Saturday, June 28, 2008

Leave The Picks. Take The Cannoli.

So you're thinking that one of the Caps' Restricted Free Agents is going to sign an offer sheet with another team and you're wondering whether or not the Caps should match. You're going over and over all sorts of hypotheticals in your head, all of which come back to one question: "Are the Caps better off with an overpaid Player X or the unspent money and compensatory draft picks?"

Let me make that questions slightly easier on you. Take the picks out of the equation - they're likely not worth much.

To begin with, let's look at exactly what picks we're talking about (dollar values represent the average annual salary of the contract the RFA signs):

Below $863,156: No compensation
$863,156-$1,307,812: One third-round pick
$1,307,812-$2,615,625: One second-round pick
$2,615,625-$3,923,437: One first- and one third-round pick
$3,923,437-$5,231,249: One first-, one second- and one third-round pick
$5,231,249-$6,539,062: Two first-, one second- and one third-round pick
$6,539,062 or more: Four first-round picks

Now let's throw out all the second and third round compensatory picks. Why? They're crap.

When this past season ended, there were more players on NHL rosters who were never drafted or who were drafted in rounds that don't even exist anymore than players who were drafted in the second round, and more than twice as many of those first group of players then players who were drafted in the third round. [Source]

From the 1998 draft (ten years out sounds like a fine draft to use), 36 of the 59 second and third round picks (61%) have played less than one full season's worth of NHL games, and only nine of the 59 (15%) have played more than four seasons' worth of NHL games (we'll perhaps generously call players who have played at least four seasons' worth of games "legitimate NHLers" the rest of the way). From the 1997 draft, those numbers are 76% and 7%, respectively, and from the 1999 draft, those numbers are 72% and 9%, respectively. For the three year stretch, 69% of the players drafted in the second and third rounds have played fewer than 82 NHL games and only 10% (19 players total) are legitimate NHLers, having played more than four seasons' worth of NHL games.

Bringing the analysis a little closer to home, the Caps have drafted 24 players in the second and third rounds in the past ten drafts (2008 excluded). The total number of NHL games played for these 24? 599. Matt Pettinger has played 324 of those and Nathan Paetsch has played 123 (which one could reasonably say were really played as a 2003 Buffalo seventh round pick and not as a 2001 Caps second rounder), meaning that the other 22 Caps second and third round picks over that span - 92% of the 2nd and 3rd rounders - have averaged fewer than seven NHL games per man.

But since picks (especially those after the first round) take a while to mature, let's look at the ten-year span from 1990-1999 (arbitrary, and mostly under a different front office, but humor me). The Caps made 22 second and third round picks, and those players combined (not one is still active in the NHL) to play 1,948 NHL games, with 1991 third round pick Steve Konowalchuk playing 790 of those and 1996 second rounder Jan Bulis playing 552. Even including those guys, that's an 88.5 NHL games average (just over one season's worth) per pick, and one pick in each of the second and third rounds over a decade of drafting that panned out.

The bottom line here, both from the League-wide analysis and the Caps' experience over two different decade-long stretches, is that a player picked in second or third round of the NHL draft has, at best, around a 10% chance of playing at least one full season's worth of NHL games.

Now on to the first rounders. In the ten-year span from 1990-99, 53% of the players drafted in the top-30 (not all first-rounders, mind you, but top-30 talent is top-30 talent) have played more than four NHL seasons' worth of games, but 30% have played less than one full NHL season. [Note: for the purposes of this analysis, Nick Boynton, who was drafted in the first round twice and with whom I just realized I share a birthday - is treated as two different players; one who never played in the NHL and the other who has the 437 career games played] That "miss" rate goes way down when you're talking about top-10 picks, of course, and 88% of the 100 players fitting that description have played more than 82 NHL games, with 74% of the hundred playing more than four seasons' worth (granted, this includes guys like Bryan Allen, Andrei Nazarov, Drake Berehowsky and Mark Bell, so don't get too excited).

