I’d prefer to keep the 3 year bad contract rather than exchange it for a 6 year one
I'm far less sold that Kotkaniemi is a 'bad' contract than I am with Krug. This year was a disaster for him, but it's no secret that his coach hates his game and in his first 2 years in Carolina he scored at a 16 goal and 39 point pace in (barely) 3rd line and PP2 usage. He got heavy sheltering, but he also has very good underlying possession/chance metrics.
His AAV is currently bad for a team trying to win right now. There are better ways to spend $4.8M than a young center who hasn't/can't/won't put it all together. It's a worse AAV if the coach also very clearly doesn't believe he can succeed in the system. But generally speaking, I'm not convinced that he won't become worth that AAV, especially if he can spend his age 24 season making mistakes in an expanded role.
I think he is a Fairly safe bet to be at least a replacement-level 3C for a good chunk of the remaining contract. If he hits that level, it's not a bad contract. It might not be a good contract, but it's not a bad one.
Krug's contract is a bad one. I think he has virtually no chance of being a $6.5M player for any remaining season of the 3 that are left. He has greater trade protection than Kotkaniemi. His $8.5M salary this year is only slightly less than what Kotkaniemi will make in the next 2 seasons combined ($9.64M).
Krug's contract is much, much further down the scale of 'bad' than Kotkaniemi's, so I don't think it is as simple as just wanting the 3 year deal over the 6 year deal. I see way more upside to Kotkaniemi than Krug and even if he doesn't reach that upside, I view the 'dead' cap per year for Kotkaniemi as being much smaller than the dead cap per year on Krug.
I get what you're saying and I wouldn't be jumping for joy if we swapped Krug for Kotkaniemi. But I would like it.