• Follow the Money II: Electric Boogaloo

    by  • September 1, 2012 • Hockey • 20 Comments

    My post on how forward salaries have changed since the lockout, was lacking a key bit of information: the effect of age on things. In the comments, Tom Benjamin said:

    Interesting stuff, Tyler, but I think the distortion created by later free agency makes it difficult to really draw many conclusions. Age was more important in than the quality of the player in determining slary under the pre-lockout CBA.

    As I explained in my response to Tom, I sort of but not entirely agree with him on this point:

    I agree with you to an extent. If you look at my list of the ten highest paid 1F in 03-04, it was as follows: Jaromir Jagr ($11MM), Sergei Fedorov ($10MM), Keith Tkachuk ($10MM), Joe Sakic ($9.88MM), Mike Modano ($9MM), Mats Sundin ($9MM), Bill Guerin ($8.86MM), Bobby Holik ($8.85MM), Doug Weight ($8.5MM) and Jarome Iginla ($7.5MM).

    Lots of those guys started getting paid big bucks while still RFA age. Iginla was RFA age at the time. Jagr was making $10.4MM in 1999-00, when he would have been about 27. Fedorov got a $38MM/6 yr deal when he was 28 that paid him a guaranteed $14MM bonus, probably making it more like $7MM a year when the time value of money is taken into account. Tkachuk started making $8.3MM a year at 28. Sakic signed that 21MM/3yr deal with NYR in like 1997. Sundin was pulling down $7MM a year at 28. I note as well that Kariya would have been on that list but took a cut rate deal to go to COL – he was making big bucks from a young age under the old CBA.

    That leaves Guerin, Weight, Holik and, to a lesser extent, Modano (although he was doing pretty well, $5MM-$6MM a year) who didn’t really hit big until UFA. Modano aside, those guys are lesser players than the ones who were doing really well at RFA age. I think it’s more sensible to say that the truly elite players were getting paid under the old CBA, generally by their mid to late 20s. It was the guys a step back who were being held back more. That seems to be rectifying itself now.

    First thing’s first: you’ll recall that, in the last post, I took all NHL F who played at least 40 games in 2003-04 and all NHL F who played at least 40 games in 2011-12 and sorted them by their TOI/G. I labelled the ninety guys with the most TOI “first liner”, the next ninety “second liners” and so on. I’ve now gone through and counted how many of those guys fall into each of three age categories: 18-23, 24-30 and 31+.

    An aside: In January of 2008, I wrote a post on NHL demographics. The key point from that was as follows:

    The league proceeded to hit its lowest average age by 1981-82. At that point, the decrease in age stopped. If that’s all there was, I wouldn’t be looking at the Baby Boom quite so closely but the average age started to increase at that point – my suspicion is that it rose as the Baby Boomers worked their way through the league. In 18 out of the next 19 years, the league was older than it was in the preceding year. The 2006-07 year was noteworthy because the average age dropped from 27.90 to 27.79 years; the biggest drop in average age since the 1980-81 to 1981-82 season. My suspicion is that that drop will be exceeded this year.

    While this data doesn’t prove anything with respect to age, it’s interesting to me that so many players aged 31+ have simply evaporated from the game. There were 26 forwards aged 18-23 who played on the top two lines in 2003-04 and 34 last year. The number of forwards aged 24-30 is basically unchanged: 100 and 102. The number of guys aged 31+ has plummeted – from 54 to 44. Probably worth following up on at some point.

    That ends the vegetable portion of the post – the rest is much more fun. I divided each of the four “lines” of players into two groups, based on salary. The higher paid one I’ve labelled “a” and the lower paid ones “b”. In the table at left, you can see the breakdown. I’ve highlighted the more significant changes since 2003-04. There was only one 18-23 year old in the highest paid first liner group in 2003-04 (Marian Gaborik) – now there are four. The number of highly paid 31+ first liners has dropped significantly. The second liners are pretty interesting as well – the share of highly paid 31+ second liners has cratered, almost entirely to the benefit of the 24-30 class. With third liners, again, we see an explosion in the share of the highly paid ones who are between the ages of 24-30. The lower paid portion of the third line class has seen the number of 18-23 year olds in it double. Finally, you’ve again seen an explosion of 24-30 year olds in the higher paid class of fourth liners.

