Leafs second buy-out window opens

Cam Charron
August 02 2013 09:57AM



-via XKCD

As we explored earlier this week, the Toronto Maple Leafs have a second buy-out window between now and about 9:00 a.m. Sunday morning thanks to the settlement of the Mark Fraser case coming early on Tuesday. They have a 48-hour window to decide whether or not to buy out a contract that could help them sign Cody Franson and Nazem Kadri, two players that will likely command $7-million between the two, that the Maple Leafs do not have salary cap space for.

The popular target is John-Michael Liles. Check our poll to the right, and a fair number of visitors to this site would prefer a buy-out on Liles, which would cost just $875K against the cap this season, although that balloons to $2.375-million in the third year of the buy-out, once deals for Colton Orr and Frazer McLaren expire but just about when it's time for Nazem Kadri to start negotiating a contract that will see the Leafs buy up some UFA years. Consider the contracts Dave Nonis gave to Joffrey Lupul and David Clarkson which are both unlikely to work out in the long run, there isn't a lot of room to mortgage more of the future now for today.

I can see why it would be an option and the Leafs should consider it, but taking a huge hit on Liles to keep Franson around just seems like a huge mis-management, effectively paying an extra $1,312,500 per year over the next six to keep him around. A trade is certainly preferable, although I don't think it's possible that Liles can be moved. He has more value to the Leafs on the roster and trying to redeem himself after his first two seasons in Toronto have been interrupted by a concussion, a lockout, and a lengthy sequence of healthy scratches.

That said, paying an amount so he won't play is somewhat foolish since the Leafs have already used up both of their compliance buy-outs, and didn't pick up an asset from another team in the process. I think that while Nonis had a number in mind for each of the players he was re-signing, he ultimately saw each come in at a price a little higher than he expected and the mistakes added up. In this cap crunch year, differences of $100K mean a lot.

Given the Leafs have seen minor mistakes (Orr, McLaren, buy-outs on Darcy Tucker and Colby Armstrong, retaining $500K in the Jonathan Bernier trade, qualifying Mark Fraser despite plans to sign Paul Ranger, etc:) add up, it's not wise to let the same thing happen in the summer of 2015. Remember, Moneyball concepts aren't exactly about using statistics to find good players, they're about not being trapped by market inefficiencies. The Leafs have done just that this summer, buying up UFAs on the market and paying a premium for toughness and unrealized potential in the Orr, McLaren and Bernier trades.

Pension Plan Puppets' exclusive interview with Chad Finds, the Leafs internal statistician, really opened our eyes on the process:

PPP: What do you think you've helped the Leafs accomplish for next season?

CF: I think we've done a really good job of helping management find new market efficiencies to make us more competitive.

PPP: You mean market inefficiencies? 

CF: No, efficiencies. The NHL dresses about 900 players a year. As I've explained to Mr. Nonis, over 48 games that provides us with a huge sample size. Enormous. A lot of good work has been done by other teams in finding inefficiencies in the market. So much good work that we now believe there are no more inefficiencies left to exploit. In such a marketplace, we can take advantage of the one thing the Leafs have and that's cash. That's why we're willing to pay above market value for things that used to be inefficiencies. That's efficient. Other teams can't use their cap space like that.

It's not like this wasn't preventable. There were three buy-out targets for the Leafs when at one point there used to only be two, and they probably would have done it all with one and still managed to get David Clarkson under contract. I don't think any manager is perfect, but I also don't think Nonis ever envisioned himself to be in this scenario back in June.

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Cam Charron is a BC hockey fan that writes about hockey on many different websites including this one.
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#2 Breen
August 02 2013, 10:10AM
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It's impressive how Nonis completely mismanaged this offseason. It takes a staggering amount of stupidity to put the Leafs in this cap crunch.

The worst part about all these crummy deals is that in 3 years, Nonis and Carlyle will be gone, and the fans will still be here and have to watch the wretched product they left us with.

Ugh!

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#3 The Last Big Bear
August 02 2013, 12:27PM
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You want parody?

Buying out Mikhail Grabovski, so you can give a massive overpayment to Bozak.

THAT's a ****ing parody.

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#4 Matt
August 02 2013, 10:17AM
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That quote from Chad Fines makes absolutely no sense.

I guess that's why it's eye-opening.

