The state of Georgia has had some trouble over the years in settling on a state flag. With yesterday’s trade of Ilya Kovalchuk, this seems like it would be appropriate. I don’t know that the return is that bad given what the Thrashers had to sell - 25 games of Kovalchuk at a cost of about $2MM - but I’m more than a little surprised that they would do this when the marginal value of standings points is so high for them right now.
There’s a great site called Sports Club Stats that breaks down a team’s probabilities of a playoff appearance. Their odds are based on a club’s play to date and won’t reflect the fact that the Thrashers have just abandoned Kovalchuk. They’ve got the Thrashers at a 37.2% chance of a playoff appearance at the moment.
In calculating their odds, they simulate the remaining season. They determine the probability of a team finishing with a given number of points and, assuming the team achieves that number of points, the probability of a playoff position. I’ve put the meat of their information relating to the Atlanta Thrashers into a graph to illustrate the point I’m driving at here.
As you can see, the possibilities for the Thrashers are pretty widely dispersed. As we all know, hockey’s a game of bounces and, in a small sample like the 27 games that the Thrashers have remaining, pretty much anything can happen. The most likely outcome, with an 8.3% probability of occurring, is that the Thrashers accumulate 85 points. If that happens, they’ve got a 20.9% chance of making the playoffs.
The thing is, the Thrashers are in sort of a sweet spot - the cost of adding or subtracting marginal standings points for them is extremely high in terms of their chances of making the playoffs. If they get 86 points, their chances at a playoff berth rise to 37.1%. If they get 87 points, their chances rise to 55.9%. 84 points drops them to 9.8%. 83 points and they fall to 3.7%.
The effect of this should have been that it required an awful lot for the Thrashers to be convinced to move Kovalchuk in a deal that weakens them in this season - marginal points in the standings are worth an awful lot to them. Here’s the same graph for the Devils.
Additional points in the standings have no value to the Devils in terms of making the playoffs. To the extent that they benefit from the acquisition of Kovalchuk, it will be in the form of enhancing their odds of playing more home games in the playoffs, whether due to a better position in the standings or because he makes their chances of winning a given playoff game better.
Why does this matter? Well, when Waddell was phoning around looking for a deal for Kovalchuk, in theory, he should not have been willing to make a trade unless he was offered value that exceeded Kovalchuk’s value to the Thrashers. Given that the Thrashers are in a sweet spot in which marginal standings points are of tremendous value to them, finding a trade that makes sense should have been pretty difficult to accomplish.
You can work through this a little bit. After the trade deadline in 2006, I wrote a lengthy post that kind of laid out, very roughly, the process I would be going through if I was an NHL general manager determining whether it makes sense to deal someone. The heart of that post was as follows:
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.
For the sake of simplicity, I’ll use the same dollar figures and assumptions with respect to finishing eighth and a 40% chance of winning a given playoff game for the Thrashers - I might be a bit generous on the money involved here but I’m probably being stingy on the eighth place finish and their chances of winning a given playoff game. So we assume that the Thrashers expected playoff profit, if they make it, is $7.2MM. With a 37.2% chance of making it, they can reasonably say that they expect to make $2.68MM in playoff revenue before they make this move.
Now look at the salaries involved. Patrice “Poodle” Cormier, although not in semi-seclusion in Northern Quebec, won’t be on the roster this year. Neither will the first round draft pick. Niclas Bergfors and Johnny Oduya, however, will join the Thrashers roster. Kovalchuk cost the Thrashers $33,105 for every day that he was on the roster. Anssi Salmela cost them $3,174 daily. Johnny Oduya and Patric Bergfors, who will presumably take their place on the roster, cost the Thrashers a total of $22,375 daily. With 67 days remaining in the season, the net savings for the Thrashers will be about $931,000.00.