So there's slightly better than a 50/50 chance, all else equal, that a team will get a legitimate NHLer (as defined above) with a generic first round pick, but a three-in-ten chance of getting a dud. And while the balance shifts dramatically when we're talking about top-ten picks, even then, they're not all Alexes and Sids. Which leads to our next point, which is the fool's gambit of trying to figure out the true value of a first round pick by predicting where the team from whom the pick comes will finish in the standings.

When Brian Burke didn't match the offer sheet to which the Oilers signed Dustin Penner last summer, the Anaheim GM's decision was widely hailed not only for recognizing that Penner ain't worth $4.25 million per year, but also because Edmonton was surely headed for the lottery, so the compensatory picks would be that much better. Then Edmonton went out and finished 19th in the League, giving Anaheim a nice pick, but not a top-10 pick, and not what they might have hoped for or expected.

Since the League expanded to 30 teams for the 2000-01 season, only 13 times has a team finished in the bottom-five (a.k.a. Lotteryville) in consecutive seasons, and only twice since the lockout ushered in the new "age of parity." Over that same span (since 2000-01), teams have only had consecutive bottom-ten finishes (and thus top-ten picks) 37 times (many of which were recent expansion teams), and 13 times since the lockout. Percentage-wise, this tells us that since the League has had 30 teams, a team followed up a bottom-five finish with another bottom-five finish approximately 36% of the time (and only 20% since the lockout) and answered a bottom-ten finish with another bottom-ten finish 63% of the time (65% post-lockout).

Beyond those numbers, at times it's been no great surprise that a team has had consecutive down years (the Caps and Penguins during their rebuilds, for example), but it's becoming less predictible all the time. Fourteen teams haven't finished in the bottom ten in the League since the lockout. Six teams have finished in that group just once, and six teams have done so twice. Eighteen haven't finished in the bottom five since the lockout, nine have done so once and three teams have done so twice. All of this is to say that in a League that, since the work stoppage, has seen Pittsburgh go from 29th to 9th, Philly go from 30th to 10th, and three other double-digit standings leaps forward all in the span of one season, today's cellar dweller is tomorrow's playoff contender (unless, of course, we're talking about Columbus or Florida, who have each finished in the bottom ten in every season since 2000-01).

The bottom line on first round picks, then, is that a generic first-round pick is around 50% likely to yield a legitimate NHLer (as we've defined that term above), and while the odds get markedly better if that pick is in the top ten, it's difficult in hockey's salary cap era to accurately predict whether a team that's currently down is going to stay down long (and it's a fairly safe bet that a team that is willing to part with first-round picks as compensation for signing an RFA expects to be on the rise sooner rather than later - you don't part with those picks if you're rebuilding).

The point of this ridiculously long-winded and dense discussion is that when it comes to deciding whether or not to match an RFA-signed offer sheet, a team shouldn't even think about the compensatory draft picks as anything more than a tie-breaker in the event that it's impossible to determine whether or not the salary fits into the team's overall salary structure (which it never is). As we've established, second and third round picks have an extremely low success rate attached to them, and first-rounders are by no means sure things. Still don't believe me? Try this little excercise: pick a random team, then pick any four-year stretch and see who was picked in that team's standings-based draft slot (i.e. 2005 doesn't count) in each of those years (and go ahead and report your findings in the comments for the rest of us to see).

This is not to say, of course, that a team should match any offer that one of its RFAs signs, but rather to say that the decision should be about the dollars, not the draft picks. If a GM is seriously weighing the latter, he likely flatters himself a bit much.

So when you're thinking about RFAs, do yourself a favor and forget about the non-monetary compensation. Focus on the salary. Leave the picks. Take the cannoli.


Shwedick said...

is anyone else nervous that Huet isnt locked up yet? We keep hearing great stuff that "it's looking good and so on" but there is one business day before 7/1. Just being paranoid I guess.

bigonetimer said...

