Wednesday, May 10, 2006

 

Team Building

It's been a while since I went to bat directly for Tom Benjamin's side in an argument, but I feel like chiming in here. The discussion was prompted by James Mirtle excerpting Eric Duhatschek, and the key graf is this:
"Managing a team these days is still about asset management, but the premium now is going to be on drafting well and keeping those draft choices until they get to unrestricted free agency, even if you have to take them to arbitration." - Brian Burke

Tom thinks Burke is being, ahem, disingenous here, and so do I. TB gets to the nuts down in the comments:
The issue is whether that premium [on drafting well] is now bigger or smaller than it was. It is very obviously smaller.

That's correct, period. I'm not interested (today) in determining whether this is a good thing or a bad thing, or whether Bettman has sold hockey fans a bill of goods, or whatever. But it is very obviously correct to say that when free agency is less restrictive, then in the grand relative scheme of things, pro scouting (good trades, FA signings, etc.) becomes more important and amateur scouting (good drafting etc.) becomes less important.

The key to a GM's success in all sports leagues, but especially where there is a salary cap, is simply to underpay as many of your players as possible by as much as possible. That's a bit glib, but it's another way of saying this: you need players who will outperform their contracts. Ideally, you sign young players to 2/3/4 year contracts just before they make The Leap; you sign experienced players after abnormally poor seasons when their market value is depressed; etc.

Restricted free agents help your team accomplish this, as the restrictions allow you to sign them to contracts for below their market value. Let's say I'm Kevin Lowe, in negotiations with Ales Hemsky, and that every GM in the league agrees that Hemsky's performance will be worth $4M next season. I can pay Hemsky up to $4M and be getting a "fair deal". John Ferguson Jr., however, cannot. For him to be getting a fair deal, he can only offer Hemsky a contract for [($4M) - (the $$ value of the draft picks he has to surrender to me)]. There is a ton of room for argument on what that "$$ value" should be, but it is some number greater than zero.

For the sake of this example, say it's $0.5M. JFJ can thus only offer Hemsky a $3.5M contract, or he's overpaying. I, then, can offer Hemsky $3.6M: it's the best deal he's going to get, and I'm getting a $4M performance for only $3.6M (everyone's happy!).

There are two rewards for drafting well in the NHL:
  1. Under the rookie salary structure, you underpay by a ton (in their 1st contracts) for excellent rookie performances (remember that Crosby & the Ocho are making ~$1M/yr)
  2. Having the rights to the good players you draft means that you can continue (in their 2nd/3rd contracts) to underpay them (per the JFJ example above) until they reach Unrestricted free agency
Item 2 is less of a reward now, because players reach UFA status sooner & younger. Hence, there's less of a premium on drafting well.

To wrap up, let me just reiterate once again that this does not mean that hockey as we know it is going to hell in a handbasket... if your team has the best amateur scouting department in the league, you are in great shape, because you'll have a constant stream of guys turning in multimillion dollar performances while being paid $0.5M-$1M. But this was also the case before, and now you have less of an advantage trying to re-sign your own draft picks: (A) because the compensation figure (# & Round of draft picks) for RFAs is smaller, and (B) because they become UFAs at a younger age.

Comments:

It would be interesting to take this analysis a few steps further. With younger UFA, does the age makeup stay the same, with the only difference being the 'stars' get their payday earlier? The stars should make more money in the long run, does that mean more 'cheap' draftees on active rosters, or more cheap veterans to fill the roster? Or will there still be the 'prime age' 3rd/4th liners hanging around?

It may take a few years to see who manages the whole thing best.
 


Matt, what you're saying is true for many teams, but how about those that could outspend other clubs in the free agent market? Some teams that didn't have to rely at all on their draft record (Toronto) now need those young players at a cheap premium.

Not draft well isn't an option anymore. It used to be.
 


1. Under the rookie salary structure, you underpay by a ton (in their 1st contracts) for excellent rookie performances (remember that Crosby & the Ocho are making ~$1M/yr)
2. Having the rights to the good players you draft means that you can continue (in their 2nd/3rd contracts) to underpay them (per the JFJ example above) until they reach Unrestricted free agency

Item 2 is less of a reward now, because players reach UFA status sooner & younger.


