Watching some of the post-deadline reaction, there was a lot of discussion about how teams had a hard time making deals because they didn’t know what they should be offering due to the effect of the earlier deadline and the salary cap. I have a hard time believing this.

First of all, this season has a pretty clear delineation between the teams who are in the race and the teams who are out of it. For the teams who are out of the race, it seems like a pretty simple calculation to me, particularly when you’re dealing with potential UFA players-get as much as you can, but don’t get caught holding the bag on a guy, particularly if he’s got a big salary. The timing of the deadline-whether it’s 26 days before the end of the season or 40 seems irrelevant to me in peforming this analysis, although the later it is, the better the information you’ll have to make the decision with.

I’ll use Sergei Samsonov as an example here. The Bruins odds of making the playoffs were pretty slim anyway-I have them at 6.9%. For the sake of my example, assume that the only decision they had to make was whether or not retain him. If they decide to retain him, what they’re really doing is making an investment of about $550K (Samsonov’s remaining salary). How much will dealing him cost the Bruins in terms of revenue? It’s almost impossible to say but generally speaking, I’m down with the theory espoused by Billy Beane in Moneyball-winning, not name players, drives revenue. I’d think that this is particularly true in hockey and particularly when you’re dealing with a guy who’s not quite a star in Sergei Samsonov. I doubt that very much, if anything, in the way of regular season revenue is lost by dealing him. Even if it is, the new CBA may almost encourage you to do this by providing protection in the form of revenue sharing against your revenues going completely in the toilet. It’d be nice to see a copy and know for sure.

What about the reduced possibility of playoff revenue? Presumably, removing Sergei Samsonov from the roster reduces the chances of the Bruins making the playoffs. If we treat the impact on the regular season as being revenue neutral or close to it, the real question is how the loss of Samsonov affects their expected playoff profits.

In order to answer this, we need to know what the Bruins expected playoff revenues would be. I’ll make a couple of assumptions here that I think are reasonable and try to be generous to the Bruins. The first is that if they were to make the playoffs, they’d be an eighth place team. The second is that they’d have a 40% chance of winning any playoff game they played. The third is that each home playoff game is worth $2MM in profit and that they would have no expenses (hotels, airplanes, per diems; I’ve got no idea how to ballpark those) from the playoffs. I think that these assumptions are, if anything, very generous to the Bruins.

If you operate with the assumptions I’ve made, you come up with an expected revenue per playoff round of $5.152MM. That’s based on a .424 probability of playing 2 home games at $2MM per and a .576 probability of playing 3 home games at $2MM per. Their probability of making it past any given round is a not very promising .2897. If you run it through, you come up with an expected playoff profit of $7.20MM-if they make the playoffs. Given that I figure their odds of doing that at 6.9%, their expected playoff profit at the deadline was about $497K and this is with what I would guess is very optimistic estimates of their chances of winning a particular playoff game, the money earned from a particular playoff game and the costs involved with making the playoffs. When you consider that they were deciding whether or not to invest $550K in keeping Samsonov, right off the bat it looks like a poor investment. Even if they have to give him away for nothing and doing so would reduce their playoff chances to 0% (neither of which is true), they can expect to come out ahead financially.

This analysis can be made even more precise if you have the ability (which NHL GM’s and scouts theoretically do) to put some sort of value on the muscle in terms of how he changes your expected goals for/goals against; you can then determine how your odds are affected. I’d be shocked if losing Samsonov cost the Bruins THAT much in terms of their chances of making the playoffs; keeping him would likely have been an even worse financial decision than it appears as it’s overwhelmingly unlikely that moving him reduces their expected playoff profit to zero.

This leads to my second point. In addition to the money that teams can save and add to the bottom line, there’s the value of what they can add. I’ve long thought that the price paid for potential UFA by the acquiring team is too high. If you accept my reasoning that continuing to pay players who become UFA’s at the end of the season when you’ve got no reasonable chance of making the playoffs is a poor investment, that means that from a financial perspective for the Bruins, Islanders, Panthers, Capitals, Penguins, Wild, Coyotes, Blackhawks, Blue Jackets and Blues (and probably the Sharks and Maple Leafs), giving away pending UFA’s who were making even a dollar more than the minimum salary (presumably, any replacement called up from the minors would cost the minimum) was more attractive than the alternative. Those teams can expect to come out ahead financially more times than not just by getting rid of the player.

They don’t just get that though-they also get the benefit of whatever assets they can pry lose. I would expect, in a rational player service market, that getting anything more than future considerations at the deadline for a player like Samsonov on a team in the Bruins situation would be driven entirely by the demand side of the equation. Presumably, people like Kevin Lowe and Darryl Sutter could go through the same process I’ve described and come up with some assessment as to how their team’s expected revenues change with the addition of someone like Samsonov. You’d then expect them to be willing to exchange anything up to the point, in revenue terms, that they would be breaking even. Given that it would be pretty easy to figure out the other guy’s situation as well, every GM should have an excellent idea of the minimum needed to offer the other guy a deal on which his team profits. It then comes down to haggling, with the upper hand going to the team that has more palatable alternatives (dealing Roloson to another team for a second rounder vs. dealing for Mika Noronen, for example).

