Friday, January 29, 2010

What Car Company Do You Work For? A Major One.

Subtitle: Placeholder Contracts and Inexact Science

We were again pondering the Oskars Bartulis contract extension recently penned by the Flyers (and meanwhile, not pondering the thought process that led us to ponder Oskars Bartulis's contract perhaps more than he himself has) - we wondered, given Bartulis's unsightly and team-low -12, what if a team intentionally signed a replacement-level or sub-replacement level player as a placeholder, to then bump him out of the playoff rotation each year through trade? Could this be a good move? There's a lot to consider here. First, let's limit the discussion to defensemen, because defensemen play more minutes than forwards, and there's less of them on a team.

Let us assume that our team is in the NHL elite, or near it - that each season, we have an excellent chance of making the playoffs. Let us call that percentage P%. Let us assume that we have signed a defenseman for 3 seasons, at $700,000, in a league where the minimum is $500,000 and the salary cap is at 56.8 million. Let us assume that he is a replacement-level defenseman and has little chance of improvement - we can assume he gives us 0 wins a season, or we can assume he gives us a range of wins from -1 to 1. For the purposes of this exercise, we suspect that just calling him a 0 win defenseman is best.

Let us assume that each season at the trade deadline, we are able to acquire a defenseman who is either a 1 win or 2 win player. Now recall, with the way the NHL salary cap works, cap room gets 'stored' - it is calculated each day, and for each amount that a team does not use on that particular day, some of that amount is 'saved' in proportion with the remaining season. The trade deadline is 40 days before the end of the regular season (which season usually lasts 180 days), therefore when the trade deadline rolls around, teams have stored up 180/40 times the cap room that they 'actually' have.

So let us return to our original defenseman - Replacement-Level Paulie. He plays for the first 60 or so games of the season at a 0 win level at $700,000. The team makes a trade at the deadline, and acquires League-Average Lou for a 2nd round pick, who's worth 1.5 wins over a full season; over the remaining 22 games, he is worth .40 wins. League-Average Lou's salary is $2,000,000 - the team could acquire him with as little as $450,000 in cap room. Replacement-Level Paulie is now a 7th defenseman.

This discussion is getting rather complicated - we know not where to place the variables. Let us try to simplify the discussion this way by asking the question again in a different way - can making a trade at the deadline every season be better than signing a defenseman? We suspect the discussion is growing too lengthy - we hope to examine this question further tomorrow.

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