Losing to Pittsburgh in the Eastern Conference finals, the Flyers realized, in the words of coach John Stevens, that they have to "close the gap" between themselves and others.

Flyers general manager Paul Holmgren said yesterday that he wants to see what the Penguins do in the Stanley Cup Finals and in their bid to re-sign 12 unrestricted free agents this summer. Pittsburgh will look very different next fall.

The gap between the Penguins and Flyers could shrink between July 1, when free agency begins, and early October, when the season starts.

"I think they are going to have an advantage for some time," Holmgren said, citing Evgeni Malkin and Sidney Crosby. "I said this the other day - they are two of the top forwards of the world. It's not like they are not going to get better. They are still both young players. To answer that, we will have a better idea next year because we don't know what they can do in terms of their roster moving forward, either."

For the third consecutive year since the lockout, the Flyers lag behind other teams on defense.

"Our overall mobility and speed on our back end needs to get better; whether we have those players internally or not, we will see," Holmgren said. "I think we do have a couple of guys that are coming. Whether they are ready for full-time basis or not I am not sure yet."

He was referring to Ryan Parent, who could start next season, and Nate Guenin. James vanRiemsdyk, a prospect, has opted to stay in college next year, so he's out of the picture.

Like the Penguins, the Flyers won't be able to re-sign everyone. They have six restricted free agents and seven unrestricted free agents. Their salary-cap commitment for next season is $49 million, with the cap expected to jump to $55 million.

Holmgren reiterated that the Flyers would re-sign center Jeff Carter before a team could steal him with a Group II offer sheet. Carter will get at least $5 million, so there goes the cap room. That's why defenseman Derian Hatcher's status will become a central issue this summer.

"I would like to sit here today and say we would like to bring everybody back, and then let's maybe add to that and move on, but realistically, is that possible?" Holmgren said. "Probably not."

The main issue is what to do about Hatcher, with defenseman Jason Smith - who was the Flyers' captain - expected to sign elsewhere. Hatcher has a year remaining on his contract at $3.5 million. His badly damaged right knee had to be drained continually this season. If he were ruled medically ineligible and placed on the long-term injury list, his salary would come off the cap.

Then the Flyers would have $3.5 million more to sign a top free agent, orchestrate a trade, or re-sign a player.

Holmgren gets emotional when talking about Smith, who suffered double shoulder injuries, and Hatcher, who had knee and leg injuries.

"They both are ultimate pros, and what they bring to a team, you can't define it," he said.

Asked whether he agreed that, personal feelings aside, upgrading on defense was the overriding concern, Holmgren replied, "Right."

It had been speculated that Carter could be lost to a Group II offer sheet, but it's just as likely that R.J. Umberger would go that route as a restricted free agent. There is a chance the 26-year-old forward would get a much higher offer than the Flyers could afford because of a deal with Carter.

"I refuse to live in fear" of a Group II offer sheet, Holmgren said. "We will do what we can to get our guys signed, especially the guys that we feel we can move forward with."

One of those guys is forward Claude Giroux, whose skill could make it difficult for Steve Downie to remain on the roster. Giroux, who would make $850,000 in his entry-level deal, is ready for the NHL.

"He is going to be a hard guy to keep off our team in training camp," Holmgren said.

Holmgren was creative in using dollars and orchestrating trades while rebuilding the Flyers in 2006-07. He has to be even more creative this summer with less cap room.

"I think we have to have a real open mind here on how we are going to do it," he said.

"To prioritize things right now, we have somewhat of a plan, and once the initial stages of that plan take place, I think the dominoes will start to fall," Holmgren said.

Contact staff writer Tim Panaccio

at 215-854-2847 or tpanaccio@phillynews.com.