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#5 Set Theory
August 02 2013, 10:38AM
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So Chad Fines is hoping everyone else was inefficient at exploiting inefficiencies? How does paying above market value for an "inefficiency" suddenly make it "efficient"? Am I missing something here?

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#6 Brian
August 02 2013, 10:47AM
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You guys know that Chad Finds is made up right? That whole interview was satire.

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#7 MaxPower417
August 02 2013, 10:51AM
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@Brian

Oops, accidentally hit trash instead of props. Have you read the whole article? It's hilarious.

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#8 MaxPower417
August 02 2013, 11:18AM
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@Cam Charron

I think what you can take from this, is that you don't have to keep putting so much effort into your articles. Just say sample size and efficiency a few times and people will think it's legit.

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#9 kid ish
August 02 2013, 11:58AM
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Haha I can't believe you quoted that PPP interview.

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#11 Jeremy Ian
August 02 2013, 07:38PM
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I agree with you, Cam, not a great situation in the short run -- and not where Nonis envisioned himself before UFA season began. There may be a lesson here -- about Nonis' decision making style, and perhaps about the league.

In complex organizations with agents simultaneously making strategic decisions (that is, when peoples choices are affected by the choices of others -- so, not a perfect marketplace where everyone is a pure price-taker, and not a monopoly in which there are no competitors), managers like Nonis prefer to make one decision at a time because they can only calculate with any degree of predictability the immediate choice they face: the outcomes differ in relatively small degrees from the status quo. Nonis went from signing to signing, from buy-out to buy-out. Managers like him stumble from choice to choice. It's sometimes called "branching" because you go further and further out on a limb.

This is Nonis. On a limb. The thing is, sometimes this is how it goes when the decision-maker is ambitious (and eager for a contract extension!) but is seriously constrained, and so he presses where he faces the least constraint (in this case, as that hysterical Chid Finds interview says): cash. And sometimes it yields to a better outcome.

Managers hate to feel this way because they prefer to tell heroic stories premised on their genius or guile. But Nonis is no genius and no killer bargainer. He's just rational within the incentives and constraints he faces. Nonis' decision-making style is pretty predictable. It's not so moronic or stupid.

There will be a price to be paid, either now or down the road. And we'll only know later whether it was worth it.

I am not so convinced that the sky is falling. The upgrades were pricey, that's all.

Which brings me to the league. What it tells us about the league, I think, is that in bargaining situations where contracts are negotiated individually by competitive agents (the managers) but the constraints are imposed collusively (by the league in the form of a cap), we will see this kind of behaviour more and more. Especially among the managers who have access to money.

So, we have a 10-year window before this CBA expires. Which means that managers of the teams with cash-flow will lobby for raising the cap to accommodate their strategy of overbidding. They also -- thanks to the length of the deal -- will win by driving the bottom end teams (13/30 teams losing money last year!) into bankruptcy, mediocrity or both. Then we will have another lockout to "correct" the perverse effects of this model of collusive competition. Some of these marginal teams may not even exist by then, and Bettman may finally have given in to the reality that real market forces warrant a team in Seattle and more in Toronto.

In the meantime, the cap will be driven up. Has to. And those most invested in keeping it down are those with the least bargaining power.

So, is Nonis's "branching" such a dumb strategy? I am not so sure.... It may look nutty right now, and it may feel like buying out Liles is over-leveraging the future. But look at the business side of the game and it looks pretty rational to me. Especially since all the serious long-term competitors to the Leafs are doing the very same thing. And if they aren't now, they will eventually. Not doing it may look foolish in hindsight.

This is just reality.

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#12 Set Theory
August 02 2013, 11:47AM
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That's the thing -- it's not particularly obvious. Given some of the brilliance that the organization exudes, this is exactly the sort of thing you can reasonably expect.

But the joke's on me. I bought it. Good one.

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#14 nonikhanna
August 05 2013, 04:14PM
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I think it might have been smarter for nonis to not buy out liles. This gives us the upper hand in trading negotiations. Because now we can either trade liles OR franson. gives us more options, teams won't be lowballing us for offers on miles Cuz we ain't gonna buy him out now. And for teams asking for franson, they don't know if we will be trading liles or not. So they really don't know how to negotiate. But we have to do one or the other. Trading liles or franson. The difference between those 2 is winning now, or piling up on prospects and saving for future.

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