02 Jul
Recapping July 1st & Looking Ahead
With the July 1st dust settling, we wanted to take a look at some of the moves that most caught our attention, both positively and negatively. Kyle will look at what we consider to be the three best moves from July 1st, while James will tackle the most puzzling. Both Kyle and James will then discuss three moves that they each think should happen.
Three Best Moves
We will start with Kyle looking at the three best moves from July 1st, which is usually the day when instantly regrettable moves take place.
Leafs Get Barrie, Spezza; Shed Zaitsev
NHL GMs are too nice to each other. The Toronto Maple Leafs came into the summer dead to right, primed for a team to pounce and sign Mitch Marner, Andreas Johnsson, and/or Kasperi Kapanen to an offer sheet. Their blueline needed improvement and they needed to fill out the bottom portion of their roster. They had a few anchor contracts that they really needed to move. Specifically, Patrick Marleau and Nikita Zaitsev. Prior to July 1st, they were able to sign Johnsson and Kapanen to very reasonable contracts, so an offer sheet for neither of those players was no longer a concern. They also had already moved Patrick Marleau at the cost of a future first round draft pick. Coming into July 1st, it looked like the Leafs would be in a position to match any potential Marner offer sheet but not really do much else to improve their roster, especially their defense.
Before the free agent period opened, the Leafs had already created some cap flexibility by moving Nikita Zaitsev and Connor Brown for Cody Ceci. The team still needs to pay Ceci but they will likely end up paying him similar to Zaitsev but for only one season. Brown is a nice player but trading him was a minimal price to pay to get Zaitsev’s contract off the books as well as his $2.1M cap hit. I don’t hate the trade for Ottawa, but I certainly don’t love it considering they held all the power in negotiations. This trade would set the table to have arguably the best day of any team. When the free agent window opened, the team signed veteran Jason Spezza to a one-year, minimum contract. Spezza is nowhere near the player he used to be, but he definitely can be a quality bottom line option who can contribute on special teams as well. However, the real winning of a move came early in the evening.
The Leafs hit an absolute homerun with the trade they made with Colorado to acquire Tyson Barrie and Alex Kerfoot. Let me be clear, Kazem Kadri is a very good player. He will be a tremendous fit as a second-line center in Colorado. However, the Leafs were able to trade him and in return they got a player to fill the void left by Kadri and fill the biggest need on their team, a top-pair, right-shot defenseman. Is Tyson Barrie a perfect player? No. However, he should be a tremendous fit for this Leaf team. He drives offense at an elite level from the backend and is an elite puck mover. He should be a perfect fit in Toronto and I expect he will excel for the Leafs. They also added Alex Kerfoot who should be a very good three-line center for the team. The Leafs have quickly gone from a team that looked like they would have to go into next season with a similar team that exited in the first round, to legitimate contender in the East. Kyle Dubas has been absolutely brilliant this offseason and although he still has some work in front of him, he has been able to dramatically improve the roster at the expense of Connor Brown and Nazem Kadri. So far, so good.
Nashville gets Duchene
When Nashville originally trade P.K. Subban, I was skeptical that they were going to wisely use the cap space. It seemed certain that Matt Duchene was engaged to Nashville and the only question was when the wedding date was. However, with the price of Jeff Skinner’s contract in Buffalo and Kevin Hayes’s insane contract with Philadelphia, it seemed like a certainty that Duchene was going to completely blow his market value ($8M per season) out of the water. If I was offered Kevin Hayes and $700,000 in salary cap space for Matt Duchene, I would take Duchene in a second. Nashville held firm on their offer and secured Duchene for a fair $8M per season. I didn’t love the idea of trading Subban and then using all (or even additional) salary cap space to add Duchene on a long-term deal. Nashville ended up getting the additional offensive punch they needed and still have a little more cap flexibility. They also didn’t do anything that will definitely be regrettable.
Timo Meier Contract
The San Jose Sharks did well to get Meier locked in before any offer sheet could happen and they didn’t completely break the bank to do so. However, the real reason we have included Meier here is we think the contract structure negotiated by his agent, Claude Lemieux is absolutely brilliant. Meier needs to accrue five more pro seasons before he is able to become an unrestricted free agent. This contract takes him a year shy of that. However, the way his contract is structured ensures Meier will either not receive a qualifying offer after this contract expires or be guaranteed $10M then. This is because Meier’s salary in the last season of his four-year contract is $10M. If the Sharks were to qualify him, they would have to do so at that value. If Meier were to elect to go to salary arbitration, the award could not be lower than the $10M he was guaranteed on his qualifying offer. Basically, this ensures the Sharks will have to negotiate a new contract with Meier and gives Meier all the leverage in those discussions. Absolutely brilliant by Lemieux. It will be interesting to see if more agents and teams follow this structure.
