Steven Stamkos and UFA Theory

After signing David Clarkson to a 7-year contract, Dave Nonis infamously told reporters, “I’m not worried about [years] six or seven.”  Nonis has been widely criticised for the remark, which was ridiculous in the case of Clarkson, who wasn’t even worth what the Leafs were paying him in year one.  And yet, because of the way the salary cap works, NHL general managers are frequently forced into decisions that involve trade-offs between up-front costs and longer-term sustainability.  Nowhere are those trade-offs more apparent than when trying to sign (or re-sign) a top free agent.

Barring a last minute change with the Lightning, it looks like this summer’s top UFA is going to be Steven Stamkos. It’s widely believed that the Toronto Maple Leafs will be one of the teams bidding for Stamkos’s services, with TSN’s Bob McKenzie saying, “there’s no doubt in my mind the Toronto Maple Leafs are going to take a hard run at Steven Stamkos.”  Some people would argue that every team in the league should want to sign Stamkos. I don’t believe it’s that simple, though. Whether it makes sense to sign a top free agent depends on a number of factors. Let’s take a closer look at what those are.

A GENERAL THEORY OF UFA

Having a salary cap distorts how players are paid.  That is especially true of players at the top of the talent tree, which is easy to see by comparing the top paid players of today to the top paid players of the years just before the salary cap came into effect.

In 2003-04, the last season in which the NHL had no salary cap, Peter Forsberg had an $11 million salary.  But last year there were no players in the league who had a cap hit that high, with Toews and Kane coming in at $10.5M.  No one else was even over $10M.  Top cap hits now are only just catching up to top salaries in 2004 even though league revenue has more than double the revenue.  (Cap hits aren’t quite the same as salaries, but I think it’s the relevant comparison here because individual season salaries fluctuate based on a number of factors, and cap hit more accurately captures what a team thinks a player is worth.)

Before the salary cap existed, teams could sign players at whatever value they were perceived to be worth in any given season.  But because the salary cap significantly drives down the amount of money top players are able to earn, teams that want to try to approximate a fair value for top players have to divide the money up a bit differently.  Typically this means that a player is underpaid in the early years of a contract but overpaid in the latter years.

The reason this happens is that there’s just no way to pay a top player what they’re worth under the current system.  Obviously, you can’t pay the equivalent to Peter Forsberg (say, Sidney Crosby) $22M per season.  Aside from the fact that it’s literally not allowed because of the limit on individual player cap hits in the CBA, you’d also never want to do it because you’d have too few dollars left under the salary cap to build a competitive team.

So what teams have to do is offer extra years in order to keep the cap hit to a more manageable level.  Let’s look at one recent contract, Anze Kopitar, as an example.  Kopitar’s cap hit is $10M per season for each of the next 8 seasons.  Kopitar finished 12th in the NHL in scoring last season and is one of the game’s most dominant 2-way centres.  His value in an uncapped league next season would be considerably above $10M.  But for the previously mentioned reasons, LA can’t actually pay him his true value.  Kopitar will be 36 at the start of the final year of his contract.  At 36 years old, it’s very unlikely that Kopitar will provide $10M of on-ice value.  So what the Kings have done is made a trade-off: in exchange for Kopitar agreeing to take below market value at the beginning of the contract, the Kings have agreed to pay him above market value later on, so that on the whole the value roughly evens out (at least in theory).

Understanding the nature of long-term contracts for players like Kopitar, you can then try to figure out whether it makes sense for a specific team to offer the kind of contract Kopitar has.  There’s really only one question to ask, and it’s this:

Will my team be a Stanley Cup contender before the salary cap hit exceeds the player’s actual value?

For the Kings with Kopitar, the answer is obviously “Yes”.  The Kings are as close to winning a Cup (again) as they’re likely to be for a while, and Kopitar’s value clearly exceeds his contract right now.  But for other teams, the Kopitar contract would not be sensible.  And that gets us back to Stamkos.

STAMKOS STAMKOS STAMKOS

Any team that is thinking about signing Steven Stamkos should go through the thought process I’ve outlined above.  That requires answering a few questions:

  1. How close is this team to being a serious contender for the Stanley Cup?
  2. How much will it cost to sign Stamkos in terms of his annual average value (AAV)?
  3. When do we expect Stamkos’s value on the ice to fall below that AAV?

#1 is obviously different for every team.  For the Leafs, I think the answer, realistically, is 3-4 years, though it’s possible that if everything goes right it’ll be a bit quicker (especially with Stamkos).

#2 is impossible to answer.  It’s been reported that Tampa Bay made an offer to Stamkos with an AAV of $8.5M per season.  We can guess that he’s probably going to get higher than that.  I’ve heard through the grapevine that he wants pretty significantly more than that, but at any rate, there’s no way I can realistically answer the question at the moment.