    The final table there is simply how the players of each group were distributed amongst the various lines between 2003-04 and 2011-12. Things are pretty much unchanged in the 24-30 class and 31+ class. The most interesting thing to me is that in 2003-04, 64.4% of 18-23 year olds were third/fourth liners; that number’s now fallen to 55.8%, with a corresponding increase in the number of 18-23 year olds playing on the top two lines. This is a sort of different finding than the one referenced above about how the number of younger players in the league seems to be increasing – this suggests that there are more 18-23 year olds playing big roles now than there were in 2003-04. I’m not entirely sure why this is; it seems odd to think that the talent distribution in the 18-23 year old group has changed so dramatically now versus 2003-04.

    First Liners:

    Let’s talk dollars, which is the sexier part of all of this. First up, the first liners. As indicated above, I’ve created two groups, splitting my first line group into the highest and lowest paid halves. I’ve taken both averages and medians of those groups.

    The last graph tells the real story here. For players who are in the upper half of first line salaries, only the 18-23 year olds have matched the growth in league wide revenues of about 5.8%. The growth in salaries for 24+ groups of the highest paid half of first liners has lagged. With the lower paid half of these players though, that trend is reversed. Keep in mind, when we’re talking about players aged 18-23 who are in the lower half of salaries for a given line, we’re basically talking about players on ELCs. The amount that a player could be paid pursuant to an ELC dropped under this CBA, which explains why they’ve seen such an decrease.

    It’s the growth in salaries of the age 24+ players who are being paid in the lower half of first liners that I find fascinating. Keep in mind, I am basically comparing apples to apples to here, because I’ve created age classes. One of the effects of the CBA of the past few year has been to massively drive up the cost of players who were in the lower half of first liners in salary relative to players who are in the upper class. If you assume players who are more highly paid tend to be better than players who aren’t – and I think that this is a reasonable assumption to make – for some reason, the NHL has spent the past seven years throwing money at players who aren’t in the upper tier as far as performance.

    It’s also, to me, noteworthy how salaries amongst players over the age of 24 have converged. Look at the first graph and notice how the salaries of the 24-30 and 31+ group are now almost the same. Brian Burke’s hit on this point before, the disappearance of the second contract but man. Basically, once you’re an RFA now, you seem to get paid like you’re a UFA, or close to it, when it comes to first liners.

    Second liners:

    Again, notice how the salary gap between the 24-30 group and 31+ group has crumbled. In 2003-04, a second liner in the upper half of salaries cost you $2MM while a 31+ guy cost you north of $3.5MM. Now? About $3.5MM and $4.05MM. There wasn’t nearly the salary edge for guys in the lower paid half of second liners in 2003-04 but still: the price difference between a 24-30 year old second liner in the lower half of salaries and a 31+ year old second liner of the same type is now awfully small – about $200K.

    The final graph shows, again, that guys under 30 have enjoyed tremendous salary growth once they get out of the ELC system. The salaries of 31+ guys in the upper half of salaries have barely grown, while the salaries of 31+ year olds in the lower half of salaries have grown north of the league revenue growth rate. Similarly, although both halves of players aged 24-30 have enjoyed significant salary growth, salaries have grown more quickly for the guys in the bottom half. Again, it sort of seems like the growth in salaries has gone to the players who are the lesser players of a specific class.

    Third liners:

    Have a look at the median and average salaries of the 18-23 year old and 24-30 year old group of third liners being paid in the top half of salaries. I’d kind of mused before, back when Gilbert Brule was signed, that it was getting increasingly difficult to see where the surplus value in contracts for RFA third liners was. Basically, the thinking with younger players is that the team that develops them gets a deal on the price – if they’re cheaper than the equivalent player who’s UFA age, the team that develops the player benefits.

    This seems to have completely disappeared with guys in the top salary half of third liners. Assuming, for the sake of discussion that these are roughly equivalent groups of players (and by sorting by ice time, I should have accomplished that), there’s now a premium that teams are paying in order to have players who they developed. I thought it was worth looking into this in a little more detail, so I put together a graph of the salaries being earned by players in the two age groups at every tenth percentile for third liners in the upper half of salaries.

