• Managing risk

    by  • October 1, 2010 • Uncategorized • 16 Comments

    With Martin Gerber gone, the Oilers are down to three goalies. I’m kind of interested to see what they end up doing because I’m pretty sure that I know who’s going to be the odd man out – JDD. Devan Dubnyk going to the World Championships was a pretty significant tell, I think, as to which one the Oilers prefer. That’s a pretty plum assignment, I suspect that the Oilers had a fair amount of say in terms of who got it and when you pick the guy who was the backup over the guy who suffered behind the Oilers all year…well, it seems to me to say a lot. If the consensus is right, and the Oilers aren’t able to trade Deslauriers, the decision to sign him to a contract will basically amount to having paid $950K to have him at training camp. You can find AHL goalies for $100K or so. The Oilers will be paying him $950K on top of that. It’s not my money but $950K is $950K.

    That’s a lot of money to blow for a chance to take a look at Deslauriers again in training camp. If the decision to go with Dubnyk was already made – and, to be honest, I would expect that the Oilers wouldn’t weight what happens in training camp too heavily. It’s simply too small of a sample, particularly in light of the pretty substantial body of work that the two of them have already produced for the Oilers’ examination.

    This is a decision that I think should have been made earlier. The Oilers probably should have made it before they were required to qualify one of them. It’s a point I’ve made before about Tambellini specifically – he likes to assemble as much information as possible, seemingly without regard for the costs of doing so. Delaying in making decisions has costs. I can understand the difficulty created by Khabibulin’s uncertain status over the summer but, given where the Oilers in the success cycle and the fact that the goalie market is pretty obviously a buyer’s market these days, qualifying Deslauriers still strikes me as a pretty expensive decision.

    If the Oilers are unable to find a market for him (assuming he’s the one who’s gone), he goes on waivers. I suspect he’ll clear waivers. Barring injury, that will probably be the last the Oilers see of him, as he’s an unrestricted free agent next summer. It would surprise me if he wanted to sign with the Oilers without first testing the market if this season establishes that Nikolai Khabibulin and Devan Dubnyk are ahead of him on the depth chart.

    Steve Tambellini was on Tencer’s show tonight and kind of waffled on whether the Oilers are going to go with three goalies or not – I got the sense that it’s something that they haven’t ruled out. I suspect that he really wants to get something back for one of the goalies. This is not necessarily a bad trait on Tambellini’s part, particularly given the Oilers’ history of not extracting a ton of value when forced into an awkward position – Kevin Lowe, outside of the Comrie situation, basically had a policy of “Surrender if necessary and necessarily surrender” in these sorts of circumstance.

    These gambles are expensive though, if you get them wrong. If Tambellini has misread the demand for Deslauriers’ services in the event that Deslauriers doesn’t make the team, that’s a $950K gamble (one that, IMO, had poor odds to begin with) lost. I’ve seen some suggestion though that the Oilers aren’t going to try and move Souray through recall waivers but, instead, have him play the season in the minors and then try and move him next summer, when there’s one year left on his contract. This is sort of a similar thing.

    I have to say, I have considerable respect for them if they’ve come up with this, as it’s rather clever. If you assume that Souray would go on re-entry waivers now (and, presumably, would go again next season if you had to), it boils down to a gamble of $2.25MM. By putting him on re-entry waivers now, the Oilers lock in their loss at $4.5MM – half his salary for this year and next. By waiting until next summer, they might be able to reduce their loss to something less than $4.5MM.

    Although they would have paid Souray all season to play in the minors, if they get something back with positive value like a draft pick, they will have reduce the amount of the loss by whatever the draft pick is worth. If they’re wrong, and nobody is willing to give up anything for him next year though or take him on waivers, they’re then sort of stuck in a position where re-entry waivers would seem to be the only route possible, at a cost to them of $2.25MM, leaving them with a total bill for not having Souray for two years of $6.75MM.

    If this is what they’re doing, I instinctively think it’s a better gamble than qualifying Deslauriers but I’m still not sure that it’s one which I would make. I’m not entirely convinced that it will be easier to trade Souray with one year left on his deal instead of two, particularly when he’s a year older. If teams perceive that he has a positive value at $4.5MM a year, I’m not sure why the extra year would make all that much difference. The Oilers carry the risk of Souray doing something like blow out his shoulder, which would render him immovable. The return would, I think, be small, even if they got one – a mid to late round pick, maybe. The risk is actually a bit greater than the $2.25MM – if he got hurt and nobody claimed him on waivers or re-entry waivers the following year, the Oilers could be stuck with the entire tab for him. I am innately conservative about some things and I wouldn’t want to carry the risk here for what I perceive as being probably a pretty minimal return.