#3 depends largely on #2, but we can at least speak in general terms.  Stamkos turned 26 earlier this year.  Peak scoring age for an average NHLer is about 23-26, with a slow drop-off over the next couple of seasons, followed by a much steeper decline in a player’s 30s.  If we consider Stamkos one of the top offensive players in the game today, it’s probably a reasonably safe guess that he’ll continue to be a good 1st liner for at least another 3-4 seasons.

There are a couple of complications to consider with Stamkos, though.  The first is that goal scoring rates typically fall off more sharply than assist rates

Aging_-_goals_assists

That doesn’t necessarily bode well for Stamkos.  While he’s 2nd in the NHL in goals per game over the past three seasons (behind Ovechkin), he’s all the way down in 63rd in assists per game.  63rd isn’t bad at all (it’s still well in the range of a 1st liner), but it is worth noting that Stamkos’s scoring is driven primarily by goal-scoring, and that skill typically doesn’t age as well.

But there’s something working in Stamkos’s favour, too.  Most of the drop-off in scoring rates comes at even strength.  Scoring on the powerplay actually holds up quite well as players age, with a far less noticeable curve. 

5v5_and_5v4_aging_profiles

Over the past 3 seasons Stamkos is 7th in the NHL in 5v4 goals per 60 minutes (minimum 500 minutes TOI), so he can reasonably be expected to continue to score goals at a high rate on the powerplay for several more seasons.

There are a lot of potential factors to take into account when deciding to offer a contract to someone like Stamkos.  I don’t think it’s nearly as simple as “He’s great! Sign him!”  Any team looking at Stamkos should spend some time to figure out the particular point at which they think he’s no longer going to be providing as much value on the ice as the AAV he’s earning.  If a team thinks it can compete for a Stanley Cup in the next few seasons, signing Stamkos seems like a great bet.  But for a rebuilding team that thinks they might be further out, it’s not as clear a decision.  It would do no good to sign a top free agent, only to have their cap hit start impeding your ability to win at precisely the moment when you need the cap space most.

  • CMpuck

    Every team has their unique cap context, why not talk about the one we’re in. Pretty much the entire roster is either on expiring contracts and/or is cost controlled ELC and then RFAs for the next 7 years. That is reason to sign a great UFA for those 7 years.

    If management isn’t signing Stamkos and I’ve never, ever, ever, ever…. ever read how management should spend the cap space they’ve aggressive freed up. Who are we signing instead of Stamkos because MLSE isn’t sitting on 20 million of empty space and how is empty cap space better?

    • Capt.Jay

      The RFA discount on the second deal has been lessening (look at why Saad and Hamilton were traded). If Nylander commands 6×6 coming off his ELC, Marner will likely be coming right behind him…then there’s Matthews. He could likely get a Kopitar deal as a 21-year-old. Would you rather give him that 10M, or be paying it to Stamkos in his 30s?

      Also, they don’t have unlimited cap space next season because of the LTIR guys. I think they can only go 10% over the cap and they can’t ship off Horton etc to Robidas Island before camp.

      • CMpuck

        Yeah, we sooooo paid through the teeth for Rielly.

        I get forwards cost a bit more if productive but the cap will be up by the time they’ll need extensions.

        The whining is really about potentially over spending by 2-3 million a year on Stamkos. Better overspending on Stamkos than the stiff they’ll sign instead of Stamkos (oh wait, you smart marks don’t have the dignity to point to how better spend that cap space, it’s as if you’re making a bad argument to not sign him).

        Why did teams over pay on Hamilton and Saad? Because they’re tweeners, those 4-6 million dollar gambles that routinely kill teams, it adores me that people blindly criticize signing Stamkos because of the horror of his contract while ignoring the reality that passing on Stamkos will force management’s hand to spend that cap space on a couple tweener/most likely terrible contracts. Trade Phaneuf and sign the next Phaneuf instead of spending money on a guy who was 3rd in goals while his production his ‘declining’

  • silentbob

    Stamkos fills a gap the Leafs have had for years (#1 center), and will allow Matthews to start off in the NHL as a #2 center with less pressure, easier match ups and a fantastic mentor/example to watch, play with, speak to etc….

    As for the contract, Stamkos would most likely be signed by the Leafs for 7 years (unless he signs for 1, then resigns for 8…..). Of the Leafs potential, future core players (Matthews, Rielly, Nylander and Marner), only Rielly will be a UFA before the end of Stamko’s contract. Signing Stamkos shouldn’t affect the Leafs ability to hold onto those 4 players. As for his age, in 7 years Stamkos will be 34 years old. We aren’t talking about signing a player into his late, or even mid, 30’s.

    Stamkos also helps shift the Leafs focus from rebuilding to competing. This an important, and sometimes hard, shift to make.

    • magesticRAGE

      The missing piece is 3 weeks away, and he’ll cost $925,000 for 3 years. He’ll probably get a $6M raise for another 7 years. His value will be higher than Stamkos’s whole contract.