JP--thank you for the well done treatise on the real downside of letting a highly prized RFA like Mike Green go somewhere else via offer sheet. I hope this disabuses anyone of the notion that "4 first rounders!!" is compensation enough for a talent like MG. The comp is even less enticing for a player like Laich.

JP said...

Thanks, bigonetimer.

My feeling is that if a guy's your guy, the picks don't matter. It's the same reason the Caps traded a 2nd to move up to draft Gus II - he was their guy, so they went and got him.

If you can't afford him, well, that's another story. But if we're talking about Laich, for example, and he signs a $3m deal with Ottawa or something, the question isn't "Do we want to take the 1st and the 3rd round picks?" but rather "Do we want Brooks Laich at $3m?" The picks are such an over-hyped part of the discussion among the fans and media.

Wes said...

*cough* Brian Campbell *cough*....

I was impressed with this season's moves at the deadline, but we'll see just how serious the Caps are next week.

Instead, watch us sign Nolan Baumgartner....classic.

Speaking of ex-Caps, what about Glen Metropolit? He's a little dude, but a great PP forward that can be picked up on the cheap I bet.

bigonetimer said...

Wes, I see your point, but plunging into upper echelon UFA market, say for a Brian Campbell, IMO, is even more folly than possibly overpaying one of "your guys." In any event, If I had to pick between them, I'd rather have Green (22) at 5M+ than B. Campbell (29) at 6.5M+ any day of the week; Green's pt total this year has eclipsed (offensively) anything Campbell has done, not to mention he's a notoriously poor playoff performer...I know we may have to do it if some crack pot offers 7M+ for Green, but I sure hope we don't have to.

Jimmy Jazz said...

The only argument I have against this is that drafting has become much more precise even in the last few years because of the cap. GMs realize they can't do it w/ FAs and veteran talent alone.
You'd never see a Patrick Stefan go fist overall in the cap era. I think if a club like Toronto wanted to sign an RFA for over 6.53 mil, I'd take the picks.

JP said...

The only argument I have against this is that drafting has become much more precise even in the last few years because of the cap.... You'd never see a Patrick Stefan go fist overall in the cap era.

I'm not sure I follow. I do agree that the value of cheap, homegrown labor has increased, but I'm not sure the drafting has gotten any better.

And who would've gone first in 1999? Real crappy draft, and so far Stefan has played the 8th most games of anyone picked that year. Zetterberg's the obvious choice, but considering that he went in the 7th round, it's a stretch to say that scouting/drafting has improved so much that he's a realistic #1 overall in retrospect, no?

Jimmy Jazz said...

I think scouting and drafting will only improve in the next few years because of the cap. Ten years from now, we'll be able to see a huge difference in the top ten draftees pre-lockout, compared to the top ten post-lockout.
Maybe it's not obvious now, but the cap will force GMs to make scouting priority no. 1 in the cap era.
So I guess my point is that yeah, maybe you're right about the scouting as of now, but give it time. The draft will soon be the most important part of managing a team.

JP said...

The draft will soon be the most important part of managing a team.

I couldn't agree with you more there. It's sorta a double whammy - scouting becomes increasingly important since everyone is required to have the same maximum payroll, but also because scouting budgets are totally uncapped. In other words, it's an area that "rich" teams can throw a ton of money at that actually will improve their on-ice product. Good/proven scouts may become the most sought after free agents.

bigonetimer said...

good points all re: scouting. It is more the Henrik Zetterbergs, not the Alexandre Daigles, that make your draft a winner. I don't think there's going to be such a significant change in who the top ten draftees will be and how they are identified; it's the second, third and fourth rounders that will spearat good scouting from not-so-good.