In the case of Kevin Lowe, he needs to consider the impact on the Oilers chances of losing Marty Reasoner and adding Sergei Samsonov has on the Oilers odds of winning/advancing this season. He then needs to consider the impact on future revenues of losing a second round pick and Yan Stastny. This is obviously harder to do-it requires not only a shrewd assessment of Yan Stastny’s potential (which I think is low) but an understanding of the market sufficient to understand the return you can generate from investing the money saved while Stastny is in his RFA years in other players. The same goes for the second round pick-giving it up costs the Oilers a certain percentage chance of having a guy filling a spot cheaply.

I suspect that if I ran a conservative analysis on how the acquisition of Roloson changes things, I’d find that that deal makes sense financially for the Oilers. It obviously made sense for the Wild, even before they take into account the expected return on the first round pick which is just gravy for them. The investment in Roloson is costing the Oilers somewhere in the neighborhood of $367K. A key point here is that it’s a win-win deal. Many commentators try and tag a “winner” label to deals; if my proposed method of analysis is correct, it should be quite common to have deals at the deadline that both teams win and so naming a winner is foolish. The Oilers are hoping that Roloson helps them acquire wins and revenue that will come at the expense of teams other than the Wild (at this point of the season, a win is worth far more to the Oilers than it is to the Wild) while the wins and revenue that the Wild hope to acquire from the first round draft pick in addition to the savings on Roloson will be taken from the league as a whole.

I’m not quite as certain that the Samsonov deal would make sense financially by this analysis (I don’t think he affects the odds nearly as significantly as Roloson, who could be worth somewhere between 0.5 and 0.75 goals per game for the Oilers) but I kind of wonder if that’s a bit of a capital investment for the Oilers, who are known to be sniffing around for a new arena. Edmonton has reacted very positively to the deals and if I’m right that the CBA benefits for the Oilers will dissipate over time, it seems wise to push hard now and be seen to be a highly competitive team for improvements all of a sudden-the windfall from a taxpayer funded or partially funded arena would be huge for EIG.

Ultimately, if you’re just a fan of the team, you probably don’t particularly care about this. When a trade is made, your interest lies solely in whether or not you think your team is better off on the ice (or will be) for making the trade. It’s apparent to me (although I’ve had arguments with smart hockey fans who disagree with me on this point) that there is no such thing as a pure hockey decision at the GM level-every decision has business implications, no matter how small. If a GM lacks the capacity to understand and evaluate them, I don’t see how he can do his job properly.

With that in mind, two general manages stood out for me at the trade deadline, albeit for opposite reasons. Potential invitee to the Atrocious NHL GM Summit Mike Barnett added Oleg Kvasha to the Coyotes for the rest of the season. It’s a lunatic move that can’t possibly have a positive expected financial outcome but one that is typical of the ongoing debacle in Phoenix. On the other side of the coin, Brian Burke did a nice job flipping guys and replacing them with players who were cheaper and/or close to as good. While Sean O’Donnell fills the hole left by Keith Carney, Sandis Ozolinsh was made somewhat redundant by the presence of Scott Niedermayer to eat the PP minutes. Burke can now deploy the $2.75MM that Ozo was slated to earn next season more effectively.

There are some points I haven’t touched on here because I don’t have the right information to do so. The first is the impact on a team’s chances to resign a specific player. The Maple Leafs decision not to trade McCabe is possibly defensible if they instead decide to resign him-if by not trading him, they get an advantage on resigning him, I’d say that they can at least argue this. Whether it’s worth paying him the extra $1MM or so is an open question in my mind. I haven’t touched on the impact on ticket sales the following season either. A team like Atlanta, for example, might get a significant financial boost the following season just from making the playoffs, which would would mean that there are revenue streams from a playoff appearance that I’m failing to consider. I’d suspect that this is a unique occurrence though and that the Thrashers could take a look at the Predators experience (although Bettman’s lockout kind of ruined them as a comparable) as well as the experience of teams like the Mighty Ducks, Lightning and Panthers (expansion teams in non-traditional markets) to at least come up with a rough idea of the revenue involved. There’s probably a similar, but much smaller impact involved in other markets. The impact in Toronto would be zero-I’m not a fan of JFJ’s work on the deadline. Finally, I think that for many owners, they’re willing to accept more risk and potential loss on their hockey franchises than they would be from their real estate ventures. The hockey team has an element of fun, social status and excitement that isn’t captured by an analysis such as this.

To come back to my initial point, none of this analysis would be affected by the imposition of the salary cap or moving the deadline forward. NHL teams will have access to much more precise information on the actual dollars at stake and ideas of the impact of dumping players on deadline day during a lost season. While there are new issues relating to cap management, the question of valuing players and knowing what to offer is still fundamentally an economic one-of all of the options available, which ones provide the team with the greatest expected financial outcomes?