Dawn of the Value Era (or, alternatively, Las Vegas’ Biggest Asset Is Cash; Who’d Have Thunk It?)

I’ve talked about Las Vegas before, mostly because we are in an era of franchise stagnation among the big 4 sport leagues in North America. No big league on this continent has expanded in size since the NFL in 2002, all of 14 years ago. When you look at the storied (and sometimes just crazy) histories of the MLB, NFL, NHL, and NBA, this might be the most impressive span of collective league stability ever. So Las Vegas kicking off the new age of expansion (oh, it’s coming for sure, looking at you NFL, NBA and Quebec) is kind of a big deal.

Like many intelligent hockey fans with low levels of socialization skills, I like to spend my spare time playing fantasy GM using CapFriendly’s Expansion Draft Tool. There’s just something about the perceived reality of the possibilities happening that make it addicting to fiddle around with if I have 5 minutes to spare. I can only imagine this is the same rush a compulsive gambler gets when they head to the casinoes.

If you don’t know the rules of the expansion draft, and you really should by this point, here’s the crib-notes version: Each existing team has 2 choices. Choice A allows a team to protect 7 forwards, 3 defensemen, and Choice B allows a team to protect 8 players of any skater position. Both choices allow for the protection of just 1 goalie from being selected by the expansion team and added to said team’s reserve list. The expansion team must pick one player from every team, but they have a few rules as well: at minimum, the team must select 3 goalies, 9 defensemen, and 14 forwards, at least 20 of those players must have contracts already in place for the following season (i.e. RFAs, or Restricted Free Agents, don’t count) and there is a minimum and maximum on the total cap hits the team acquires.

That last sentence right there is key, because it illustrates one key rule that the NHL plays by. Money is power. Those who have the most spending money, wield the most power.

And going by that logic, Las Vegas? Well, they’re the most powerful team in the NHL.

Here’s a nice little fact that the majority of people associated with the NHL have figured out since the 1st lockout, managers, players and fans alike. A player’s value is not necessarily dictated solely by his actions on the field of play. In a system where resources are limited (i.e. teams can only pay a maximum of so much) management groups are constantly trying to squeeze water out of a rock. Every cent matters in salary cap leagues, because teams that manage their money well always end up being the teams that have the most talent and/or depth and the teams that have the most talent and/or depth tend to be the ones that win championships. At this point I’m reiterating the obvious, but work with me here.

This leads to situations where Player A and Player B can be exactly the same player, but if Player B is earning $3 million more than Player A then he’s just wasting $3 million and thus far less valuable than his equivalent counterpart. Now, some people have difficulty reconciling value and ability and so we tend to hear overarching statements like “X is such a worthless player”, but in general most people figure out eventually that the third liner you’re paying $5 million for is still a pretty good player and a guy that’s good to have on the team, but that his $5 million is really cutting into the paycheque of someone else who might be more deserving of it.

There are a lot of players like that, guys who are earning above what they deserve relative to play, partly because with the way talent movement works. If you lose talented players for nothing you become an also-ran really quickly which leads to the best and even mid-tier players getting long contracts ensuring that a team can’t possibly lose them without consent. Now reality is not every contract is going to end up great because things change, players get better or worse or their situations get better or worse and so while some contracts end up looking great, a lot look like poop because that 4th line player should not be earning the salary of a guy who scored 20 more goals than he did. Teams need cap space to sign talent more than ever, but most teams don’t have cap space to spare and the few talents that get on the open market get paid more than they probably should be getting because of a lack of quality players being available (thanks to everyone and their mothers signing long-term deals with their original teams). Gary Bettman supposedly said as the 2005 CBA was being written that the cap ceiling would act like a magnet, with every team trying to get as close as possible, and that’s exactly what has happened, with 21 teams within $2 million of the salary cap and just one situated under the cap midpoint (2 if we count Arizona, who have roughly $12.5 million in dead cap space, not including Dave Bolland’s LTIR’d contract).

This is not a problem that Las Vegas faces. They have no prior commitments to honour, no shortage of excess money and an owner who up to this point has said he is willing to do whatever it takes to win a Cup. Well, Mr. Foley, time to put your money where your mouth is.