Three Most Puzzling
Now James will move on to discussing three moves that were puzzling and didn’t quite make sense for the teams involved.
Sergei Bobrovsky and Anton Stralman Signings
On June 21st, 2019, the Florida Panthers used their first-round pick (13th overall) on a goalie. The goalie, Spencer Knight, is considered by many to be a possible franchise changing netminder. There was and still is some controversy about using a middle first round pick on a goalie, but it was the decision they made. What is most puzzling about this situation is they then signed UFA goalie Sergei Bobrovsky to a seven-year, $70,000,000 contract ($10,000,000 AAV). The first problem with this contract is Bobrovsky should not be making $10,000,000 a year. Only Carey Price makes more per season as a goalie and that contract is met with its fair share of criticism. The second problem with Bobrovsky’s contract is the term. If you just used a first-round pick on a goaltender that you would expect to be in the NHL in the next few seasons, why would you commit seven years to a goalie and pay that goalie an outlandish amount of money? There is a strong possibility that when Knight reaches the NHL, the Panthers will still need to pay Bobrovsky for four more seasons. This combination of moves makes no sense.
On top of singing a veteran goalie to an enormous contract, the Panthers did the same with a veteran defenseman. Anton Stralman, a 32-year-old, has been declining the past couple of seasons. The Panthers gave him $5,500,000 per year for the next three seasons. Our contract predictions had Stralman at just under $3.4 million on a three-year deal. This is quite the overpay, not to mention a raise on Stralman’s previous deal. It is known the Panthers were looking to make some noise this offseason, but this Stralman and Bobrovsky combination is worrisome for their future.
Semyon Varlamov over Robin Lehner
Robin Lehner was a Vezina trophy finalist this past season. He played very well for the Islanders in the playoffs and was one of the main reasons they made it past the first round. According to reports, the Islanders didn’t offer him much more than a two-year deal that would pay $5,000,000 each year. For a Vezina finalist, that is low.
What is really odd about this is that the Islanders moved on from Lehner to sign Semyon Varlamov to a four-year deal that will pay him $5,000,000 each year. Varlamov has had an up and down career and finished this past season as a backup in Colorado. Over the past three years, Lehner has better average numbers and Lehner is younger. It is very puzzling that you would pay Varlamov the same amount per season and add two seasons to the offer and sign him to that deal over Robin Lehner. Lehner wasn’t even offered that deal. He has since decided on a one year deal for $5,000,000 to try to prove his value once again and cash in next offseason. Why the Islanders were willing to give a bigger deal to a worse goalie is beyond us at AFP Analytics. Nothing about it makes sense.
Sebastian Aho Offer Sheet from Canadiens
After looking over this deal, it really is quite puzzling. You have to wonder what exactly the Canadiens were going for with this. Yes, the deal is lined heavily with signing bonuses at the beginning of the contract. However, Aho may just be a franchise player. You can’t let him go for $8,454,000 per year on a 5-year deal for compensation of a first, second, and third round pick. That was what Tomas Tatar was traded for when dealt from the Red Wings to the Golden Knights. Aho is leaps and bounds superior to Tatar. Again, it doesn’t make sense to not match this offer. At this point, we know that the Hurricanes are matching the deal and will keep Aho. Hurricanes owner Tom Dundon has expressed his feelings that this was a no-brainer and very easy to match. That leaves us wondering why the Canadiens would even take the time to create this deal. While yes, it could hurt a team financially, the Hurricanes were well prepared and reportedly expected the offer sheet to be much greater than it was. If anything, they are happy with the money aspect of the deal. The one downfall that the Canadiens forced on the Hurricanes is that the deal is only for 5 seasons and will make Aho a UFA at age 26. That is not ideal for the Hurricanes, but it ultimately doesn’t factor into whether or not they would match. The hockey world was excited for offer sheets this offseason, but this one was basically pointless.
Three Moves That Moves Should Happen
In this section, James and I will each discuss three moves that we think should happen. Does this mean they will happen or we even think they will happen? Not in the least. However, if we were NHL GMs these are some moves we would be looking to make for our team.
