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WHAT’S THE BEST WAY TO BUILD A TEAM? By ROB VOLLMAN
Without question, the most ambitious topic to tackle with statistical hockey analysis is how to build a team. Not only is team management an extremely challenging subject, but many of its key concepts aren’t exactly easy to explain in a meaningful and entertaining way. On the other hand, what’s the point of a book like this if it shies away from this type of question?
The analysis here is entirely focused on the post-2005 salary cap era, when the dynamics of how teams are built completely changed. For example, the Chicago Blackhawks brilliantly assembled a dominant collection of talent on their way to the 2010 Stanley Cup, but the salary cap forced them to part ways with superstars like Antti Niemi, Andrew Ladd, Dustin Byfuglien, and Brian Campbell, not to mention useful secondary players like Kris Versteeg, Troy Brouwer, and Tomas Kopecky. Somehow Chicago was able to successfully manage its roster and remain competitive by replacing those players with rookies and other bargains, winning yet again in both 2013 and 2015, only to find themselves in exactly the same position they had been in five years earlier. At season’s end, Chicago had eight forwards, four defencemen, and two goaltenders under contract for a combined 65 million, leaving the team with just over $6 million to fill six to nine remaining roster spots. Once again, some excellent players had to go and were replaced by rookies and bargain-priced depth players.
The Blackhawks are an ideal case study for a guide to building a team in the salary cap era, which could actually be a topic for an entire book. The NHL is a dynamic market of very different players at various points in their careers, with ever-changing market inefficiencies and a collective bargaining agreement (CBA) chock full of both rules and exceptions. There are entry-level contracts, several different types of restricted and unrestricted free agents, and many different types of bonuses as well as trade deadlines, waivers, front-loaded contracts, buyouts, and special rules for players both young and old.
How can we sort all this out? The primary concept is to create a team-building model upon which all of these rules can be added. Its primary goal is to maximize the expected value of a team while staying within the team’s total cap space and abiding by all the numerous rules and regulations of the most recent CBA.
For this model, the central requirement is a method of projecting a player’s expected value over the life of his contract relative to his expected cost in cap space. Among other factors, this method will have to weigh each player’s offensive and defensive contributions, to allow a comparison between players of different types and positions, to consider the scarcity of each type of player, to project each player’s future by including some kind of age curve to make the distinction between up-and-coming players and declining veterans, and to account for a wide variety of additional factors, such as a player’s acquisition cost and situations where the opinions of the scouts significantly disagree with the numbers. That may sound like an overwhelming project, and more than a little dry, but it actually makes perfect sense when everything is broken down into bite-sized pieces. It also sheds some fascinating light on our favourite teams and players on a case-by-case basis.
Before we begin, it’s critical to note that what’s being presented in the following pages isn’t the only team-building model, nor is it the perfect one, but it will fully represent what every model needs to look like. If newer and better methods come along for any of its components in the future, such as a better way to measure player talent or a superior projection system, then these methods can be easily substituted for what is included here. Above all, think of everything that is presented in this chapter as more of a way of thinking about the problem, as opposed to being a definitive solution in and of itself.
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As a bonus, the completed model will produce a list of general rules and guidelines that apply in the here and now, like how much cap space should be invested in goaltending, and some tricks to getting the most out of free agency. Some of these rules and guidelines will be timeless, whereas others are a result of market inefficiencies that exist only at the present moment but may no longer be valid in the future. That’s why the process by which these guidelines are discovered will be of far more interest than the conclusions themselves. After all, Chicago didn’t become dominant by following trends that others uncovered years ago; they dominated by discovering and exploiting new opportunities.
These discoveries will be referred to as guidelines, instead of strict rules, because we aren’t dealing with fantasy hockey teams that are being built from scratch and in a static universe. A front office already has a set of players and contracts from which to start, along with instructions from ownership and requests from the coaching staff. Furthermore, the desired players won’t always be available in trade, through free agency, or in the team’s farm system, leaving teams to make the best decisions possible with their available resources. That’s why no team could ever achieve the perfect model, even if such a thing exists. The most successful team-building process is a dynamic one, with organizations following a set of gradually changing guidelines to forever improve their team one step at a time.
Before unveiling the model and exploring the resulting rules and guidelines, let’s first take a close look at the salary cap and some of the specific details that are most relevant to what we intend to build.
The Salary Cap
Creating a team-building model would be easier if the salary cap were just a single, predictable sum of money under which the total combined salaries of all the players had to remainbut that would just be too easy.
In practice, the NHL’s salary cap has many rules, and each rule has many exceptions, most of which change with each new CBA. A player’s age, the number of games in which he has played, and the number of seasons during which he has played at least a certain threshold of games are all factors that need to be carefully monitored and considered. To be honest, I’m convinced some of the new conditions were added just so the greater complexity would justify more jobs and higher salaries for the league’s lawyers and agents. That’s why it’s essential for each team to have an expert in cap-related matters on staff, who manages the model at all times. There are a lot of intricate rules and regulations that can be land mines for the unaware, as well as potential market inefficiencies that can be exploited by those who know the finer details.
