On The Fallacy of Probablistic Thinking

Let us imagine that we are brilliant, and came up with a way besides the classic Hockey League Simulator 2 to simulate 10,000 2009-10 seasons, from start to finish (in all of them, Marian Gaborik gets injured). Let us imagine these simulations are pretty darned accurate - the Gaborik injuries are a dead giveaway that they are.

Now we have a list of teams who've won the Stanley Cup in these 10,000 simulations - let us look at their average playoff wins. Someone like Detroit might have 9 or so, someone like the Islanders might have 0.1 or less. These numbers, however, are inherently meaningless when imagining who's going to win the Stanley Cup simply because some team has to win 16 games in the playoffs.

There's a lot of luck in the playoffs - it's rather improbable that despite the fact that Detroit and Pittsburgh were likely the two most talented teams in each of the last two seasons that both teams made it to the Stanley Cup Finals. When wondering about whether they'll repeat that feat, citing the above is not particularly important - it is certainly improbable, but still more probable than most Stanley Cup Finals pairings.

The Kessel Deal, Part 2 - The Boston Side and Why Toronto Loses

Boston GM Peter Chiarelli says Phil Kessel wanted to be traded in July - he came away with an excellent trade for a number of reasons.

He Got More Than An Offer Sheet

2 1sts and a 2nd is significantly more than a 1st, 2nd, and 3rd.

According to TSN, 2010 is a 'strong draft'

We don't pay much attention to TSN grading a future NHL draft - after all, they air the draft. However, the Bruins now have 5 picks in the top 2 rounds - 2 of their own, 2 from Toronto, and 1 from the Lightning.

Boston doesn't 'need' a player back

Boston's got some solid prospects all the way around the organization - that is why they felt confident enough to deal someone like Martins Karsums to the Lightning. Mikko Lehtonen could be on the Bruins in October, and he's got 20 goal potential. The Bruins have lots of right wing depth - while Kessel is an outstanding player, and he will be missed, they can do without him.

Marc Savard can now be retained

This is far from a guarantee, but Savard is deserving of a large pay raise commensurate with players like Daniel Briere. The Bruins owe 38 million to 10 players next season, so it may be a stretch to fit him in, but with Kessel on board, there was literally no chance of them retaining both players.

Boston has assets with which to rid themselves of bad contracts

Maybe Boston gets rid of Michael Ryder to make room for Marc Savard - but who wants Michael Ryder at that salary? Why of course no one - but with a 1st round pick bundled along with it, maybe Boston gets back a decent prospect.

Boston sells Kessel at the peak of his value

While Kessel is exceptionally talented, and the Boston Bruins as well, we are skeptical they could maintain their prodigious even-strength scoring ability. If Kessel scored 30 goals in 82 games next season, his trade value would certainly diminish.

Boston has the ability to deal for Ilya Kovalchuk

Outlandish idea, but if both sides saw fit to do this, Boston could certainly make it happen. It would happen at the trade deadline, but it would give Boston the most dynamic scorer outside of Alexander Ovechkin.

Why Toronto Loses

Brian Burke may be overplaying his hand - by loading up on salaries now, he may be losing out on opportunities to raid the Chicago Blackhawks next off-season, as well as all the teams that are going to be dumping legitimate NHL talent to get under the salary cap. By not offer-sheeting Kessel, Burke drops a 2011 1st round pick, something which is no doubt valuable. While Burke may think he can sign undrafted free agents to make up for that, there are only so many of those players around. If Kessel is only a 30 goal scorer in Toronto, it seems this gambit is a massive failure.

Phil Kessel - The Toronto Side And Why Boston Loses

"That plane to Toronto's leaving, and if you're not on it, you'll regret it. Maybe not now, but soon, and for the rest of your life." Brian Burke, to Wade Arnott, Phil Kessel's agent.

Okay, we made that exchange up. What is true is that Phil Kessel was traded for three draft picks - a 1st in 2010, a 2nd in 2010, and a 1st in 2011. This seems insane, and is insanely complicated, so we're going to examine it in two posts - this one looks at why Toronto 'won' the deal and Boston lost it. So, without further ado:

The 2010 Draft Is Weak

We fully admit we don't keep up on draft classes - in fact, the reason we don't is because when we were young, we were taught that the 1999 draft class was exceptionally strong, only to have it turn out to be one of the weakest in NHL history. However, if the 2010 draft is weak in the way that the 1996, 1999, 2001, and 2007 drafts were weak, a 1st round pick that will likely be in the range between 10th overall and 20th overall does not have a great deal of value. 1st round picks are exceedingly valuable when they might render players that provide excessive cap savings in Year 3 of their entry-level contract - weaker players obviously provide less value, but they also take longer to reach the NHL.

Brian Burke Has a Boatload Of Assets

Toronto has NINE UFA Players. NINE. (Imagine this as Principal Rooney in Ferris Bueller's Day Off). None are particularly valuable besides Alexei Ponikarovsky, but we theorize their value may be like this at the deadline:

Alexei Ponikarovsky - 2nd and 5th
Lee Stempniak - 3rd
Mike Van Ryn - 3rd (perhaps 2nd)
Matt Stajan - 3rd
Garnet Exelby - 3rd (or 4th)

Now, Toronto may have no interest in trading these players at the deadline, especially if it is in the playoff race. However, it shows that Burke is capable of recouping some of the assets he lost.

UFAs Are Expensive And Don't Exist

Phil Kessel is a 'pure scorer', possibly in the elite. Let us look at the list of elite UFA 'pure scorers' coming available in the next 3 seasons:

Ilya Kovalchuk

Gambling that Ilya Kovalchuk comes available and wants to sign for a penny less than what Marian Gaborik received is a fool's wish. Kovalchuk would likely command $8+ million - if the salary cap falls, there are not many teams that can afford that. Plus there is always the worry that Ilya Kovalchuk returns to Russia.

You Have To Choose What Year You Will Contend

Besides out-of-nowhere success of the sort the Bruins had this past season, under the salary cap one has to judge which years they think they can be a Stanley Cup contender and plan accordingly for that season. The Leafs must be circling 2012-13 - all of their onerous contracts (Blake, Finger) will have ended. Nazem Kadri's contract may slide to begin in 2010-11 - this puts that all-important 3rd year of his entry-level contract right there. 2011-12 may also be important - Luke Schenn is not arbitration-eligible that year, and Burke may be able to bury the Finger and Blake contracts in the minors if he so chooses.

Toronto Has Shown They Can Attract Undrafted Talent

The NHL draft isn't the only place to acquire cheap contracts - undrafted free agents are important as well. With the Leafs signing 3 of these this past season, they clearly think they are running the kind of organization that makes players want to sign up. New Jersey has certainly made up for draft mistakes by sprinkling their lineup with undrafted free agents - Toronto will look to do so as well.

Why Didn't Burke Sign Kessel To An Offer Sheet?

Simple - Boston might've matched. And if the number was made high enough that Boston wouldn't match, the cap savings that Kessel provides are gone. Furthermore, Kessel may have refused to report to Boston if they matched, causing all sorts of problems.

Why Boston Lost

These draft picks are not quite lead balloons, but they are certainly far less valuable than prospects at this juncture. Two of the picks are in a weak draft. Plus, Boston was a legitimate Stanley Cup contender if they could've shoehorned Kessel on to their squad - they may be missing their window of Stanley Cup contention. They gain cap relief, but they also squandered money on the Derek Morris contract and buying out Peter Schaefer - these moves should not have been made before securing Kessel's contract.

Coming Soon: The Boston Side and Why Toronto Lost

The Derick Brassard Deal - Anticipation

We often belabor the point here at Hockey On Paper - in fact, we think that should be our slogan: Hockey on Paper, We Love to Belabor. One of the points we've been trying to hammer home is just how important it is in a salary cap environment to have underpriced contracts somewhere on one's roster. We like to think of contract value not in terms of goals and assists but in terms goals and assists converted back to dollars. The best team in the league (however one chooses to define this) has salaries worth some X above their total salary costs, that is why they are the best.

Derick Brassard only has 48 NHL games played, but Columbus is gambling and giving him a 4 year, 12.8 million dollar deal. This contract is similar to the one given to Evan Longoria of the Tampa Bay Rays, a move that puzzled MLB experts but excited sabermetricians. It was a risk - sure, Longoria may not turn out to be a great player, but almost all indications were that he would. Likewise, while Brassard has not played that many NHL games, all signs point to him being an excellent contributor. So why now instead of after next season?

Columbus gets a discount

Brassard's lack of experience increases the risk, but if he has an excellent season, his contract demands will go way up. Unless he gets injured again, it's not likely that a contract offer of that length would plummet - Brassard is almost certainly going to be worth more than 3.2 million per season in 2013-14.

Columbus avoids an impasse

Phil Kessel and Brandon Dubinsky are still unsigned with training camp's beginning a few short days away. Columbus must have noticed this - furthermore, Brassard isn't arbitration-eligible until 2011-12. With neither side having recourse to arbitration, contract negotiations could have gotten contentious, which benefits no one.

Columbus pays out the largest amount when it can afford it

Steve Mason and Nikita Filatov will still be on entry-level contracts in the first year of Brassard's new contract. This means that while Brassard will be overpaid relative to what an arbitration-ineligible RFA should get for the 2010-11 season, Columbus has enough low-priced contracts to weather that storm. However, down the road, it will need all the cap room it can get, and if Brassard can emerge into the 20-50-70 (or better) sort of player it looks like he might be, Columbus gets a steep discount during the final two years of that deal, enabling a possible Stanley Cup run to come to Central Ohio.

Okay, yeah, there's downside

This contract is not without its risks, of course. Everyone loves to make fun of the Rick Dipietro contract, not realizing that said contract has been copied around the NHL as a model of excellent management. So, Negative Nellies, have at it:

Brassard is injury-prone

He has missed significant time in 2 of the last 3 years. We can't be totally sure if that indicates a lack of durability or simply bad luck. He may well be injury prone, but the Jackets likely got a discount as a result of that.

Brassard might never develop past this point

Brassard not developing further would be rather shocking - even if he doesn't, he is still likely a 15-45-60 type of player. Overpaying for that isn't really a crime, although it would be a large setback for Columbus.

Brassard might get complacent

Being signed for the next 5 years may cause a 22 year old to get a swelled head and bloated body if he doesn't watch himself. However, this is unknowable to anyone who isn't in the Columbus organization - it's the type of risk that Stanley Cup contention is built on.

Conclusion

The Derick Brassard deal is perfect for the Columbus Blue Jackets. While they have made contract mistakes in the past, this one makes up for some of them.

The Kessel Situation, Part 2

We were rather lazy in creating our last post, so another whirl:

Let us say that the Boston Bruins' chances of winning the Stanley Cup this season are some number a, with Phil Kessel on the roster, along with all the other Bruins' players, below the salary cap.

If Kessel gets offered a sheet, the Bruins' probabilities become b and c - b is with Kessel, at his elevated price, and some other players waived/released/whatever, c is without Kessel altogether.

Let us then posit letter d - the probability of the Bruins winning the Stanley Cup in 2011 with Kessel, and e without him, having been signed by another team.

(this can also be done with projected revenues based on playoff success).

Now a is our ideal, but seems somewhat unlikely. We only include a here because it's also a comparison if the Bruins decide to make a trade with Kessel - they will have a very difficult time getting back fair value for him.

For an offer sheet, however, it's very simple - if (b+d)x < (c+e)y, where x is some number above 1 that represents the time value of money, and y represents the possible trade value of the draft picks the Bruins receive, the Bruins should pass on signing Kessel.

Obviously, none of these variables are knowable; there's a lot of uncertainty involved. What would make this more clear is the salary cap situation for the Bruins - however, this equation is only based on the fact that if Kessel is signed to a large deal, it will be very difficult to retain Marc Savard.

The Phil Kessel Situation

Holding out was a classic maneuver under the old CBA - several players even held out for an entire season (Petr Nedved, Michael Peca, Alexei Yashin, to name a few). We have yet to see that under the new CBA, in part because a player can only hold out to December 1, according to 11.4 of the CBA. If he holds out longer, he will be ineligible to sign a contract. We suspect this clause has something to do with the salary cap, but that is a discussion for another day.

Phil Kessel is still unsigned as the Bruins head to camp this week. It is theorized that the Leafs made a trade for their 2nd round draft pick so that they can submit an offer sheet to Kessel - teams must have their draft picks in order to submit offer sheets. Here is the compensation teams receive based on the size of the offer sheet submitted.

Could the Leafs submit an offer for something like 5 years, 30.1 million? This would entitle the Bruins to a 1st, 2nd, and 3rd round pick in compensation. The Leafs' biggest lack is a top-end scoring threat, and Kessel certainly showed himself to be that last season. The real question is - would the Bruins let Phil Kessel go if this offer were made?

Digression On The Bruins' Salary Cap Problems

Everyone is talking about the salary cap hell the Blackhawks are putting themselves in, but the Bruins are also in an uncomfortable spot. They owe 36.8 million to 10 players, plus $1 million in buyouts. That's 37.8 million already committed to next year's cap, plus Milan Lucic and Blake Wheeler are going to be RFAs, the latter arbitration-eligible. Marc Savard is a UFA next off-season, and unless the Bruins can get rid of a salary or two, he may not be able to re-sign with Boston.

Back to Kessel

Kessel being paid $6 million would throw the Bruins' cap commitment to 43.8 million for 11 players. It is totally untenable even if the salary cap stays at its present 56.8M level - the Bruins would have to make a trade. While Marco Sturm is probably disposable, bringing that level down to 40 million to 10 players, it still leaves 16.8 million for 10 players. That sounds like a lot, but Lucic and Wheeler are RFA, and with the latter being arb eligible, he is going to get at least 2.5 million if he sustains last season's performance. Lucic is also a candidate to draw an offer sheet - like Dustin Penner, he is big and supremely overrated. The Bruins have a tough road ahead - letting Kessel go may solve some problems while replenishing their prospect base for future Stanley Cup runs.

Conclusion

It may be in Boston's best interest to let Kessel go if Toronto signs him to an offer sheet. They may work out some other compensation instead of draft picks, but Boston just doesn't have much room to operate under the salary cap at the moment.

Thought Experiment With Contracts

Let's posit two players: Evgeni Peaklate and Wendel NHLReady, about to be drafted by an NHL team. Wendel NHLReady is a good old Canadian boy who's got all around solid skills, but his upside is limited. Evgeni Peaklate is a flashy Russian who needs some work on defense and positioning but has tremendously high upside. With the NHL UFA age now at 27, and 25 for players like Jay Bouwmeester who had 7 years of service time, should NHL GMs be thinking about players in terms of Peaklate and NHLReady - i.e. should they consider something other than 'best player available?'

Let's say NHLReady needs 2 years in junior, and Peaklate needs 2 years in junior/Russian league/wherever, as well as 2 years in the minor leagues. Let's also assume that both players are paid exactly what they are worth, except for their entry level contract. It therefore follows that unless NHLReady is providing minimal value during the three years he spends in the NHL under his entry level deal, or Peaklate incredible value for that one season, that NHLReady will provide more value for his team over the course of his contracts.

Obviously things don't work this way. The point we're trying to illustrate with this silly example is that with our earlier assertion that UFA players get paid 50% more than what they get paid as RFAs on average, teams should think harder about players with limited upside but more certain NHL futures who will be ready for the NHL quicker than counterparts with serious flaws in their game that need correcting. Luckily, junior hockey teams around the world are getting better at developing players who are ready for the NHL - 2008-09 saw 12 players picked in the 2008 draft make their NHL debut.

Next post: The change between the first entry-level contract and first RFA contract a player enters into. We estimate the average change will be between 125% and 175%.