Kyle’s Picks
Montreal Offer Sheets Brayden Point or Mitch Marner
Montreal broke the seal, though poorly, on NHL offer sheets, so why not learn from your mistake and do it again? It would’ve made little sense for Point to sign an offer sheet similar to what the Canadiens gave to Aho as it would’ve bought UFA years. However, for an additional first-round pick and $2M more in cap space, the Canadiens could make things really tough on their division rivals. Montreal appears to be hunting for an elite offensive playmaker and Point would be a great fit. Marner would as well but I am not sure he would be willing to sign an offer sheet that wouldn’t make him the highest paid winger in the game. If Montreal’s first attempt was only at the 1st, 2nd, and 3rd round level, it seems unlikely that they would be unwilling to go to the first 1st round pick level. However, that would certainly add additional fuel to the Montreal-Toronto rivalry. Do I think Montreal will go this route? Probably not. Should they? Absolutely.
Winnipeg Trades a Forward for Defenseman
For a team whose Cup window is now, Winnipeg’s defense is nowhere near good enough to get to that level. They are currently going to have a second-pair made up of two of Dmitry Kulikov, Nathan Beaulieu, Sami Niku, Tucker Poolman, Anthony Bitetto, and Neal Pionk. I will guarantee that will not be good enough. The team has some quality young forwards, who will quickly eat into their available salary cap space and make it tough for them to upgrade their defense at all. Basically, Winnipeg needs to make a move similar to what Toronto just made with Colorado. There are two very likely partners, teams with a need at forward and a surplus of defensemen. These teams are the Carolina Hurricanes and Buffalo Sabres. I have been all for a trade that centers around a swap of Nikolaj Ehlers for Brett Pesce. With Carolina having to match the offer sheet for Aho, I am not sure they would be overly anxious to make a trade where they take on more salary than they ship out.
The Sabres are another fit but any defenseman they could offer is nowhere near as good as Brett Pesce (although Rasmus Ristolainen may be perceived this way by some teams). I am going to assume Ristolainen would be the defenseman Winnipeg would covet. Buffalo does have three other things Winnipeg may be interested in. First, they have salary cap space. They could retain some of Ristolainen’s salary or possibly take back Mathieu Perreault to add value on their end. Second, they have cost-controlled depth forwards. Winnipeg has plenty of top forward talent but are lacking some depth with the loss of Brandon Tanev. The Sabres find themselves in a spot where they have a surplus of depth forwards after acquiring Jimmy Vesey. A player like Conor Sheary could be a great fit for Winnipeg and he certainly doesn’t break the bank. C.J. Smith, Evan Rodrigues, and to a lesser extent, Johan Larsson, Scott Wilson, and Zemgus Girgensons also would provide a decent depth option. Third, the Sabres could include a second defenseman, who would provide depth but maybe not an upgrade.
Edmonton Signs Patrick Maroon
Patrick Maroon was a surprisingly good fit with Connor McDavid before they traded him to New Jersey at the trade deadline two years ago and then he signed with St. Louis during that offseason. Edmonton needs help on the wing and they could probably get a little of a value buy, who is also a known commodity. Maroon isn’t the fastest player but has proven in the past that he can play with other elite offensive players and still be effective. If he could slide on McDavid’s wing, that would help push some wingers down the lineup. This sounds crazy but might be the savvy move that Edmonton needs.
James’ Picks
Jake Gardiner to the St. Louis Blues
This was one of my prediction before free agency and with Gardiner still a free agent, I would like to reiterate the fit here. The Blues have three defensemen that are true top four defensemen. Those three are Alex Pietrangelo, Colton Parayko, and Vince Dunn. Jay Bouwmeester is no longer a top 4 quality defenseman, and putting Carl Gunnarsson or Joel Edmundson in that role would not be the greatest idea. Pietrangelo and Dunn play very well together, leaving a theoretical spot open on the left side next to Colton Parayko. Gardiner would be an ideal fit.