While I’m sure that a comprehensive account of the salary cap and all of its rules would be a real page-turner, it is thankfully far outside the scope of this book. There are, however, a few significant details with which we need to be familiar before we can build the model.
Starting at the beginning, the NHL salary cap was introduced during the 2005 lockout. Well, reintroduced, actuallythere was an NHL salary cap in the pre-Original Six days. Today’s cap is known as a hard cap because there is no allowance for going over. A team that has run out of cap space doesn’t pay a penalty; it would simply have to play its remaining games with fewer players, as the Calgary Flames did late in the 200809 season.
The NHL’s hard cap varies from year to year and quite unpredictably. It is calculated as a percentage of the NHL’s revenues from the previous season, with a current minimum of $64.3 million. Initially, 54% of all hockey-related revenues went to the players, which increased to 57% in the 2013 agreement.
NHL SALARY CAP, 200506 TO 201516
Season
SALARY CAP
Change
200506
$39,000,000
New
200607
$44,000,000
+12.8%
200708
$50,300,000
+14.3%
200809
$56,700,000
+12.7%
200910
$56,800,000
+0.1%
201011
$59,400,000
+4.6%
201112
$64,300,000
+7.6%
201213
$70,200,000
+9.2%
201314
$64,300,000
-8.4%
201415
$69,000,000
+7.3%
201516
$71,400,000
+3.5%
The salary cap for the 201516 season is $71.4 million, which is almost twice what it was when it was first introduced, for the 200506 season. That quickly rising salary cap is like a life raft for poor general managers. Deals that really don’t make sense today could make sense down the line, as the deal’s total percentage of a team’s overall cap space decreases over time. Once that cap ceiling starts to stabilize, the teams with the most effective models will truly have the greatest advantage over the teams who frequently overpay.
Individually, there is also a player limit of 20% of the team’s overall cap, or $14.28million for the 201516 season. At the time of writing, the highest individual cap hit is $10.5 million for Chicago’s Patrick Kane and Jonathan Toews.
Remember that it’s the cap hit that must remain below $14.28 million, not the salary. A player’s cap hit is calculated as his average salary over the length of his current contract, so adding some lower-paying seasons at the end of the deal can reduce the annual cap hit. Kane and Toews are actually being paid $13.8 million in the 201516 season, for instance, but only $6.9 million in their final two seasons, which is the legal minimum of 50% of the highest-paid year. This is known as a front-loaded deal, and it’s a perfectly common, legal, and legitimate way to reduce a player’s annual cap hiteven if he retires prior to playing out those final, low-paying seasons.
But watch outthe retired player’s cap hit will continue to count if the contract went into effect after he turned 35. This is just one of the many points written in fine print (to create more jobs). Even without this clause, a veteran who plays out one of the lower-priced seasons may be frustrated if his subsequent contract doesn’t include some extra compensation for that. This was the case with Daniel Alfredsson, a career-long Senator who spent his final season with Detroit after being displeased when he wasn’t sufficiently rewarded for playing out a $1 million season with Ottawa in 201213.
As for term, there’s also a maximum contract length of seven seasons, with an additional year allowed if the player is re-signing with the same team. Once again, there are some special job-creating exceptions. Players who sign their first NHL contracts, which are called entry-level contracts (ELCs), are limited to three-year deals or less, depending on their age. Furthermore, these players have their salaries capped at $925,000 plus an additional signing bonus capped at 10% of their initial salary. Even with additional performance bonuses, which can reach $2million, ELCs are obviously the most affordable types of contracts and should be timed carefully to maximize a player’s value.
These, and all other types of bonuses, do count against the cap. However, teams are allowed to go over their salary cap on performance-related bonuses, which may or may not occur, and carry them over into the next year. The down side of this practice is that it could leave a team with less cap space with which to work the following season. This was exactly the case for the Boston Bruins, who had $4.2million of their 201415 cap space used up by a bonus earned by Jarome Iginla the previous season, a player who had since moved on to the Colorado Avalanche. Oh, and the Bruins missed the playoffs by two points that year. Doh!
There is also a cap floor, incidentally, which can be safely ignored in any model designed to produce champions. It’s the individual league minimum that’s more relevant to the model, because that’s the cost of a replacement-level player. Even if a player isn’t worth it, every NHLer must be paid this league minimum, which will increase far less gradually after the 201617 season.
INDIVIDUAL LEAGUE MINIMUM SALARY, 200506 TO 202122
SEASON
LEAGUE MIN
SEASON
LEAGUE MIN
200506
$450,000
201415
$550,000
200607
$450,000
201516
$575,000
200708
$475,000
201617
$575,000
200809
$475,000
201718
$650,000
200910
$500,000
201819
$650,000
201011
$500,000
201920
$700,000
201112
$525,000
202021
$700,000
201213
$525,000
202122
$750,000
201314
$550,000
What does this mean for the model? Since a team dresses 20 players