The Oilers received prospects Robert Nilsson and Ryan O'Marra and a first-round draft pick in 2007 in exchange for Smyth. Smyth's agent Don Meehan said that the two sides talked over the last 24 hours but couldn't get a deal done.
"I'm surprised actually given what Ryan is to the community and what he has been to the franchise," said Meehan. "But I understand that with all due respect they have the ability to make these decisions and that's what management has to do in these circumstances."
Smyth, 31, is making US$3.5 million this season and is due to become an unrestricted free agent July 1, meaning the Oilers were at risk of losing him for nothing in the off-season. It's believed he had been hoping for a long-term deal with the Oilers worth at least $5 million a season.
Meehan said all of the negotiations were very amicable.
"I think we had a different view in relation to where we felt Ryan was at, in relation to the industry given what transpired this past summer with free agency and the people that would be available this summer in relation to free agency," said Meehan. "So I think we felt strongly in that position."
Smyth led the team in scoring this season with 31 goals and 22 assists in 53 games. But the Oilers are faced with an uphill battle to the playoffs. Heading into Tuesday's game against Phoenix, they were trailing the Calgary Flames by nine points for the final playoff berth in the Western Conference.
The trade came in just under the wire of Tuesday's 3 p.m. ET trade deadline.
Smyth didn't have the look of a player that was about to be dealt during the pre-game skate at Rexall Place.
He skated hard through drills and joked around with his teammates. While taking off his equipment, he carefully examined a white board outlining the schedule for Mark Messier's number retirement ceremony later Tuesday. It was not something Smyth would see from his familiar spot on the Oilers bench.
It is arguably the biggest trade the Oilers have made since sending Messier to the New York Rangers in 1991. While they dealt players like Doug Weight and Jason Arnott after that, neither of those guys were as beloved as Smyth was in Edmonton.
A native of nearby Banff, Smyth was drafted by the Oilers sixth overall in 1994 and had spent his entire career with the team.
"I think Ryan offers a lot to a franchise, I think he offers a great deal to any competitive team within the league," said Meehan. "Yes, there was a degree of compromise and I'll convey to you that both sides compromised throughout this process but not to the degree where we both felt comfortable that we could come to a deal."
Nilsson was the Islanders' first-round pick in 2003. He's recorded 12 goals and 33 assists in 50 games with the AHL's Bridgeport Sound Tigers.
O'Marra, who has won back-to-back gold medals for Canada at the world junior hockey championship, is currently playing for the OHL's Erie Otters. He was New York's first-round pick in 2005.