So, if you leave aside the value associated with Cormier and the first round draft pick, the assessment is easy: did Waddell reduce the Thrashers expected revenues from the rest of the regular season and the playoffs by less than $930,000? Given where they are in the standings, I’m inclined to think that the answer is no. I’ve assembled a colour coded chart that incorporates the assumptions above in terms of the Thrashers chances of making the playoffs with a given number of points, the assumption that a playoff appearance has an expected value to them of $7.2MM, the assumption that they would necessarily finish in eighth place, with a forty percent chance of winning a given game and the assumption that they’ll net about $931,000.00 in savings from the trade.
All numbers are in millions. If the cell is coloured green, the expected value to the Thrashers from the trade is in excess of $500,000.00 (before consideration of the value of Cormier and the first round pick); if it’s red, it’s an expected loss of at least $500,000.00. White cells mean a value of somewhere between $500,000.00 and -$500,000.00. Keep in mind: I’m only considering the financial implications between now and the end of the 2009-10 season.
You can see that Waddell was in a pretty tough position with this deal. If he expected the Thrashers, as presently constituted, to be an 85 point team and he figures that the shuffling of players in this deal reduces their expected outcome by two or three points (two points seems more reasonable to me than three), then he’s into a grey area in terms of whether it makes sense to deal Kovalchuk or not. I’m not wild about Patrice Cormier and a late first round pick is a lottery ticket - I don’t know how much extra value I’d be attaching to that, maybe a couple hundred thousand dollars. A playoff berth would presumably help the Thrashers in terms of selling tickets for 2010-11, so there are future financial implications cutting both ways.
In short, it would be a very tough decision. I can’t bury Waddell for the return because I suspect that the value of the return exceeds the short term financial hit but the timing of it is torturous. These decisions are usually pretty easy for selling teams - if I were to make a table like that for the Oilers, it would be entirely green.
If I was in Waddell’s shoes, I’d have been inclined to see how things played out as we moved towards the Olympic break. Given that New Jersey benefits very little from adding Kovalchuk in the regular season (marginal standings points have little value to them) and are presumably motivated by the possibility of improving their odds in the post-season, I would suspect that the same deal would be on the table on March 3 as was on the table on February 4. One wonders if Thrashers management looked at the $463,470 they would have been paying to Kovalchuk during the Olympics and just wasn’t willing to swallow it.
Being a fan of the Oilers is not a lot of fun right now but being a fan of the Thrashers has to be just awful. I’m hardpressed to think of an instance in NHL history in which a team has actually made a trade like this when they were actually competitive for a playoff spot. The Oilers’ decision to, for example, trade Ryan Smyth happened when they were seven points out of the playoffs and a month later in the season.
Given where the Thrashers are on the playoff bubble, this may well have been a white flag trade - the loss of a couple of points is huge to them. I can understand making a trade that has marginal financial upside to you when you’re clearly out of the race; making that same trade at a time when you’re in the thick of it is just an awful thing to do to the few people who’ve been coming out to the rink for ten years. The return is probably reasonable, given the limited value of 27 games of Ilya Kovalchuk but effectively abandoning the playoff hunt is a pretty awful thing to do to the fanbase.
This situation reminds me a bit of the Oilers situation with Joseph in 97/98. Sather decided to not flip Joseph, the Oilers upset Colorado in the first round, and then got knocked out against Dallas in the second. Joseph signed with Toronto in July, and the Oilers got nothing back at all other than the $ from the home playoff games. It’s a real damned if you do, damned if you don’t situation
I suppose the one thing is that if Kovalchuk were to get injured during the Olympics then the Thrashers would be SOL.
Great example AG. Here’s what the standings were like on deadline day:
“The return is probably reasonable, given the limited value of 27 games of Ilya Kovalchuk but effectively abandoning the playoff hunt is a pretty awful thing to do to the fanbase.”
Tell that to Florida fans who lost Jay Bouwmeester for nothing. I bet they would love that package Atlanta received right now.