    You can see that the 31+ guys are, in general, more tightly grouped. I suspect that what’s happened over the past few years is that teams are paying young guys based on what they perceive as potential. The fact that they cost so much more than UFA third liners suggests that, on average, teams aren’t winning these bets. Maybe they’re getting some payoff with some cheaper second years down the road but, looking at the second liners, you see an awfully small difference between what the 24-30 and 31+ guys are getting paid.

    Also keep in mind that the NHL incurs pretty big development costs to produce these 24-30 year old players, frequently by the team that’s still paying them. In a sensible world, you’d be getting that investment in player production back in the form of cheap talent in the coming years. In the pre-2005 days, you could make an argument that that was happening. I’m not so sure that you can make that argument any longer.

    Aside: one wonders if the NHL wouldn’t be better off having a two round draft, limiting teams to 30 NHL contracts and letting leagues like the AHL develop talent that NHL teams can then buy from them, if the player is under contract, or sign as free agents when the player is no longer under contract. Few top two line guys spend much time, if any, in the AHL and you really have to wonder about the economic sense of having an incredibly expensive infrastructure to develop third and fourth line players.

    When you look at the compounded annual salary growth, you see about what you’d expect: guys under thirty in the top half of the salary structure for third liners have gotten massively more expensive, while the price of guys playing third line minutes has fallen dramatically. 31+ guys in the lower tier have seen a much bigger salary increase than 31+ guys in the upper tier, whose salaries have gone backwards.

    Fourth line:

    The fourth line’s a lot less interesting – what you’re seeing with the salary declines for those in the upper half of the 18-23 year old group is basically the impact of a lower rookie salary cap. The 24-30 group, you can see the impact of a higher minimum salary. The 31+ guys in the upper half are taking it in the neck. Nobody’s enjoyed salary growth anywhere near the growth in league revenues. Even in the NHL, in which it hasn’t been the top 1% raking in the growth in wealth, those at the bottom are still being gradually left behind.

    What does it all mean?

    1. You can’t refer to “the players” monolithically. I know that I harp on this but some players did quite well as a result of how the NHL’s salary structure changed in the last lockout. Some did quite poorly. If you’re a 23+ guy who would have been a cheap first line option had you played in 2003-04, you are now a far, far wealthier man that you might otherwise have been. Guys like Matt Cullen, Chris Kunitz and Mike Fisher should celebrate the “loss” in negotiations in 2003-04. (Point: it’s hard to know exactly which of these players would have benefited; some of them might have won the lottery of UFA and been second liners on better teams, with fatter contracts.)

    2. The NHL has spent the past seven years rewarding the lesser players on each line. If you go through and compare, you see that the guys in the lower half of salaries for first and second liners aged 24-30 and all the way through for guys aged 31+ have had larger percentage increases in their salaries than the guys in the upper half of salaries for players 24+. It’s one of the curious absurdities of what the NHL has done in locking in a players’ share of salaries and circumscribing teams within a tight payroll range – crappy teams that used to be cheap have now become more expensive and, as a result, crappy players who used to be cheap have increased in cost more than good players. It’s a bizarre way to pay people, a consequence of having a sort of Soviet structure.

    Note: this does not mean that paying lesser players much less is a way to “fix” the NHL’s “problems” – this is a consequence of a system where good players have decided that they value the chance to play with good players more than they value another couple of million dollars in annual salary. Teams like Edmonton thought that the salary cap meant that they would get a shot at the game’s superstars; what it actually meant was that they would get a shot at paying Dustin Penner or Michael Nylander far more than they would have paid him in 2003-04.

    3. Roster spots have kind of become commoditized. In essence, teams are much closer to just paying players now based on where they play in the lineup. Whereas before, there was some allowance for the skill of the player, that’s been reduced. If you’re a bad first or second liner, the emphasis is now more on the fact that you’re a first or second liner than it is on you being bad.

    4. Jordan Eberle is paying paid like he’s part of the NHL elite. That’s what he has to be for that contract to make sense. All this talk of Eberle getting going rate for a 60-70 point guy is nuts. He’s being paid like an elite first liner. If he’s a second line RW in two years, it’s a poor use of resources. There is a massive gulf between what an upper tier first liner is making and what an upper tier guy in a second line spot makes. It is more than a little frustrating to hear that sort of waved away – the Oilers are a team that has pissed away money on guys for years, always giving a bit too much to people. Not a problem that looks like being solved.

    5. Teams should possibly be walking away from third liners more often. You can’t have everyone give up on developing third liners but with what the ones under a team’s control cost now, it’s hard to see how investing resources in developing them makes a lot of sense. I never understood the criticism that the Oilers took for not having a farm team and I’m not sure what the economic case for one would be now, at least when it comes to forwards. We’ll see what the defence numbers look like – maybe that’s where teams are making their money back.

    6. UFA wins are getting cheaper, RFA wins more expensive. This is a sort of corollary to the point made above but it’s important, so I’ll harp on it. When a team signs a player to a contract, what they’re doing is buying wins (Desjardins explains in more detail here. Historically, it was cheaper to buy wins from RFA than it was from UFA and many analytical types will assume that an RFA contract contains a healthy price discount. I’m not so sure that that’s a sensible assumption to make any more. Here are 24-30 median/average salaries as a percentage in 2003-04 and 2011-12, as a percentage of the 31+ salaries paid to players in that same salary class (1a = highest paid half first liners, 1b=lowest paid half of first liners, etc.)

    Trend’s obvious. Your second and third line used to be a place where you could historically generate a real competitive advantange by developing those players in house – they were just ridiculously cheap compared to players aged 31+. That advantage has either narrowed significantly or disappeared. From an analytical perspective, this probably means that we should cut way back on the salary savings we’re assuming are generated by an RFA over a UFA.

    Email Tyler Dellow at tyler@mc79hockey.com

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    20 Responses to Follow the Money II: Electric Boogaloo

    1. Woodguy
      September 1, 2012 at

      So Burke was right?

      Kevin Lowe killed the 1st RFA value contract?

      • Tyler Dellow
        September 2, 2012 at

        Heh. I think that contract was on its way to death after this CBA was signed regardless. There were other big deal for RFA types before that – Nash is the one that sticks out to me.

        • September 2, 2012 at

          I think Ales Hemsky was one of the first to get paid on his second contract. Agreed that this was a process that was going to happen regardless but Hemksy’s deal probably had more impact in that regard than Penner’s.

          • Tyler Dellow
            September 2, 2012 at

            That was Hemsky’s third deal, IIRC. ELC for 2002-03, 2003-04 and then year burned during lockout. Pretty sure he signed a cheap one year deal for 05-06.

            • dawgbone
              September 3, 2012 at

              Yeah, he signed in August of 05 to a one year deal in the $1.0 – 1.5 mil range.

            • September 4, 2012 at

              Huh. I didn’t realize that. I had just assumed that season was the last of his ELC.

      • Woodguy
        September 3, 2012 at

        Doug Wilson did a good job with Couture’s 2nd contract.

        2 years for $5.75 total.

        I’d trade Eberle for Couture pretty quickly.

    2. Tom Benjamin
      September 1, 2012 at

      Great stuff, Tyler, although I still think most of the changes reflect the change in the free agency age. I do agree that the truly elite players were always paid very nearly what they were worth. (As someone pointed out on the previous thread, the best players often got the payday with the holdout or the threat of a holdout.)

      IIRC, in 2003-04, the big salary jump took place at about age 28 or 29 in anticipation of the UFA date when teams bought UFA years. We see the same thing happening again, but with FA from 25-27, buying UFA years wipes out a lot of the advantages of restricting free agency.

      In 2003-04, the second tier stars couldn’t really hold out so their best option was usually arbitration, a system that held down salaries. (Remember the claims that arbitration was inflationary? Right.) It isn’t surprising to me that the second tier stars were the biggest gainers and older players the biggest losers. (Although this may not be so if you looked at career earnings. Did the second tier stars gain back what they lost when they finally hit 29 or 30 under the old CBA? The guys who really lost out were guys who had their salaries suppressed through their primes and didn’t get the big payday in the 30′s.)

      Your second and third line used to be a place where you could historically generate a real competitive advantage by developing those players in house – they were just ridiculously cheap compared to players aged 31+.

      Indeed. It was pretty hard to convince anyone that this was true in 2004 though. I think this data shows how much better the old CBA was for the small markets. As long as you drafted players you could ice a very good, very cheap team by trading good players when they finally approached free agency.

      Oh, and I suspect that the reason we see the league getting younger is because we are a decade from the last expansion. I did one study years ago and while I can’t remember the results exactly, but expansion did extend careers for several years afterwards. I think that was the reason the league got so young in the early 80′s. The WHA collapsed and there were suddenly a lot fewer jobs around.

      • Tyler Dellow
        September 2, 2012 at

        The expansion theory is an interesting one although, I’m not sure that the data in the post link supports it with respect to the most recent expansion. Tom Tango’s theory that the league got younger in 1879 in part because of draft age dropping two years always appealed to me.

    3. TheOtherJohn
      September 1, 2012 at

      Fascinating look at who won/lost the last CBA. What is likely a corollary is that all sorts of teams say to their elite players “you need to take 10-15% less than market to make us a SCF contender” and then forget (or are too stupid) to make the exact same request of the 2nd and 3rd liners for the same discount. Not the Oilers mind you, they generally try to over pay everyone. Hall excepted

      Have no reason why you should not recycle (ie sign on FA market) your 5-6-7-8 D and bottom 6 forwards each year unless you are elevating AHLer/draft pick into that slot

      Which likely means Oilers will announce 4 year contract for Ryan Jones

    4. RhysJ
      September 1, 2012 at

      First off, excellent read.

      If I may be so bold to suggest a narrative to fit the data, could the generally strong annual increases in salary seen by lower-tier 1st and 2nd line players in the age groups 24-30 and 31+ be attributed to simple supply shortages in top-tier UFA 1st and 2nd line talent? If more players are being locked up long-term at young ages (in other words, signing UFA deals at an RFA age, killing the value in the RFA contract), logically there should be less truly elite players in their roles becoming available on the open market. In that case, seeing as TSN and Sportsnet and the mainstream media machine always tend to list team needs simply as “top-6 forward” or “top-4 defenseman,” a shortage of supply could be inflating the price for mediocre players if teams are a) desperate and/or b) unable to truly differentiate between quality top-6 F and average top-6 F. Inevitably, this leads to Ville Leino being one of the “top available talents” and getting $6M that turns in to 25 points.

      Mind you, if what I’ve suggested is true (and I have no evidence other than anecdotes to suggest that it is), I’m not sure that it leads anyone any closer to any solution on fixing this “curious absurdity.” If it really is a simple problem of not enough supply, maybe a cap on length of contract and fewer RFA years can help flood the market with more talent, restoring the growth in salaries to what you should logically expect (the CBA rewarding the top players rather than the “scrubs” who benefit from circumstance).

      • Tyler Dellow
        September 2, 2012 at

        Rhys – yeah, I think your second paragraph has a lot of sense to it. I also think that there’s something systemic in that lousy teams are being told they have to spend $X. They ask themselves “How can we best do this?” They. not unreasonably, conclude that they’d rather pay their young guys and lock them up long term instead of paying old guys when they intend to suck anyway.

        The whole thing is just another example of the problem of planned economies, I think.

    5. Doogie2K
      September 2, 2012 at

      I wonder also about that massive explosion in young third-liner salary. Part of it’s paying for potential, but I wonder also if it’s also a bit of a cognitive bias – thinking your guy is better than the other guys out there due to familiarity. Call it the HF Effect.

      • dawgbone
        September 3, 2012 at

        That and I think hockey overrates that kind of player on the whole.

        Heart, grit, character, good in the room… all that jazz gets a value tied to it and teams pay it.

      • RhysJ
        September 4, 2012 at

        Whether or not the NHL “overrates” the 3rd line player is irrelevant when looking at how that age group’s salaries have exploded. Seeing as they’ve increased to a point where they’re nearly on the same payscale as players who are 24-30 and 31+ (the guys signing UFA contracts), I’d guess that what we’re seeing is the death of RFA value. Essentially, they’re just getting free market value earlier in their careers.

    6. E
      September 3, 2012 at

      Can you elucidate point #3 above a little bit more?

    7. Triumph
      September 4, 2012 at

      Okay, there is a ton to digest here, but I’ll throw out a few theories.

      A: The league getting younger – this has been a trend for a while now, and I suspect there are three reasons -

      1: Increased penalizing of obstruction has made speed a critical factor. It means not only that young players who can skate get into the league earlier, it means that oldsters who lose their speed don’t stick around as long. When Hal Gill types can just bear-hug or cross-check a smaller player, it reduces their effectiveness.

      2: Younger leagues teach the NHL game better. This is anecdotal, but I don’t hear as much talk about 18 year old players whose defense has to be developed. Sure their defense isn’t great, but rarely is it ‘Can’t play in the NHL’ weak. As a league gets more competitive, the edges get smaller, and talented players can’t just coast on ability even in those leagues, and I suspect this began at the NHL level and seeped down to junior hockey and the NCAA.

      3: Older Russian players who are on the NHL fringe often go to the KHL for a safer job and probably better paycheck.

      As for salaries going up for the bottom half of 1st and 2nd liners, I’d be curious if you could split the ages a little better. Remember that arbitration was a touch later for players under the 1995 CBA. Then there’s earlier free agency. I recognize that salaries haven’t gone up for the top half, but this is likely due to salary and cap pressure – the better players are likely on better teams and the better teams tend to be closer to the cap. I am not sure that it is so much floor considerations as the desire to not step on players – you could step on players under the old CBA because they wouldn’t have the choice to leave for another 6-7 years. Now they can leave in 4.

      The fact that a second contract for good players is now a 5 year deal instead of a 1-3 year deal also can’t really help drive salaries down as it tends to cover a UFA year.

    8. Lee
      September 4, 2012 at

      Tyler, one of the main factors I think you’re ignoring with the Eberle contract is the employee relations and team building characteristics related to these signings, as well as the inherent difficult that Edmonton as a market faces in retaining elite talent.

      Advanced stats may make a stronger case for Hall’s deal providing better value than Eberle, but what kind of message does management send to the team and to Eberle in particular if they sign the golden boy and then make Eberle wait another season to prove his value? Or conversely if they try and reach a deal with Eberle now, but go at him hammer and tong in negotiations to save themselves $1mil+ per compared to Hall?

      These are the kind of actions that drives wedges between players, hamper team building and ultimately damage the chemistry of a core the team is so desperately trying to build upon.

      Eberle put up better boxcars than Hall last year. He’s been less injury prone than Hall. Finally, from all accounts, Eberle is extremely competitive with a hard-ass agent to match. Amongst those facts, what would make management think “here’s a guy we can likely sign for less than Hall because our QoC metrics says so?” The numbers may bear the argument out, but you’ll never convince Eberle at this point that he’s lesser player than Hall so you’re setting yourself up for a protracted and acrimonious contract negotiation. Both Hall and Eberle confirmed that Eberle watched Hall’s renegotiation carefully with the express expectation of achieving comparable remuneration.

      By advocating the Hall extension now and a ‘wait and see’ attitude agenda on Eberle, you’re basically advocating that management show preferential treatment for one of their cornerstones almost solely on the basis of advanced stats predictors. Clinical ‘management by numbers’ may look good on paper, but unfortunately, people don’t react favorably to being treated like numbers. If you ultimately want to push Eberle out the door at the earliest possible UFA opportunity, then the management strategy you’re advocating is the best way to do it.

      I agree, Oiler management (particularly Lowe) have been guilty of contract overpayments in the past. I suspect much of that is due to fallout from the dynasty years. Slats was a notorious hardline negotiator and while that undoubtedly saved the org some dollars over the years, it ultimately broke up the dynasty prematurely. As a result, the Oil probably have a mgmt team now that’s a little more player friendly than it needs to be at times. But there’s two key things to remember here. 1) It’s Katz’ money and it would be exceedingly naive to think that he’s not intimately involved in the final decision on these big money contracts. If you’re looking for a ‘brake’ and a voice of reason in these negotiation, ultimately the buck stops with this savvy businessman now and not with Kevin Lowe, 2) Edmonton is an effing arctic wasteland. The team WILL alway pay a little more than the going rate for player compensation. Particularly as the players age and the wives and kids get involved.

      All that Hall and Eberle care about right now is hockey, so if you can get their signature on a longterm deal that’s a very good thing. In a few years, their perspective on the world starts to evolve considerably and all of a sudden you’re facing significant pressures and threats that hamper your ability to retain your core. Messier was a perfect example. In addition to the $s, one of the primary reasons he left Edmonton was to take on a new challenge with the Rangers as he’d largely outgrown this little burg. In his own words, he was ‘pretty bunkered’ in Edmonton.

