On Value: Cap Hits and Perception

Arik
May 08 2012 11:50AM

 

 

In the history of hockey, the salary cap is relativey a new idea. In some ways it seems like it's been around forever, but the implementation was only a few years ago and how we tend look at it shows that.

As fans and writers who will likely never see anywhere near the amount of cash the players do, we frequently get caught up in flashy, gaudy numbers. We see a contract like Luongo's and think "TEN MILLION?! OUTRAGEOUS!", while ignoring the fact that his cap hit is a tiny $5.3M.

Of course, more and more fans are perceiving the difference between salary and cap hit, but even so, plenty of Flames fans see Jay Bouwmeester's cap hit of $6.68M and balk, not realizing that $6.68M isn't as bad as it seems.

So how should we perceive a player's salary and salary cap hit?

The thing both of these are missing is context: the salary cap itself and how it compares to average NHL cap hit.

The salary cap context is simple: it's a matter of determining a given player's cap percentage. If you take a player signed in 2005-06 at a $3.9M cap hit, for example, and divide it by the salary cap, multiply by one hundred, you end up with his hit percentage. For 2005-06, that CH% is 10%.

Now, 10% is a fine number if you're a good first liner or a legitimate top pairing defenseman, but other than that it's a bit much. That said, we often still perceive the $3.9M the same way, despite the fact that the CH% for the same amount is now much lower. In 2011-12, the salary cap was at $64.3M, making a $3.9M cap hit percentage just of 6%.

To add context, a quick statistical survey of several teams determined that the average cap hit in the NHL is approximately $2.453M (the Flames, as a point of reference, are at $2.458M). This covers a wide range of players, but the bulk of the guys in the $2M-$3M range are considered average to slightly above average (at best). Andrew Cogliano, with a salary cap hit of about $2.39M, represents the player closest to that number, but Hal Gill, Nikolai Kulemin, Anton Babchuk, TJ Oshie, and Teddy Purcell are all in that range for various reasons: some are RFA deals, some are for players with "issues", and some are deals for merely average players.

Now, the reason that particular number matters is that $2.39M = 3.8% of the salary cap.

When you compare that average player number to Mystery Player X's 6.07% and consider that UFAs command a higher price tag than RFA and ELC contracts, it becomes a even more palatable than most fans initial reactions.

The idea here is that instead of just looking at a big number and failing to place it in context, folks need to consider the dollars relative to the total cap and the league average contract. There are certainly times to take raw salary into account: poorer teams and their fans should consistently do this when looking at contracts, as those owners can usually ill-afford to at pay high amounts. For teams with considerable amounts of money (i.e. the Rangers, Maple Leafs, Canadiens), as well as teams with decent money (the Flames, Penguins, Lighting, and most of the league), the cap hit percentage should be of far greater concern.

The Cervenka Deal

This method makes the recent Cervenka contract seem even more reasonable - his cap hit (including all bonuses) of 3.77M is just 5.9% of the current ceiling and may well fall lower should the cap get any kind of bump this summer. That's a pretty small amount of the budget to pay for a guy if he can effectively play in your club's top-6 rotation.

Five years ago, Cervenka's deal would have been a much bigger chunk of the cap and therefore a much bigger gamble. Today, however, the risk is subdued by the cap's inflation.

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Arik works in Search and Rescue in the United States Coast Guard and is a former managing editor of the SBN Flames blog, Matchsticks and Gasoline.
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#1 loudogYYC
May 08 2012, 12:16PM
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Awesome article, thanks Arik. This is the perfect layout for the "X player is too expensive" argument.

Although it makes the Stajan contract look more palatable, it's still the worse contract the team has. He's the definition of an average player, yet he has a well above-average cap hit.

Jaybo is the best Dman we'll have for the next 2 seasons, time to embrace it.

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#3 ScottN
May 08 2012, 01:11PM
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Interesting article, what are your thoughts on how cap hit should be allocated by forwards, defenders, and goaltenders?

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#4 Michael
May 08 2012, 01:20PM
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'plenty of Flames fans see Jay Bouwmeester's cap hit of $6.68M and balk, not realizing that $6.68M isn't as bad as it seems'

His cap hit of $6.68 million is as bad as it seems, this kind of cap hit should be buying you an elite top five NHL defenceman. We are simply not getting value for his 'cap hit'.

Forget actual salary, the cap is limited each year by the NHL, while actual salary only ties to the clubs player budget. In effect 'cap' becomes a commodity, if you waste it, you waste it.

One of my biggest complaints with current and previous Flames management is their failure to use the 'cap' effectively. The Flames are essentially a cap maxed team, but this isn't reflected in the on the ice product. They are simply not getting value for what they are paying.

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#8 Kent Wilson
May 08 2012, 02:44PM
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I think it's reasonable to consider Bouwmeester's pay as not terrible outrageous from a percentage perspective, but still look at him as relatively overpaid compared to the market.

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#10 kittensandcookies
May 08 2012, 03:17PM
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@Arik

A) You need to assess his CH% at the time of the signing.

B) You need to compare his CH% to other d-men out there, rather than in a vacuum.

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#11 kittensandcookies
May 08 2012, 03:18PM
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@Arik

Oh yeah, if was paid less, he'd still suck.

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#12 propositionWes
May 08 2012, 03:22PM
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"In the history of hockey, the salary cap is relativey a new idea. In some ways it seems like it's been around forever, but the implementation was only a few years ago and how we tend look at it shows that."

Good lord that is an awful opening.

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#13 Parallex
May 08 2012, 03:26PM
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Ha! Yeah, a lot of Flames fans turn into jibbering loons when the topic of Bouwmeester comes up. Is he overpaid? Yes. By a lot? IMO No. Is he the best defenseman on the team? Yes, by a not insignificant margin I'd say.

Really the problem (IMO) has been that the Flames have over the last three seasons continually overpaid for depth players (Babchuk, Kotalik, Stajan, Staois, Sarich) so if we're overpaying for Bouwmeester at least we're overpaying for quality.

Really it's been death by a thousand cuts rather then one fatal wound. There were/are so many inefficiencies on the team that they all collectively add up.

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#15 Parallex
May 08 2012, 03:33PM
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"A) You need to assess his CH% at the time of the signing."

Why? His Cap Hit% at the time of the signing is only relevant to that year.

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#17 MC Hockey
May 08 2012, 03:56PM
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Great stuff Arik...I am a big capgeek.com and nhlnumbers.com watcher....love to see values of players and how things fit.

AND, I think a lot of commentators on here must check those salarcy-info websites FAR out more oftenn before they spout off about performance for contract value (LOL but seriously!).

As per Arik and others above, JayBo is slightly overpaid but he is the #1 D-man, plays against top players, and plays nearly 30 minutes a game often...that is HUGE! And again, the % of cap for the season matters.

Arik or Kent or other writers - do you have any fancy statistics (probably involving a Corsi measure) that allows us to compare players salaries versus performance and score them against each other? If so, I bet JayBo would be middle of the pack versus other FLames.

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#19 NateBaldwin
May 08 2012, 07:24PM
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Mchockey touched on it but I'll reiterate it anyway, I think that cap hit per TOI is something worth considering too, or maybe TOI% relative to other roster players at the same position. I've had a much better view of bowmeesters contract than (probably) most others because of the number of minutes he eats, especially considering the quality of competition he faces consequently.

Nice article too btw.

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#20 loudogYYC
May 08 2012, 07:28PM
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@kittensandcookies

Who would you rather have playing 25+ minutes per night? Phaneuf? Every team needs at least one 25+ minute Dman. I'm 100% certain if that were Giordano, he'd be a criticized quite a bit cuz although he's good at everything, I don't think he's elite at anything.

$6.6M is a heavy cap hit and all, but at the time of signing, Jbo was the biggest upcoming UFA and Sutter traded a 3rd rd pick for his rights, so he kinda took away some of his own negotiating power by committing an asset to an unsigned player.

I'm with most that think Jbo's overpaid, but he's no Wade Redden. Flames can still afford a Matt Carle type contract for next season. Remember Cory effin Sarich had a $3.6M cap hit last season.

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#21 ChinookArch
May 08 2012, 09:22PM
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Arik wrote:

Man, Kent was right. Even mentioning Bouwmeester's cap hit turns people insane. Glad I changed the article meat after all.

Great work here Arik.

If you hadn't brought up Bouwmeester, I guarantee a reader would have commented how bad his cap hit is, within 15 minutes of your post.

Every time the subject of Bouwmeester and his pay comes up, it reminds me an old saying:

"Don't confuse me with the truth, I've already made up my mind".

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#22 SmellOfVictory
May 08 2012, 11:12PM
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Arik wrote:

@Michael

According to what or whom? Also his CH% is just over 10%. It might be a tad high, but not the "HE'S OVERPAID BY MILLIONS" amount that everyone seems to react with.

Serious question: if Jay Bouwmeester's cap hit was $5.68M, what do you think the Flames would do with that extra $1M?

I don't know, buy a bunch of shoes? It's still a fair chunk of change to overpay someone by. Calgary's cap issues have often been akin to death by a thousand cuts; there was no Scott Gomez on the team, for the most part, but you take 6-10 guys and overpay them all by 500k+ and it adds up quickly. Especially when your core players are being paid substantial dollars in addition to that.

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#23 John Deere Green
May 08 2012, 11:33PM
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Off topic here but, check out Roger Millions article on Sportsnet.ca. Maybe things aren't so great afterall in Flameland? Says that the head coaching position in Calgary is not a desired position among available candidates for various reasons. Flames employee told him that Bowmeester is very much in play for a trade. Take it with a grain of salt, but I trust Millions before Spector any day.

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#24 febreze
May 09 2012, 12:10AM
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I'm well over criticizing the J-Bo contract. The fact is that he plays a lot every night and is at least holding the fort while shrewd deals are starting to be made to offset the bad deals. If we think that he's taking up valuable cap space that we're going to need in the next 2 years then we're dreaming.

There also wasn't much available around the time the Flames signed Bouwmeester (aged 25 in '09). Derek Morris (30 in '09) was available for about 3-4 million per year. Also a few semi-proven names under age 30 at the time were Mara (29), Skoula (29), Bergeron (28), Beauchemin (29), Seidenberg (27), and Eminger (25) would have all been available for around 4 mil or much less. Then, and now in hindsight, J-Bo doesn't look like a terrible choice, especially his with his age. We should also be glad that Komisarek (27 in '09), who might have been a player in the Sutter mould, didn't end up in the Flaming C. I think Jay Bouwmeester was the right choice but if that cap hit is really bugging someone then they would have had to known that Leopold would have ended up being as serviceable (or at least healthy) as he's been and re-signed him then brought in Seidenberg with a total cap hit for both of them for less than 5 mil (even if you overpaid).

I would still say that if the Flames at any point in the last few years have had cap troubles which have actually prevented success then J-Bo's contract has at most, only been partially crippling. There have been several poorly drawn contracts which have put the Flames up at the cap ceiling where, to be honest, they really didn't belong.

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#25 Monaertchi Gaudnett
May 09 2012, 08:41AM
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Looking at CH% is interesting, but I think it's without meaning unless you have a reasoned opinion on what cap allocation should be. Saying Player Q is getting 10% doesn't tell me anything unless that can be quantified with a detailed CH allocation. Something like: "a 50G guy should get 10-15%, a #1C should get 8-12%, a #1D should get 7-10%, and here's why..."

So JBo gets ~10%. So what? For that to have any meaning for me I need to know what you think a #1 D should be getting, and is JBo actually deserving of a #1 D man CH%?

Once you've built up an allocation of CH and a reasoned argument for it, I'll be much more interested. If I had the time or inclination, I'd even do it myself because I think it is very interesting and worthwhile.

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#26 Derek Zona
May 09 2012, 09:26AM
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Now about the cap vs cash thing...

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#28 Monaertchi Gaudnett
May 10 2012, 12:33PM
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@Arik

I think average NHL contract CH% is a useless metric, as is ave. NHL UFA CH%. At some point Karlsson and Kipper will be or have been UFAs, but to compare both of them to the same league-wide position-independant UFA average is meaningless.

Value that a player brings to the team, on the ice, has nothing to do with free agency so that should be left out of the equation. I don't care how or why JBo got his contract, i just want to know if he's worth 10% so he must be compared to others in his position both %-wise and on-ice-wise.

Lidstrom and JBo (and about 28 others) are both playing 1D positions. What are their CH%'s? What are their G, A, +/-, Corsi, etc...

If you're going to compare percentages you should be looking at 1C, 2C, 3C, 4C and 1LW, 2LW, 3LW, etc... Perhaps 1C, 2-3C, 1LW, 2-3LW, top pair D, 2nd pair D, etc...

Well, that's my opinion anyway. I hope you're able to be that thorough because I think the results could be very interesting.

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