Forgotten in all your graphs and figures is the possibility that Kovalchuk gets injured before or during the Olympics and Waddell receives nothing for his asset.
Its like Wheel of Fortune. If you know the puzzle do you try and solve it right away or do you spin the wheel again and risk going bankrupt.
Another thing that should be mentioned is that while Atlanta’s winning % might be x when Kovalchuk in the lineup, what that winning % would be with the distraction of Kovalchuk’s pending trade is another story.
Kovalchuk basically gave the bird to the Thrashers organization when he turned down 101 million dollars. Not really the greatest team environment you want heading into the stretch run.
Kovalchuk basically gave the bird to the Thrashers organization when he turned down 101 million dollars. Not really the greatest team environment you want heading into the stretch run.
Oh Traktor. Your team environments and distranctions are good and all but I’ll take hard cash, thanks.
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MC:
Good breakdown, although Traktor’s long-winded post brings out a (small) point, un-intended I think so I hesitate to really credit it to him but anyways.
I’m onboard with most of your positions on matters like this, they remind me of the positive-expected-value play arguments in poker. But if I am correctly informed such an argument is contingent on having a large bank-roll and therefore able to sustain short-term losses.
In the case of ATL I don’t know if they are able to sustain a loss like Kovalchuk going down with injury. The org appears to be on its last legs here.
It’s like having the choice of a coin-flip, with the coin weighted 37H-63T. And if you flip heads you get a dollar, tails and you get nothing. ATL absolutely needs to flip heads but they absolutely can’t afford to flip tails and get nothing. So instead they forgoed the flip and took 20 cents on the dollar.
Although, I think in a way you’ve already addressed this by saying ATL can’t afford any other outcome but the dollar. Twenty cents might as well be nothing, to them. Is that right?
Addendum to post #5: it’s not just losses like Kovalchuk getting injured that would worry ATL, it’s pure shit luck too that they can’t handle either. If Kovalchuk brought them 1-3 marginal standings points but the team gave it all back because their goalies sucked or they ran into hot netminders or they just didn’t score the right goals in the right games, they’d be SOL too.
So really I don’t think injury is relevant here, just plain bad luck would have been disastrous.
I really like how clearly you laid out the cost/benefit analysis with the colored cells.
From a pure/cost benefit analysis a GM has to weigh both short and long term. Let’s say they keep Kovalchuk, finish 8th and have just 2-3 home playoff dates. The revenue bonus from the home dates is modest. The bigger payoff would probably show up in higher season ticket sales over the summer. However, if all the fans know Kovy is leaving during summer that might put a big damper on those as well.
On the other hand, if you finish 9th, those pieces (Oduya, Bergfors) are very affordable and (in theory) make it easier to qualify for future post-seasons than getting nothing would.
Personally, I would have dealt him last summer. I think Kovalchuk is over rated because of his extreme PP ice time and soft minutes. He really hurts the club at ES with his position in the D-zone. I don’t think you can build a Cup contender around that sort of player. For me, trading Kovlachuk opens the door to building a genuine two-way hockey team, so I think moving him is better than signing him through his age 37 or age 39 season.
Tell that to Florida fans who lost Jay Bouwmeester for nothing. I bet they would love that package Atlanta received right now.
You can’t really sit here and say that though. You don’t get to make the decision with knowledge of how things will play out. Florida ended up being as close to making the playoffs as is possible last year - they lost the tiebreaker to Montreal. They were a 90% shot when the decision was made. It’s completely unfair to criticize that decision after the fact.
Forgotten in all your graphs and figures is the possibility that Kovalchuk gets injured before or during the Olympics and Waddell receives nothing for his asset.
Sure. And what if the plane Oduya and Bergfors get on to fly to Atlanta crashes and they die? Those are risks of employing hockey players. Atlanta still has those risks, they’re just carrying them for different people now.
In the case of ATL I don’t know if they are able to sustain a loss like Kovalchuk going down with injury. The org appears to be on its last legs here.