Our prediction for Gardiner is a six year contract for just over $6.3 million a season. Just to play it safe, let’s pretend he gets a $7 million per year contract from the Blues. That would leave them with just under $7 million in cap space this offseason to resign RFAs Ivan Barbashev, Robby Fabbri, Zach Sanford, Oskar Sundqvist, Joel Edmundson, and Jordan Binnington. Binnington will most likely get a short term deal near $3 million per season. That would leave roughly $4 million for the rest of the RFAs. While none of them would break the bank, it would be close to the cap and possibly over if they were all resigned. Two players like Alex Steen and Jake Allen could be expendable. I would try to target a trade involving Allen to a team with a lot of cap space that could use a goalie, like Ottawa or Columbus. Doing so will allow the team to resign all RFAs. Long term, they will need new deals for Brayden Schenn and Alex Pietrangelo. With the salary cap rising each season and some other deals expiring soon like Jay Bouwmeester and Tyler Bozak, there should be no worry in singing the core pieces long term. Gardiner would be able to fit salary cap wise and he’d be a great fit next to Colton Parayko for a very strong top four defensive group. This move should definitely happen and it would certainly help their chances in returning to the Stanley Cup Final.
Ryan Dzingel to the Montreal Canadiens
The Canadiens have struck out on prying Aho from the Hurricanes. They traded Andrew Shaw, so they could be looking for someone who can play center but would also fit on the wing. My original spot for UFA forward Ryan Dzingel was the Minnesota Wild, but with Zuccarello signed, Dzingel would not be a fit there. Dzingel had a good season in Ottawa and performed fairly well for the Blue Jackets after being traded. As a good second line player, he’d fit in well with Montreal to extend their offensive depth. Our prediction for Dzingel was a 5-year contract that would pay just under $5.3 million per season. If the Canadiens could make that deal happen or get him on an AAV that is slightly lower, this move would be a good fit. This is a move that the Canadiens should be looking into.
Colorado Avalanche should offer sheet Brayden Point
The Avalanche have roughly $27 million in cap space. Let’s say Rantanen gets $9 million per seasons. We would then be looking at $18 million. Burakovsky, Compher, and Zadorov should not be more than $8 million all together. That would leave $10 million in cap space for the season. Colorado just had two first round picks, so I think it would be more comfortable for them than most teams to sign an offer sheet that would cost them four first round picks. The Tampa Bay Lightning have just under $8 million in cap space. I believe Colorado should sign Point to an offer sheet of five years for an AAV of $10,568,590. That is the lower limit for giving up the compensation of four first round picks. That would allow them to put a great bit of pressure on the Lightning. It would also make the Lightning think about not matching. Colorado would be able to afford this by moving out a player like Matt Nieto or Matt Calvert. It allows them to have a forward group similar to what the Maple Leafs had with MacKinnon, Point, and Kadri down the middle. This group would dominate. Jost and Girard are up for new deals next season, but some salary will be coming off the books to make resigning them very doable. If the Lightning match the offer sheet for Point, Colorado may then be able to take advantage of their situation through trade and acquire a player like Tyler Johnson or Ondrej Palat. Regardless, the outcome here is great for Colorado. You either get an elite center, or you get a consolation prize of a good second line forward. This should definitely be considered by Colorado.
Feature image courtesy of NBCSports.
KYLE STICH is the Director of AFP Analytics. In addition, Mr. Stich is a tax specialist and Director of Operations at AFP Consulting LLC, whose clientele include professional athletes performing services on three separate continents. Mr. Stich earned his Master of Science in Sport Management with a Concentration in
James Finch is an analyst at AFP Analytics. James graduated from St. John Fisher College in 2019 with a bachelor’s degree in Sport Management with a minor in Economics. His background with sports and economics have brought about an interest in gaining experience and finding his niche within the
30 May
Why the Smart Move is to Sign William Nylander to a Long-Term Deal
James Mirtle recently wrote a piece for The Athletic where he discussed the Toronto Maple Leafs’ options with William Nylander. The article can be found here
I am a subscriber (and I think others should subscribe as well) so I don’t know if the piece can be read by non-subscribers. I will provide a very quick summary of the discussion. The Leafs basically have two options, sign Nylander to a long-term contract or a short-term contract, commonly referred to as a bridge deal. Mirtle went through a tremendous breakdown of determining an approximate value for a long-term versus short-term contract. He ultimately concluded that the team would be best off signing Nylander to a long-term contract. I agree with this assessment (though differ in how many years) and I wanted to write a short discussion of why that is correct.
I have a background in finance so my mind is always coming back to the bottom line. It is my belief that a hockey team’s goal when managing their salary cap is to minimize the total cap hit in today’s dollars. In the finance world, there is a belief that a dollar today is worth more than a dollar in the future because that dollar can be invested or the price of goods will increase due to inflation in the future.