      Without Stamkos holding 14% of the team cap, Nylander, Marner, Matthews, Brown, Hyman, Soshinkov, Gardiner, Zaitsev, Valiev, and Leivo can get contracts and extensions. To build a proper team, it needs balance. It can’t be too front heavy, like the Pens and Caps were the last 4 or so years. The Pens are good right now, but when their defense matures, players will have to go, like one of their $7M+ players. Lets not make that mistake. Stamkos will end up being in the same situation, but being traded (like Kessel).

      I don’t think blood clot just disappear, he might just be predisposed to the condition, which sucks for him. He’ll have to keep an eye on it for the rest of his career (Paschal Dipuis).

      • silentbob

        First, Matthews MIGHT be the missing piece, we still don’t know how good or bad he’ll be in the NHL. We do know about Stamkos. Plus adding Stamkos can/would help Matthews become that missing piece.

        Second, none of those young guys will be getting big contracts while Stamkos is making 14% of the team cap (if thats how much he makes)

          • silentbob

            No they won’t, they will all be RFA’s (Except Rielly) for the duration of Stamkos’s 7 year contract.

            Lets assume, and its probably a safe assumption, that Rielly’s contract will be the Leafs model and Nylander, Marner and Matthews get 6 year contracts for 5-6.5 million after their entry deals. That means Nylander won’t be a UFA for 8 years and Marner & Matthews for 9.

          • CMpuck

            Yep, the only way Marner, Nylander or Matthews are getting more than 6.5 per on an RFA contract is if they walk into the league and set it on fire.

            If they have the production we collectively hope for, Barkov’s deal looks to be a reasonable comparable.

          • Capt.Jay

            And by the way. If Stamkoes is signed for max years then yes, our guys will be UFA’s. 7 years in the NHL and you can be a UFA at 25. Just like Stamkoes is now. If Mathews and Marner are in the league next year then they will be UFA one year before Stamkoes deal is done. 2 years for Nylander who burnt a year off this year.

  • SEER

    Couldn’t the overpaying for a lower value player toward the end be avoided by following the Phaneuf model. Front end load the dollars and trade to an internal cap team later in the contract where the dollars reflect value even if cap his is 8-10M per year?

  • silentbob

    I touched on it slightly in my first post, but what if the Leafs sign Stamkos to a 1 year, 14.3 million dollar contract. Then in 2016-2017 sign him to an 8 year contract that averges out to something more “reasonable” like 7 or 7.5 per season?

    • BarelyComments

      They could even sing a max contract for 2 years given that in in the 17-18 season we will have even more cap flexibility than we currently do for the 16-17 season…

    • Harte of a Lion

      Shanahunter, Baboriello et al Will not make this mistake. When questioned at the worlds Babcock said while a team is still building you don’t add a huge piece… and the Maple Leafs are in building mode

    • Eli York

      Wow! This is a real eye-opener. I don’t believe he is damaged beyond repair, but you gotta be very careful with his contract. If anyone can do a good job, it is Shanny and Lou.

  • Capt.Jay

    I’m tired of players getting contracts for what they did 2-3 seasons ago. If Steven wants to come here great. Just not for max money and term because his production has dropped. Tampa owes him for services rendered not the Leafs. IF any player is a dominate player I’d have no problem paying him max money for 3-4 years. I have an issue paying Stamkoes max money and term when Marner, Nylander and possibly Mathews will all be leaving their entry level deals when Stamkoes is 30 years old.

    But as many have said before, it only takes 1 out of 30 GM’s to give said player what he wants.

  • Capt.Jay

    I’ll never really understand why guys chase the most money, or huge amounts… 8.5M, 10M, who cares, you’re unbelievably rich after just 1 year, it’s more money than 99% of people in these countries will make in their entire lives. Would you rather have $10M/yr, or $8.5M/yr and a good shot at a Stanley Cup? or $7M/yr and pretty much guarantee a Cup? Seems like an easy choice.

    (Taxes for all the team location vary from around 40%-50% overall. So $4M+100%Cup vs $6M+50%Cup…)

  • Capt.Jay

    Thanks for the article. The decline in power play goals was a revelation. Still, buyer beware. As has been mentioned, he has had health issues. Risk vs reward.

  • Capt.Jay

    1- His production the last few years has been sagging more than a little bit- partly due to injuries, but then again that is something to merit some caution
    2- this was occurring on a team competing for the cup with plenty of other talent around him.
    3- the Leafs, as a prime example, will just be ascending (I hate to even admit that fact), in about 3 years, and perhaps in 5 years will be challengers, with the right additions, etc.
    4- in 2-5 years they will have quite a few promising young guys whom they will absolutely want to sign, orrisk have sitting out or get offer sheets on. These guys will add up to a lot, and if they have 10 mill committed to Stammer?? How to resign Matthews, Nylander, Marner, et al.?
    5- He is a scorer, and as mentioned that declines faster than assists