According to NHL reporter David Pagnotta contract talks aren't going very well lately. The latest offer the Red Wings made to Larkin was not acceptable. This is really not good news for Detroit. Larkin is a core piece of this Red Wings roster and the teams number one center. Yeah Detroit has not been good for a quite a while now but losing Larkin could set them back if they can't agree to terms.
Steve Yzerman is one of the most cunning General Managers in the league. Even if he can't agree to a contract extension with Larkin, he'd likely trade him for at the trade deadline rather than lose him in free agency. At the end of the day, I think they get a deal worked out. Larkin is a local Michigan kid and I think he wants to stay, they just have to pay him a lot. There may not be a hometown discount in Larkin's next contract. He likely makes $8 million or more per season.