While Semin's 2004–05 season with Lada was considered his first year of military service, it was arranged for Semin to continue with Lada for his second year of service in 2005–06. Lada is located in the military district into which Semin was drafted, and they were the only team with whom Semin could fulfill his military obligation. He was signed to a tax-free, $2 million contract, along with a car and a condominium. News about Lada's struggling financial situation early in the season initially offered the Capitals some hope that Semin would join the team after all. It was reported the Russian team was expected to cut its payroll in half, while Semin was Lada's highest paid player.