    In the bigger picture though, I think that this is a somewhat encouraging thing about Steve Tambellini. He does seem to be focused on extracting the most value possible from players who the Oilers have signed. The Vandermeer for POS trade and getting anything in return for Staios are similar examples. While I question whether he has measured the risk of qualifying JDD and of keeping the risk associated with Souray on the Oilers books properly, I like that he appears to at least be trying to look for ways to get the most out of players who aren’t in the Oilers’ plans.

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    16 Responses to Managing risk

    1. speeds
      October 1, 2010 at

      The decision to qualify Deslauriers is suspect, given that they gave Dubnyk a two year, one way deal (also suspect, in its own way). It’s kinda like paying $900,000 for fire insurance when it only costs $500,000 to rebuild your house and replace your belongings if it burns down.

      But perhaps we shouldn’t be surprised with EDM’s (in)ability to properly assess and value goaltenders, given the Khabibulin contract?

      The Souray case is interesting. Bob Stauffer has been pushing that for awhile, but the problem with doing that is that, as you note, it’s no certainty you can move him next summer.

      I actually find it pretty surprising they haven’t taken him back yet, it’s a lot of money to burn when you have some chance to move him if he can stay healthy for 30-40 games and play reasonably well. To be honest, I still wouldn’t be all that shocked if they do bring him back at the start of the season, but just kept him out of camp to delay the inevitable circus.

    2. David Staples
      October 1, 2010 at

      Could the Oilers have signed JDD to the big contract to scare off other teams from taking him on waivers, and to keep him happy in OK City?

      Perhaps they think he has raw talent, just needs one more year in AHL, don’t want to lose him, want to keep him happy, so they give him the big contract, with an eye to bringing him back next fall.

      As for Souray, if he plays well in the minors, the Oilers might be able to trade him sooner than later. His big problem is his post-concussion play. He can show he’s healthy and ready to perform almost as well in OK city as he can in the NHL.

      (Not sure if the Oilers would have to first recall Souray and expose him to recall waivers before trading him).

    3. Tyler Dellow
      October 1, 2010 at

      David -

      He has to be exposed to recall waivers in order to come back. I’m not wild about recall waivers because of this effect. The NHL is a better hockey league if Sheldon Souray is in it. Something that pushes the Oilers to keep him out doesn’t seem like a good thing to me.

      As for JDD…I still don’t see it. He’s UFA at the end of the year. He might quite reasonably think that if he’s sent down and DD wins the backup job that the Oilers have made DD their guy going forward. At the very least, I would think he’d want to check out the market. If the Oilers have faith in him, why not keep him up? Khabby needs lots of breaks historically, so there will be games to play here.

    4. Woodguy
      October 1, 2010 at

      Given Tambellini’s stated desire to keep Souray away from the Oilers organization, I think that if Souray is assigned to OKC, he’ll be asked to not report.

      Besides that, the AHL vetern rule would complicate matters since I believe they are already at their max, although those vets are only counted on a per game basis, not a total roster basis.

      The die is now cast and they cannot trade him without recall waivers until next summer, so the chances of any trade almost none.

      If they really want to be pricks, they could assign him to Stockton in the ECHL (“Hey Sheldon, its close to your kids”)

      That would be comedy.

    5. dawgbone
      October 1, 2010 at

      The die is now cast and they cannot trade him without recall waivers until next summer, so the chances of any trade almost none.

      I don’t think that’s true.

      He’s been put on waivers but he hasn’t been assigned to OKC yet. He only needs to go on re-call waivers to come back up from the minors.

      For some reference: In 2008, Khabibulin was placed on waivers by the blackhawks on almost the same date and did not need to clear re-entry waivers to play.

    6. October 1, 2010 at

      Tyler:

      You don’t think there’s a good chance Minnesota picks him up via waivers? I’m assuming you think they’ll sign an Emery, Theodore or Legace for similar or less money?

    7. October 1, 2010 at

      The risk is actually a bit greater than the $2.25MM – if he got hurt and nobody claimed him on waivers or re-entry waivers the following year, the Oilers could be stuck with the entire tab for him.

      Can’t that risk be somewhat mitigated with insurance? Worst case scenario is that we send him down this year and he gets hurt to the point that he scares off all takers on the last year of his contract, even through re-entry waivers, but is still cleared to play next season. Even there, though, the Oilers should be able to offset some of next year’s costs with insurance payouts on his lost salary this year.

      Although maybe the premiums on a policy for a man like Sheldon Souray are prohibitively expensive at this point. I really don’t know.

    8. Schitzo
      October 1, 2010 at

      He has to be exposed to recall waivers in order to come back. I’m not wild about recall waivers because of this effect.

