.
If he continues to play at or near that level over the duration of his deal with the Capitals, then he'll provide a nice return on the investment. Should he begin to decline—a very real possibility given his age and overall track record—then his salary becomes more of an albatross on the team's payroll.
By re-signing Oshie, the Capitals are essentially casting aside one or two players who were valuable to their postseason run for financial concerns. That would exacerbate the consequences in the event Oshie's performance begins trending downward.