      By signing Hall and Eberle to nearly identical contracts now, the team is sending a very strong message both internally and externally that they’ve decided these players are essential building blocks and they’re compensating them equally and fairly with that in mind. Yes, in fairness, both signings are a bit of a gamble at this time, but there’s also a strong possibility that everyone’s boxcars take a leap forward with the additions of Schultz and Yakupov and then you find yourself having to cut these deals with Hall and Eberle with lesser leverage and tighter timelines. Prudent? Perhaps, but likely just a risky for different reasons.

    9. Fraser
      September 5, 2012 at

      I think teams have gotten smarter in the way they deal with their young first liners. As we know, two thirds of first liners (ie. wingers) peak very early. Given that, it would make sense in a non-planned economy for these players to be paid the highest salaries of their careers when they’re younger. You touch on this in the comments when you write about bad teams preferring to spend on their younger players instead of older players in order to get to the cap floor, but what’s odd is that although there is an attempt to control the market for young players, the best among them are still being paid as if they were free to negotiate with any team.

      All this to say, at least insofar as young first liners are concerned, the CBA is a pretty poor attempt at a planned economy.

    10. Lobanovskyi
      September 5, 2012 at

      “Roster spots have kind of become commoditized”

      This is the natural result of the salary cap. The concept of opportunity cost did not come naturally to many NHL GMs, but the majority of dealmakers now seem to understand that it doesn’t make a lot of sense to pay, say, $2 million a year to a guy who’s expected to play 6-8 minutes a game; their behaviour has adjusted the market such that even the ones who have a looser grasp of economics won’t offer such contracts (for the most part).
      The interesting thing about the commoditization and specialization of NHL jobs is that it implies a rationale for fitting players into the categories on which basis they get paid. Given the age of players when such sorting occurs (at least at the top end) and the opportunity costs to clubs of playing players in roles that are inconsistent with how they’ve been categorized, it is very difficult for players to move into positions where thay can expect to get paid top-line money. What we have is a system that rewards players for getting drafted in the top three rounds (and then competing with others in that position for the top-end spots).
      My system administrator at work considers Gabe’s site to be offside our e-policy, so I can’t justify my assertion using es toi/g (which is really a better measure of where a player is categorized), but a review of the top 90 scoring forwards last season returns 18 that weren’t drafted in the first 3 rounds (using the top 90 p/g forwards returns about the same results). There’s an argument to be made that even some of these 18 had roads paved for them to become top 2-line players, but 80% coming from the top rounds of the draft is pretty solid proof that it’s a rigged game.
      I guess you could argue that NHL scouts are really good at identifying the 18 year-olds who can “make it” and those who can’t, but you’d be wrong.

      “one wonders if the NHL wouldn’t be better off having a two round draft, limiting teams to 30 NHL contracts and letting leagues like the AHL develop talent that NHL teams can then buy from them, if the player is under contract, or sign as free agents when the player is no longer under contract. Few top two line guys spend much time, if any, in the AHL and you really have to wonder about the economic sense of having an incredibly expensive infrastructure to develop third and fourth line players.”

      I agree with this.
      If we’re engaging in fantasy, why stop there, though? How about a draft-free system with a salary cap that applies to every player a team owns (even for players loaned to AHL or ECHL teams), 30 NHL contracts, the right to sign one (new) player under the age of 20 every year, and no connection between NHL and AHL teams? It would increase the level of competition and calibre of AHL games, as teams would have to prove to the markert that they were capable of developing NHL-ready players. And it would broaden the talent base from which NHL teams pick their players, theoretically resulting in better NHL players and teams.
      AHL teams have the same categorization issues as NHL teams do, and are often under orders to play the big club’s prospects even when it’s not in their competitive interests to do so. This would solve that problem and allow for truer competition for top-end roles.
      My understanding is that the draft was put into place to prevent teams from stockpiling talent to the exclusion of their competitors. In a salary cap world, that’s no longer possible to do, and there are ways to preserve competitiveness that don’t have the unintended consequences of limiting the pool from which top players can be selected in the way that the current system does. Forcing everyone to spend approximately the same amount of money on their players appears to be a good way to do that.

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