Leave a comment

The Value of a Twelve Million Dollar Man

Imagine you’re a General Manager assigned the task of assembling a winning National Hockey League team.

Would you pay two players $12 million each to produce 100 points (goals plus assists) in the 82-game regular season? Or would you rather pay four players $6 million each to produce 50-60 points in a season? Or would you pay eight players $3 million each to produce 25-35 points in a season?

As a General Manager (or GM) in the current NHL, those are the kinds of questions you would have to wrestle with.

Under the current salary cap, an NHL team can pay its players no more than $81.5 million in a season. Since each team has a maximum of 23 players on its roster, that means that the average player gets a salary of about $3.5 million. However, it is not quite that simple. For technical reasons (contracts bought out, salary retained from players who have been traded, etc.), most teams are paying a little of that $81.5 million to players who are no longer playing for the team.

Furthermore, player contracts are negotiated based on what a player is expected to produce or what the player used to produce, not on what a player actually produces. All teams have some players who produce less than they are being paid for—such as a $6 million player who produces only 20 points a season. Most teams also have players who produce at a higher level than expected. This is especially true of younger players. The NHL agreement with its players limits the salaries of new players in the league to about $1 million per season for their first three years. It is not unusual for one of these players to produce 50-60 points in a season.

Regardless, the basic question remains: What mix of players should a GM assemble for his team. Should he assemble players with similar levels of skill and pay them all $3.5 million? Or should he assemble players with different levels of skill and pay some players more and others less?

Higher paid players are often expected to play more minutes per game; therefore, per minute, the salary difference, while still large, is not as large as it might seem at first glance. On the other hand, playing more minutes brings the risk of burning out the $12 million player.

Now let’s look further at that $12 million player. Every GM seems to want one or two of them. That is why they jockey to get a top draft pick, hoping that a young player will develop into a $12 million player. And that is also why they offer huge contracts to free agents.

But is that the best strategy?

If your team is behind by a goal late in a game, you would surely want to have one of those $12 million players to put onto the ice to try to score a goal and tie the game up. But putting so much emphasis on one player (putting all your eggs in one basket, so to speak), can leave you vulnerable. If that player is injured or the other team puts enough focus on preventing that one player from scoring, then your team might be left with no other options.

Also consider this: The more $12 million players a team has, the fewer medium-priced players it is likely to have. There is a limited amount of salary money to go around. The result might be a team that has great strengths in one area and great weaknesses in others. For instance, if the top forwards are paid more, the team’s defence might be weak. Or the first line might be great while the other three forward lines don’t score very much (in hockey parlance, the team lacks secondary scoring).

Let’s look at some concrete examples. In 2018-2019, the highest paid player was Connor McDavid of the Edmonton Oilers at $12.5 million. (For the purposes of this article, I am using the “cap hit” or average annual salary.) The Oilers also had Leon Draisaitl at $8.5 million. McDavid did his part, producing 116 points, the second highest total in the league, and Draisaitl finished fourth with 105 points. However, the team only had two other players being paid over $5 million. The team finished 25th in the 31-team league.

The Toronto Maple Leafs had two players in the top six mostly highly paid players: Auston Matthews at $11.634 million and John Tavares at $11 million. Matthews produced 73 points (while playing in only 68 games due to injury) and Tavares 88 points. The Leafs had only three more players being paid over $5 million. The team finished 7th, but tailed off in the second half of the season and lost in the first round of the playoffs. In the upcoming 2019-2020 season, the Leafs have three players in the $11-$12 million range, making up three of the seven highest paid players in the league. Their top two lines are likely going to score a ton of goals—and they will have to because the Leafs’ bottom two lines aren’t likely to score many at all.

At the other end of the spectrum, the top player on the Tampa Bay Lightning, Steven Stamkos, was paid $8.5 million, and five other players were paid over $5 million. The Lightning were by far the best team in the regular season, but lost out in the first round of the playoffs.

The highest paid players on the Calgary Flames were Johnny Gaudreau at $6.75 million, Mike Giordano at $6.75 million, and Gary Monahan at $6.375 million. Two other players were paid more than $5 million. The Flames finished second in the regular season and also lost out in the first round of the playoffs.

The highest paid player on the Washington Capitals was Alex Ovechkin at $9.538 million. The Capitals paid eight other players over $5 million. They finished fourth in the regular season but lost in the first round of the playoffs.

The highest paid player on the Boston Bruins was David Krejci at $7.25 million. The Bruins paid six other players more than $5 million. The Bruins finished third in the regular season and were the second best team in the playoffs, losing in the Stanley Cup final.

The highest paid players on the St. Louis Blues were Vladimir Tarasenko and Ryan O’Reilly at $7.5 million each. They produced 68 and 77 points respectively. The team had seven other players paid over $5 million. The Blues finished 12th (tied with two other teams for 10th) in the regular season but had the best record in the second half of the season and eventually won the Stanley Cup.

Also consider this: Of the 12 players paid $10 million or more, seven played on teams that did not make the playoffs.

Hockey is a team game. The best strategy to have a winning team does not seem to be to acquire one or two $12 million superstars. Rather, the best strategy seems to be to have a cluster of very good players in the $5-$8 million range.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: