Thursday, July 26, 2012

The Nashville Decision

“The day you say you have to do something, you’re screwed. Because you are going to make a bad deal. You can always recover from the player you didn’t sign. You may never recover from the player you signed at the wrong price.”
Billy Beane in Moneyball

While it's true that I'm generally an advocate for offer sheets, it's not hard to feel a little sympathy for the Nashville Predators. Building a winning franchise as a budget team cannot be easy; to lose both Suter and Weber in the same summer would have been a pretty bitter pill to swallow for David Poile. That said, retaining a player beyond the point that makes financial sense, simply because he's "your" property, is not necessarily a prudent position to take as the architect of a club. Losing Weber obviously wouldn't have been ideal, but in this case I think it would be less negative than matching Philadelphia's offer sheet.

I think there are a couple of different problems with matching this particular offer sheet. By matching the offer as a non-cap team, Nashville doesn't get the same cap benefit as Philadelphia. Philly is getting a 14 mil player at a cap cost of 7.85 mil, and that's great for them, but those cap savings don't matter to Nashville. Philadelphia can't go to the UFA market and spend 14 mil like NSH can, because they are constrained by the cap. Can Nashville do better with 14 mil by going to the UFA and/or trade markets than by matching Weber's OS? Would Semin*, Rozsival, and Arnott, or another D, help the club more than retaining Weber? Those players would all be on much shorter contracts, so that long term risk would be minimized relative to Weber. You'd also have 4 1sts with which to shop for trades, restock, etc.

Secondly, one of the long term benefits of matching is that, down the road, you might get a player at a deep discount relative to his value, if Weber continues to play, and play well, into his late 30's. Those years could prove extremely valuable, but that requires them to be played. The problem with this deal, however, is that the structure gives him so little pay down the road that he may retire before you get to the cheap years. If he were to retire after 10 years, he'd have received 10.4 mil per season for 10 years, 94.5% of the contract's value over 71.4% of the contract's term. This is something that may not matter to Philly - they may well look at it as a 10 yr, ~100 mil offer that comes with the benefit of a 7.86 mil cap hit. If he feels like playing out years 11-14 of the deal, and is still worth his cap hit, great, PHI has a deal. If not, they can ship him off to a team looking to make the cap floor. But Nashville might be looking at those years as an important part of the appeal in matching, and those benefits may be illusory.

So, from the hockey end, and assuming NSH looks to compete for the Cup immediately, I think Nashville would likely have been better off in years 1-6 by letting Weber go. For years 7-10, there's a pretty good chance they couldn't do better than Weber at the money he's scheduled to make, although there are some mitigating factors**. For years 11-14, again, pretty likely Weber will be worth more than the money he's paid, but only if he actually plays.

Of course, on a deal this big the hockey side of things is only part (a big part, mind you) of the decision. One of the arguments for retaining Weber is that losing him would greatly harm your ticket sales. I can't speak to how accurate that is, and I have no trouble imagining it would hurt sales in the short term. I don't have the detailed financial information at my hands here that Poile did, or whatever market research the Nashville financial side would have gathered on the potential lost ticket sales by losing Weber, and that could well have affected my thoughts on the this topic. That said, I have a hard time believing it would cost anywhere near as much as the $41,000,000 Weber is due by July 1, 2014. Now, even if they had signed Weber to a long term deal on their own it probably would still have been somewhat front-loaded, but they might well have been out only 20 mil by July 1, 2014 in that scenario.

Having read this statement, I do wonder if the Predators gave too much thought to public sentiment. It would be interesting to know how seriously Poile may have been considering a total rebuild had the team decided to pass on Weber. My sense is that fans are less fickle than people generally assume, but perhaps that isn't the case in Nashville? They probably have a bunch of their season ticket money already for 2012/13, so it's a somewhat open question how much it would impact them this season, relative to next season. Had they lost Weber, how bad would they have been? Could they have then moved Rinne***? What sort of sweetener might MTL have given NSH to take on Gomez? Or NYR with Redden? Both of those players see their contracts expire in 2 years, and are owed less money than their cap hit. Could they re-brand and sell some tickets within a year or two if they had landed a couple top 3 picks in the 2013 and 2014 drafts, while saving a bunch of money?

There was a ton to consider here, and as I mentioned earlier, Nashville would have had access to important information that I don't. That said, and this is obviously just my opinion, I think there's a good chance they'd have been better served by staying away from this long term contract. Does that mean they can't compete financially with the big spending teams? Well, not necessarily. They certainly haven't been the last few seasons, but that doesn't necessarily reflect business going forward. Even if they do want to compete financially with other teams going forward, it doesn't mean they wouldn't be better off avoiding this particular deal to retain flexibility going into a new CBA. What I would say, closely related to the Beane quote at the top, is that having the desire for something, and the ability to afford it, doesn't necessarily mean you should buy it at any price.

* I wrote the majority of this post before Semin signed with the Hurricanes. In fact, I wrote a significant chunk of it before Nashville decided to match, but thought I'd wait until after they announced their decision before posting. I don't think it really hurts my argument - if NSH had decided to strongly consider letting Weber go, they could have signed (or, at least tried) all those players before their window to match had lapsed.

** Injury possibility, the player not aging as expected, and the foregone 2013-16 1st round picks that may or may not be starting to contribute had you let Weber go.

*** Rinne does have a NMC, but I'm not sure how much he'd want to stay in NSH if Suter AND Weber were gone?

4 Comments:

At 9:31 AM, July 27, 2012 , Blogger adam said...

Great analysis. It seems obvious in retrospect, but I didn't even consider how cap space affected the cost of the contract, ie, having a huge amount of signing bonuses is very valuable to a cap-heavy team like Philly.

BTW, signing bonuses seem a way to circumvent the cap - why is it allowed in the current CBA?

 
At 2:00 PM, July 27, 2012 , Blogger Dirk Hoag said...

One can certainly question whether or not $14M per year for the next four seasons is the wisest choice for Nashville, but remember they had only the 7-day period to decide, and there's no guarantee they'd be able to cobble a free agency package together of Semin, etc. to fill the gap (and personally, I don't think such a package would fill that gap). So it's a choice between "yes, we know we can have Weber for this", and "no, but we hope we can spend this money more effectively in a thin free agent market. but other teams are out there buying, too". I'm OK with keeping Weber there.

The business impact also should not be underestimated, especially in light of Suter's departure and the promise by ownership not to let star players go over money. Consigning this team back to the dregs would cost them millions in lost sales and corporate sponsorships.

 
At 2:14 PM, July 27, 2012 , Blogger speeds said...

Adam: I'm not sure they really contemplated things going the way they did regarding signing bonuses, or even if it would have been an issue it they did. It may be something they limit in the next CBA, but if they get, say, 5 or 6 year contract limits, along with a strengthened version of the 100% rule, it may not be something the league feels is a problem?

 
At 2:25 PM, July 27, 2012 , Blogger speeds said...

Dirk:

7 days is probably more that enough, I'm sure they'd have been running any number of scenarios over the past few months (at least) - this may have been more than they thought, but I would imagine they'd have already been gathering some information of what exactly he's worth to them, both on the ice and off the ice.

I'm not sure if they could necessarily have filled the gap, this summer, right now. I also don't know what their projections are for this season, even with Weber, minus Suter. but maybe opportunities open up as the new cap comes in, who knows?

I agree that it's important not to underestimate the business side; it's not impossible that this deal could make business sense while not making hockey sense - and I don't say that meaning it definitely doesn't make hockey sense as Weber is a great D. But it's also possible they overestimated the financial side.

FWIW, I do think Semin is really underrated, although that's a side issue.

 

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