I don’t think that the organization’s that fragile. If the line between surviving and not surviving is made up of Johnny Oduya, Poodle, Patrick Bergfors and a first round pick, well, shit. They’re in a lot more trouble than I thought.
On the other hand, if you finish 9th, those pieces (Oduya, Bergfors) are very affordable and (in theory) make it easier to qualify for future post-seasons than getting nothing would.
Well, there are two angles to this, obviously. First, there’s the idea that wins are being exchanged. In theory, Atlanta sent more wins to New Jersey for the rest of this season than they got back - otherwise the deal is senseless for NJ. Atlanta makes it up by getting future wins. If there are no salaries involved, it’s purely a matter of finding the right number of future wins that equal the present value of the wins Kovalchuk represents.
Second, you bring money into the equation. If Oduya is signed to FA market value, his future wins don’t really have any value to the Thrash - why wouldn’t they just go out and buy those wins from a defenceman over the summer?
My sense is that replacement level is a lot higher than we all intuitively realize. I’m not sure that, when you account for that, getting the future equivalent of a win is that big a deal.
Personally, I would have dealt him last summer.
This I probably agree with, although I would have looked to move him at last year’s deadline when the Thrashers were out of it. In that case, they would have gotten a better return, plus they could have looked to replace some of his contributions for this year in the 2009 UFA market. When you factor in the amount of money that they were paying him, they may well have been able to do alright adding a replacement player in the summer.
I’ll defer to you on his value - I don’t watch a ton of Thrashers games - but I am sort of surprised that he was only able to take Atlanta to the playoffs once. It’s a team game but that’s an awful division.
I don’t think that the organization’s that fragile. If the line between surviving and not surviving is made up of Johnny Oduya, Poodle, Patrick Bergfors and a first round pick, well, shit. They’re in a lot more trouble than I thought
What I meant was, can ATL afford to miss the playoffs again?
part of the problem is that atlanta hasn’t done a great job of showing kovalchuk’s value - he’s never won a playoff game or been a plus player. i have to imagine that dissuaded some people who might’ve been interested.
you have to believe that waddell hoped to make the playoffs this year and by doing so retain kovalchuk - he is the face of the franchise, it’s going to be tough to sell hockey in atlanta without him.
Do u guys think, prior to this season, that Marian Gaborik and Ilya Kovalchuk couldve been considered similar players? Why or why not?
I don’t think they are the same player. Gaborik learned defense first hockey under Lemaire for years, Kovalchuk not so much. Of course they are both elite offensively though.
Nice look at this season’s value. The sports books seemed to have Atlanta at about 5:1 to make the playoffs now - so this move cost them $1.3M?
Going forward: I estimate picks in the 2nd half of the first round have about a 20% chance of turning into a 0.5-win player during the entry-level period. Those are cheap wins though - $600k per so, not including money paid to unproductive young players.
If we take a 3-year horizon, we get:
Oduya = $0 surplus value
Bergfors = $900k (1 win over three years?)
Cormier = $500k (50% chance of being a 30-40 pt guy?)
Pick = $500k
Cash = $930k
I should discount that a bit, but oh well.
So the Thrashers picked up $2.8M in surplus value + cash? At a cost of $1.3M in playoff revenues.
NJ is basically now favored to win an extra series - so this was worth $4-6M to them, at a cost of $2.8M. Seem right?
Impressive and exhaustive work, MC and Hawerchuk, converting player value into money.
(Not that I comprehend a damn word of it)
NJ plays the teams that ATL is chasing for a playoff spot 9 times between now and the end of the season, ATL plays them 5 times. Does the improvement of the Devils not alter the odds of ATL gaining points on those teams a little? Not that Waddell had this in mind, but he did trade him to the team that plays the Rangers and Phillies 6 more times this season.
The Rangers and Phillies? Did the Devils just trade for John Smoltz?
Sorry - the Rangers and Philly:)