      I agree with this thought. I wonder if it would be possible to change the rule so that the team losing the player would still be stuck paying half of his real salary, but with no associated cap hit. The acquiring team pays half salary and half cap hit as always.

      This would provide a cash incentive for teams to recall players who should probably be playing in the NHL.

      You’d probably need to restore the cap hit to its original value if the player is traded subsequently, however. Otherwise you have the Oilers waiving Souray, the Islanders claiming him, and then the Oilers reacquiring Souray for a 6th rounder. All of a sudden he has a $2.7 million dollar cap hit. That wouldn’t fly.

    9. Woodguy
      October 1, 2010 at

      dawgbone,

      They need to assign him by the beginning of the season right?

      If so, the limbo can only last a week.

    10. godot10
      October 1, 2010 at

      Tambellini got more back in the Garon trade (Stone and a pick) than LA got for Labarbera (much lower pick) at roughly the same time. There was a third backup goalie deal about that time where the seller got very little compared to what the Oilers received for Garon.

    11. Tyler Dellow
      October 1, 2010 at

      The Oilers also took back Dany Sabourin’s salary.

    12. SumOil
      October 1, 2010 at

      I dont think Souray is subjected to re-entry waivers unless he is assigned to OKC.
      I think Blackhawks did something similar with Khabibulin. Sent him on waivers, no one picked him and they did not assign him to their AHL team and played him the in the NHL.

    13. godot10
      October 1, 2010 at

      The Oilers want to make a good impression in Oklahoma, so they were going to spend on goaltenders there in any case.

      Considering Khabibulin’s problems and the good half of Deslauriers play last year, I have no problem with the decision to give him a one year one way deal as goaltender insurance in Edmonton and as one of the two goaltenders required for Oklahoma. The one year deal fills the gap to Olivier Roy.

    14. spOILer
      October 1, 2010 at

      Till he’s assigned he counts as a roster spot, but he can be held in limbo for the week.

      Oilers could also LTIR JFJ or send him and Jones on rehab assignements to stretch the process out somewhat.

      I wonder if waiving him now (a little early) was to light a fire under the ass of the GMs with which Tambi is talking. Essntially putting a clock on the negotiations. Allegedly there was a deal to be had prior to the trade deadline and Iggy’s head breaking Sexy’s hand, so there might be some discussions now, and there was some interest in Columbus earlier.

      As for JDD… One of the Edmonton reporters mentioned Darren Pang had said JDD was being shopped last summer but no takers.

      If reKhab’ situation was the issue, why give him the extension? Doesn’t the Gerber signing prove that insurance wasn’t needed that early or at that price?

      I worry they still think he might turn into a goalie.

      Or are they concerned reKhab is going to be gone for a major portion of the season, and thus want to be sure they have enough goaltending throughout the organisation? Add an injury and it might force an overpay for a goalie they don’t really want later in the year.

    15. October 2, 2010 at

      “That’s a lot of money to blow for”

      Keep a text file handy with this phrase in it, so you can just cut-and-paste this phrase for half of your Oilers posts this season.

    16. NewAlgier
      October 2, 2010 at

      I’d send Souray down. The two years’ salary is sunk. The only question is that of maximizing marginal benefits, one of which is doing something about the cap hit. Sending Souray down to OKC negates completely the cap hit, right? That’s gotta be strictly better than a $2.5 million cap hit for a cap-constrained, cash-unconstrained team.

      (I’m completely ignoring the whole “character” issue. I mean, come on, these are hockey players. Maybe they can make a movie of Souray tutoring the young kids in OKC, costarring Susan Sarandon).

      The money, yeah, whatevs, that comes back with even a short playoff run (or even competitiveness in April). There’s no new publicly-financed stadium without playoffs, after all. Obviously, I also couldn’t care less about Katz’s finances, if he spends like crazy to bend the cap, I’m all for it.

      If Souray’s contract is $3 million out-of-the-money when it comes to cap space, that’s a reasonable replacement player. So the way that I think about burying Souray is that it opens up the chance to get another, above-replacement NHL player at a fair cap hit.

      How much is cap space worth to a shitty team that spent up to the cap? The answer might well be that it’s priceless.

      Very little that the Oilers have done since signing Pronger has impressed me. If they send Souray down and free up his cap space, though, that would be the sort of thing that strong organizations do: relentlessly cut their losses.

      Another way to look at it is that they are buying cap space for the price of Souray’s salary. I’ll do that deal any day, because it’s a result that can’t be achieved any other way. $6 million is no more than two playoff games, tops. Never mind the higher attendance in March and April.

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