For those unfamiliar with this concept, think of it this way. Today, I have one dollar in my pocket. When I go to the store, I see a chocolate bar costs one dollar. I could also invest that dollar in something that pays 10% every year. Therefore, my dollar would be worth $1.10 next year, $1.21 the next, etc. Let’s assume I didn’t buy that chocolate bar and didn’t invest that dollar. Let’s fast forward five years in the future. I am back at the same store and that same chocolate bar is $1.16 due to the price rising at the rate of inflation (~3%). That dollar bill I kept in my wallet can no longer buy that chocolate bar!
You can also reverse the idea and say, if I know I want a chocolate bar in five years, what should I spend today to make it worth it? If I know in five years the chocolate bar will cost $1.16 and from today till then inflation will be ~3%, we can convert the future dollars into today’s dollars. If you’ve been reading up to this point, you will know that the breakeven point would be $1 in today’s dollar. This means if I see a chocolate bar selling for $.99 I should, in theory, buy it and save it for five years from now when I know I will want it and will have to spend $1.16 because I will have saved $.01 on the bar! That $.01 saved seems insignificant but think about what would happen if instead of talking about $1, you are talking about $1M dollars. You now saved $10,000. If the idea still unclear, I suggest doing a little more research or take me at my word.
Now that we understand the concept (or are just going to trust that I am correct), let’s get back why this matters in hockey. The goal of any team should be to minimize the impact of a contract in today’s dollars. I think too many times teams fail to recognize that they are voluntarily sacrificing cap space, in terms of present value, for minimal immediate cap relief. This is what happens nearly every time a team signs a player to a bridge contract, followed by a long-term contract. I’m not going to say what I am about to discuss is an absolute but the pure math suggests it should be the case. Today, I am just going to look at William Nylander and do a very quick analysis but later during the summer I will dive much deeper into this analysis.
For this discussion, I am solely going to go off of Mirtle’s numbers. He concludes that a long-term contract for Nylander should be around $49M/7 years. He also suggests if they go the bridge contract route, it could be for $10M/2 years. To do an apples to apples comparison, I then assumed Nylander would sign a five year contract after the bridge to keep him with the team for the same seven yeats. I also looked at the numbers if total length was eight years opposed to seven. I kept the same long-term and bridge deal AAV. For reference, Nylander would be 30 years old at the end of an eight-year contract.
Let’s look at the numbers. I used a discount rate of 4.59%, which was the average cap increase since the lockout. The charts show different contract lengths and for the bridge contracts show the future cap hit that would cause the bridge contract and long-term contract to break even. A future cap hit lower than the number shown, means the Maple Leafs would save money while anything above means the team would spend more money, in terms of present value.
I would favor going eight years. Here are those numbers:
As you can see, regardless of the contract lengths, the long-term contract immediately should result in cap savings for the Leafs’ in today’s dollars. The way I look at it, Nylander would have to regress for the Leafs to actually save money in today’s dollars, if they go the bridge deal option. If the bet is for the player to regress, then the team should be looking to trade Nylander because betting on that makes zero sense. I favor the eight-year contract because it keeps Nylander until he turns 30 and then the team can freely walk away at the point where the team is likely to start to see significant regression.
I want to reiterate there are other factors at play and this analysis can’t take place in a vacuum. The team will be committing significant dollars to Matthews and Marner, that will kick in next offseason. However, that could incentivize the team going big right away because they can’t afford to pay significantly more after a bridge contract. The 2019-2020 season could be a little pain, especially with the Marleau contract still on the books, but the one season pain would likely be offset by the long-term gain. The other consideration is will Nylander get complacent if he gets the long-term deal. With no intimate knowledge of the team, I will avoid speculating but it certainly has to be considered.
Overall, Mirtle’s conclusion of the smart move for the Leafs would be a long-term Nylander deal is confirmed through a relatively simple time value of money calculation. If you enjoyed this discussion, please follow us on Twitter, @afpanalytics, as we produce more content like this. I will be doing an even more in-depth analysis regarding this concept this summer but wanted to get this up and out as it is current.
KYLE STICH is the Director of AFP Analytics. In addition, Mr. Stich is a tax specialist and Director of Operations at AFP Consulting LLC, whose clientele include professional athletes performing services on three separate continents. Mr. Stich earned his Master of Science in Sport Management with a Concentration in Sport Analytics from Columbia University in 2017. He earned his undergraduate degrees in Accounting and Sport Management from St. John Fisher College in 2015, where he has served as an adjunct professor teaching Sport Finance and Baseball Analytics.