Getting back to MG, isn't the whole point to ID someone early, draft'em, raise'em, play'em and sign'em? Green is a textbook opportunity, and he's a rare sort: a budding star. Even if a bottom feeder like TOR were to give us four #1's as compensation, only next year's has the greatest likelihood of being a quasi-lottery pick. I just don't see a team like TOR being out of the hunt for very long--too much money and passion up there for them to wallow in the mire.

If I were GMGM, I would have to see at least two or three lottery-esque years in store for the signing club before I waved g'bye to a rare one like Green.

bigonetimer said...

that's "separate", not spearat

B19 said...

What GM in there right mind is going to offer 6.5 million for Mike Green? I don't think any GM will, You've got to think about it from the other team's side.

They are paying a 22 year old d-man 6.5 million and giving up 4 1st round draft picks. That's a lot to give up for a guy who is still kinda unproven.

JP said...

First and foremost, there's an ass-load of luck involved in drafting a Zetterberg. If the Wings had the slightest clue that he was this good, they wouldn't have let him slip until the seventh round. Kudos to them for knowing which guy to take a flyer on, but let's not pretend they knew no one knew about him, so they instead used their fifth round pick that year on Andrei Maximenko.

Secondly, as I alluded to before, if I was an NHL owner, I'd dump so much money into scouting that people's heads would spin. Like BOT and Jimmy said, it's the mid-round picks that are going to make or break franchises.

B19 said...

This is a really good article by the Minnesota Wild assistant GM. It's all about RFA's.

Ogre said...

Why were there only 59 draft picks in the 98 draft?

DMG said...

A Godfather reference? In the words of JP himself, "+1".

@Ogre, I'm not sure I follow: The 98 draft had 258 picks.

b.orr4 said...

OK, let's assume the worst and some GM offers Green $6.5 for 4-5 years. Then assume the cap continues to grow at the very modest rate of 5%. At the end of four years, Mike Green's contract is going to represent less than 10%of your total salary cap. Is that too much to pay a guy that you believe is going to be one of the best at his position? That's kind of a rhetorical question because in my mind the answer is a resounding no. Take a look around the league at the best defenseman; Chara, Lidstrom, Niedermayer, Phaneuf, all of their contracts well exceed 10% of their team's budget. Hell, Dan Boyle's contract far exceeds 10%. Like it or not, it's the going rate for a top flight defenseman. I know Mike is young and I know he doesn't play great defense (yet), but he's already in top 10% of the league's D-men and only going to get better. That makes paying him a no-brainer. If it means we lose Laich and Feds, so be it, but you don't let your best defenseman and a potential superstar walk for draft choices. Scott Stevens proved that point and I think George and Ted already know it. That's why the "ten minute" comment was made.

Stella said...

This is an OUTSTANDING bit of analysis! Very thorough and convincing. Thank you, JP! By god here's hoping Spunky will continue to hang tough and stick to the cannoli too.

JP said...

@ Ogre: I'm not sure I follow, but I know that there were some compensatory picks thrown into that draft after Nashville selected some UFAs in the expansion draft that they knew they wouldn't sign, the result of which would be compensatory picks (Mike Richter was one), hence the strange numbers of picks in the (I believe) second round.

@ b.orr4: Obviously, I agree.

@ Stella: Thanks

Ogre said...

I think I meant, why were their 59 draft picks in the 2nd and 3rd rounds. It seemingly has been answered. Compensations.

Professor Shutout said...

With regards to the value of compensatory picks.

First, it is worth noting that the the major reason that compensatory picks enter the conversation frequently is not as much regarding the benefit to the receiving team, but rather the *cost* to the giving team. Losing 3-5 picks can really take the stock out of the cupboard for years to come.

Secondly, the value to the receiving teams is in large part *because* NHL picks are so random. It's a numbers game, and there are huge payoffs to getting as many bets down on the roulette wheel as possible, especially in an era where you can stash away picks across the plethora of European leagues as well as your own farm system.

This is a long-winded way of sayings that comp picks are 1) strong disincentive to swoop for RFA's and 2) more than a tiebreaker.