In a league where it costs the Blackhawks a former 1st round pick in up and coming scorer Teuvo Teravainen just to get rid of one year and $4 million in contract (otherwise known as Bryan Bickell), how much does George McPhee stand to make if he calls up Dallas and goes, “Hey, how desperate are you to make cap space? Because I see you’re got $5.9 million and a years’ worth of gently-used Kari Lehtonen.”? How about David Clarkson’s 3 years and $5.25 million in Columbus? Or, if he really wants to go all-in for big-money but big opportunity cost, Los Angeles has an ex-captain who plays hard with 5 years after this one at $5.875 million.

Here’s where GMGM has the big time advantage: there are, oh, about 22 teams in the NHL who have a poor contract that they desperately want to move. Some, like Calgary, Edmonton or Winnipeg, have bad contracts that they’d like to move if possible. Others, like Washington or Tampa Bay, are literally desperate to move said contracts because they need that money to make space for players who need raises and are actually worth it, or have pressing holes on the roster that cannot be filled without making cap space first.

The nice thing about supply and demand is that being the only seller on the market tends to have you do real well for yourself (and make no mistake, Las Vegas could be the biggest seller of cap relief in pro sports history). Las Vegas doesn’t have to take all of these contracts, or even any if it’s not worth their time. That means that someone is going to be missing out. And depending on the cost of doing business, no GM wants to be the guy missing out. If played well, there could literally be a bidding war over who gets to shed their big albatross contracts, the kind of bidding war that brings in high draft picks and high-end prospects, both of which the as-of-yet non-existent Las Vegas system is in short supply of.

Majority owner Bill Foley wants to win the Cup within 7 years and wants to make the playoffs in 3, but he isn’t getting that kind of quality talent directly via the expansion market even if it’s set to be the most generous expansion draft ever for an expanding team. This is where that little discussion about the difference between value and performance comes into play, because a large majority of the players teams are desperate to be rid of are not necessarily poor players. They’re just overpaid. Many might even be of equivalent quality as your run of the mill non-protected player. It makes sense, then, to let the offers come in and simply take the 3 or 4 deals that promise the most rewards in exchange for taking on a still serviceable player and/or a player who will be gone soon enough. The combination of taking on 3, 4 or 5+ million dollars in salary with no retention (or yes retention, whatever floats their boat as to how they get to the deal) for a year or longer, as well as the whole opportunity cost of having to pass on other, cheaper, maybe more capable players will be immense.

How good does LV look with, say, Kale Clague plus extra 1st and 2nd round picks from Los Angeles? Because if we’re comparing to the market set by the Bickell-Teravainen deal, that could simply the starting point of what it might cost to move Dustin Brown, who may be better than Bickell as a player but costs nearly $2 million a season more for a whopping 5 more seasons as opposed to just one for Bickell’s contract at the time of his trade. What’s the cost to move Brooks Orpik if you’re Brian MacLellan of the Capitals, a 1st rounder and Jonas Siegenthaler? A couple of deals like that and all of a sudden Mr. McPhee has a team flush with young talent and young depth who could be making an impact right around the time his owner expects the team to begin making a serious playoff push.

A handful or less of large contracts filling the bottom of a potential Las Vegas lineup still leaves the team with solid depth, while bringing in major assets that might otherwise not have been available for this team and leaving just enough room for any talented players that slip through protection lists (one of Minnesota’s vaunted defensemen, perhaps, or a goalie from the Pittsburgh Penguins among others). If McPhee and Foley want to build a franchise that can sustain itself right out of the gate, there’s no question that they need to load up as many assets as possible, even if that means having to rush a minor league affiliate into the fold in order to accommodate the up and coming talent they could be bringing in via draft, free agency and trade.

It’s going to be interesting keeping an eye on the group of teams that are truly desperate for cap relief: Washington, Dallas, Tampa, Detroit, Los Angeles, the Rangers, Anaheim, Philadelphia. All are teams that have designs on short-term success to varying extents, but need to shed some bloated salaries in order to do so. But given there’s only so much salary LV can take on….

And for many of these teams, there isn’t exactly a choice on whether they should move some negative-value contracts. The benefit of opening up extra money right now for a chance at a championship run outweighs the downside of moving future assets for many of these teams, many of whom are right on the cusp of their Cup windows or just sliding out of them. Does Washington need another 1st round pick and a prospect who won’t be ready for another year or two (and not a major contributor for at least 3) or do they need to find a way to resign the likes of Kuznetsov or Burakovsky?

This is the new NHL now, where what a player does for your team is secondary to whether or not he can do it at a price point that doesn’t break the bank. Las Vegas doesn’t have any bank to break, and thus the NHL is their game to play.


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