Thursday, July 06, 2017

The Draisaitl Contract: Part 1 - The "Percentage of the Cap" Argument

In the build up towards Connor McDavid signing his 8 year, $100M contract extension, much has made of McDavid's "percentage of the cap", and how it compares to Crosby's when he signed his post-ELC deal*. While I understand the temptation to look at this situation from that perspective, I don't love the "percentage of the cap" argument, even for McDavid. The idea behind it makes some sense, in theory.  However, in practice, looking at a percentage from 10 years ago is only an appropriate comparison if the general league wide allocation of salaries is the same.  Since Crosby's post ELC contract was signed, the cap has increased faster than the salaries of the highest paid players, as expressed by a percentage of the cap, which in my opinion means that a straight across comparison of percentage wouldn't capture the changing league dynamics.

I particularly don't love the "Kopitar made X percent of the cap, therefore give Draisaitl the same percent of the current cap" argument. With Connor McDavid, you have a notably different situation than with Draisaitl.  McDavid is a better player, and there are no good comparables under a recently negotiated contract.  The team and player have to come up with some novel method to find an appropriate salary. Perhaps looking at Crosby's (5 years) and Ovechkin's (13 years) deals from 10 years ago isn't ideal, but what can one do but try to piece something together that works as an 8 year deal for McDavid, in today's environment?

In Draisaitl's case, while perhaps none of Barkov ($5.9M), Scheifele ($6.13M), Monahan ($6.38M), Gaudreau($6.75M), or Tarasenko ($7.5M) are absolutely perfect long term comparables, they are reasonably close enough to be roughly used as such when it comes to more standard NHL salary negotiations.  Kopitar's extension was signed almost 9 years ago.  Even if you agreed that Kopitar is a better fit as a comp (and I'm not saying that's a given), a contract signed that long ago is unlikely to better capture the relative worth of Draisaitl in today's market than the recently signed contracts of a peer group. If I were in Edmonton's position, and Draisaitl's representation was making this argument, it would strike me as an excellent attempt on their part to change the topic of conversation. If his agents don't think those comparables help them to secure Draisaitl the amount of money they are seeking, what can they do besides argue that (a) they aren't good comparables, or (b) try another angle, and argue that Kopitar, for example, is a better fit by style, and then try to shoehorn in a "percentage of cap" argument? I do kind of wonder if, in this hypothetical, Chiarelli and Edmonton's management might have a wry smile to themselves, very much doubting whether Draisaitl's agents would be using a "percentage of cap" argument if it meant that Draisaitl would be receiving less than the recent comparables?

Signing Draisaitl to a long term deal is not an idea entirely without merit.  However, if the ask from Draisaitl's agent is unwavering, notably above the market for similar players, and based upon a "percentage of the cap" argument that doesn't accurately reflect Draisaitl's value in the current market, there is no requirement for the Oilers to acquiesce and accept that line of reasoning. There are relatively sound comparables for Draisaitl. Changing the argument might seem like a useful tactic for his representation, but that doesn't necessarily mean the Oilers should deviate from the comparables recently established.

*The percentage of the cap for McDavid's deal turned out to be 16.67% with his 8 year, $100M contract, vs. Crosby's 17.2% (here is a chart from NHLNumbers with numbers for Crosby, Ovechkin, Malkin, and McDavid)

Next Up: PART 2 - The Merits of a Bridge Contract

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