But Item 1 is more of a reward now because there's a cap on signing bonuses for draft picks under the new CBA.
 


I wonder what team's GM is going to step up and make an offer sheet to one of these young studs.

I bet you dollars to donuts that it isn't a GM who has ever had an association with the Edmonton Oilers Network.
 


But Item 1 is more of a reward now because there's a cap on signing bonuses for draft picks under the new CBA.

You do get the first 3 years cheaper for a guy on his first contract, but under this CBA you only get Crosby for 7 years as compared to 13 under the old CBA. He will probably cost the 20% cap after his rookie contract if he continues to progress as it seems he is.
 


It'll be very interesting to see how many elite level players leave their teams at the early age. I imagine Crosby's Pens will either be so strong when he's eligible that he'll stay or they'll deal him off.

I think the actual value of a pick is less than before, but not to the extent many seem to believe.
 


James, I suppose I'm not outright disagreeing with you here, but I think what you're talking about is pretty rare. How many teams were there (say) 5 years ago that could really spend their way out of trouble, and not actually need any young cheap players? Four, maybe? And did any of them actually win anything doing that?

Cosh, I know your point, but I haven't quite gotten my head around whether you're right or not (in other words, I might have screwed up ERRR misworded Point #1). Does a lower, or higher, or ANY rookie salary structure affect the relative Importance of Drafting Well?

If was intent on rebutting your take, I would start by noting that if the #4 overall pick in 2006 is a total bust, it will cost the team that drafts him a lot less than it would have in 2001 or in 1996. But like I say, I haven't quite gotten my head around this yet.

And LT, I'm fascinated to see the same things as you...
 


James, I suppose I'm not outright disagreeing with you here, but I think what you're talking about is pretty rare. How many teams were there (say) 5 years ago that could really spend their way out of trouble, and not actually need any young cheap players? Four, maybe? And did any of them actually win anything doing that?

A lot of teams used a hybrid system whereby they didn't necessarily have to rely on their draft picks.

The Detroit Red Wings, for instance, were a half decent drafting team, but it wasn't their recent picks carrying that club to glory. I'm not suggesting the Red Wings wouldn't have been dominant otherwise, but a payroll that was nearly double the league average helped cover up their bad moves (Uwe Krupp comes to mind). Terrible free-agent pickups or lean draft years would have sunk teams with low payrolls.

To win now, not only do you have to draft well — your draft picks have to be contributing at an early age. Building a team based on UFAs has never been economically feasible in the past; who's to say if someone can manage to do it now?

Anyway, all I know is that teams like Toronto, for who scouting was an afterthought in the past, have dramatically refocused on the draft. The Leafs scouting staff has almost doubled to 11 members this year.
 


Is it actually a given that the compensation for RFAs was reduced under the new CBA?
 


lowered UFA age

I wrote a bit about this awhile ago, it's not perfectly related but might interest some.
 


Cosh, I'm not 100% sure, but I believe the previous compensation was five 1st-round picks regardless of the salary of the RFA, so now compensation is somewhat less for the big-name RFAs, and much much less for the depth guys.
 


I dont know if the new NHL is drastically that different other than the fact owners and GMs cant spend stoopidly anymore thus saving them from embarassment. (ie. some one will sign Yashin for the max no matter what system we are in)

Pro scouting and amateur scouting are the same (beauty is in the eye of the beholder). 5 scouts going to the same game will all notice something different. I agree with James that buying free agents was never a successful policy so why should it be now.

The only decision GM's have to make now is predicting if a Cheechoo type season is one worth keeping for 3-4 years at $4 million each or better to trade while value is high.

What would you do?
 


new RFA compensation rates

old RFA compensation rates

compensation is significantly reduced everywhere, noticeably at the lower end, plus draft picks may or may not be worth less ( I say less, others disagree)
 


I don't agree that draft picks are worth less. In a cap environment you obviously have to maximize your production/cap dollar, but if you're suggesting building a team by looking around the league and signing guys who had bad years, I WANT you in my division.
 


"Buy low, sell high" works with hockey players as much as it does with any other commodity.
 

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