Offer Sheets Can Fix a Broken Market
I’m old. I see things and, sometimes, I write things too. So bear with me as I admit this little hockey rumination about a player I don't care about and an organization that has wallowed in irrelevance for years not named the Buffalo Sabres.
Many GM's of hockey clubs are former players and, for all they know about the way the game is played, their business acumen has been lacking, especially regarding the deployment of the most powerful tool in their managerial arsenal: L’offre Hostile, The Offer Sheet. Now an Offer Sheet allows any franchise to sign another team's young player or RFA (Restricted Free Agent) who’s just completed their entry level deal to a contract that lets them suit up for their team. There’s certain nuances, of course, the home team can match the deal and keep their player or not match, let the player walk and get draft compensation in return (depending on the contract size). In essence, you offer my guy millions and either I match the offer or if I don’t, depending on how expensive the contract, you get the player and I get your draft picks. That’s all there is to it, well, besides lingering enmity between clubs, but that’s another, much stupider story.
Why is the Offer Sheet such a powerful tool? The old saying comes to mind: A bird in the hand is worth two in the bush. A simple cost to benefit analysis shows that if you looked at Draft Picks as real world assets, the closest equivalent would be a Lottery Ticket. A 1st Round Draft Pick has a 63% chance to hit money, in this case to play in the NHL. A 2nd Rounder? 25%. A 3rd Rounder, 12% and so on. The probability of the drafted prospect becoming an impact player? Drastically less. And the better the team, the later their selection in those rounds, reducing that percentage even lower! And, what’s more, NHL Draft Prospects are like Savings Bonds. That is, once your draft pick turns into a prospect it usually takes them 2-4 years to reach the NHL, and even longer to reach their fullest potential. So an 18 year old, if he beats the odds, may crack the lineup at age 22 and, even then, won’t reach their prime until 24. In short, the Offer Sheet is giving up potential players that may or may not break your roster in 2-4 years and, even then, might not be all that great. So an Offer Sheet allows a GM to sidestep the odds game, years of development and can address a team’s immediate need. Added bonus? You obtain a cost controlled asset who, in his prime, is motivated to go to a team that wants to pay him.
Now, for a long time, offer sheets were a taboo among NHL GM's, and a sort of unsaid "You don't steal my RFA’s, we won't steal your RFA’s" deterrent ensured that they were rarely employed. Here’s the problem- this detante ensured a cost certainty within an organization’s local Restricted Free Agent market that allowed GM’s to author spectacularly bad contracts when it came to the Unrestricted Free Agent (or UFA) market.
In order to "push teams over the top" and vie for the Cup, any and all above average to good UFA’s (players aged 27 years old or players who’ve been in the league for 7 years) became highly sought after and the NHL off-season turned into a zany arms race. Players on the cusp of ageing out of their prime, regardless of talent, started to become paid as if they stopped having birthdays past age 29 and were given a term that made them grossly overpaid for their on-ice production as they entered into the later years of their contracts, a deterioration that can be, and has been, easily predictable, from the standpoint of an veteran player’s O-Pee-Chee Hockey Card to a cursory Google search.
So GM’s continually put themselves in a sort of Salary Cap Jail every offseason making contracts that are good for their "championship window" now, but look regrettable a couple years down the road, especially when they're dressing a recently signed UFA not named Ovie who happens to take up 10% of their cap salary and performs at 30% of their former self. That player, in their 4th year of an 8 year deal stops being an asset and starts becoming an albatross and, worse, in order to clear the decks of his salary that GM has to either A. buy him out and reduce their cap long past that players’ playing days B. trade him and retain salary to receive equitable value (reducing the ceiling of their overall cap for the course of that player’s career) or C. trade him to a team with cap space and send draft picks to sweeten the deal for nothing in return. Keep in mind that if the player has a no-movement clause, things become even more stickier and, 9 times out of 10, that player isn’t going to a team that can afford him because, well, they probably aren’t that good.
...but this is the market. We live in an NHL era where the Sean Couturiers, Jeff Skinners and Erik Karlssons are signed until they're 37 years old for top dollar and maybe 3-4 years of "worth it" production; players who, in the near future, will force a cash strapped GM to trade him to a team who "needs a good guy in the room," which is hockey speak for a salary dump. What’s worse? Teams have done it and will do it again and again. This is usually the death spiral for any club before they fire their General Manager, and replace him with another guy who will also do it.
Offer Sheets have the potential to break the cycle and punish that behavior. Brutally. If they increase in frequency, not only will they force GM’s to dole out reasonable contracts to players who perform, contracts that will age well and keep organizations competitive, they will make performance incentivized contracts the law of the land, and not just for scorers. And you know what? It’s just good business. And good business understands what it takes to sustain success.
Enter the Carolina Hurricanes who, literally priced out of a deep Stanley Cup run, have Offer Sheeted Montreal's RFA Jesperi Kotkaniemi for 6.1 million over a 1 year term. Classless move? Revenge signing? Heinous overpayment? Well, sure, all of the above, and it’s going to cost the Canes their first round and third round pick to do it, while MTL, over the cap as it stands, is left to figure out either A. take the lottery tickets and run or B. take scissors to their roster and future prospects to make room for a young asset.
First let’s talk about the player, Jesperi Kotkaniemi. A 21 year old Finnish center drafted 3rd overall in the 2018 draft. His stats don’t jump off the page, but they show a steady improvement over the length of his professional career. On the ice he’s relied upon to be a swiss army knife, a crafty playmaker who can both snipe and hustle back to play defense. While not many scouts would’ve considered him elite at the time of his draft, he was a solid prospect whose bottom potential would project into a good top-6 forward. Even with his team having made it to the Stanley Cup finals, the nicest thing this writer can say about Jesperi is that his low end potential hasn’t happened yet. Often scratched during MTL’s magical playoff run, he lost his ice time to Jake Evans, a player I would politely consider a grinder, a maximum effort guy whose primary responsibility is not making defensive mistakes. Not exactly a vote of confidence from the Montreal organization.
Taking revenge and pettiness out of the equation, why in the world would Carolina offer 6.1 Million for 1 year to acquire an unproven center? Short answer, it’s a brilliant and surgical business decision made for two very simple reasons.
First, Montreal can’t afford it. If MTL matches the offer for Jesperi, they exceed the cap limit by 6 million and will be forced to trade away assets for pennies on the dollar in order to get back into cap compliance before the season starts (see GM death spiral). With the contracts of future NHL stars Nick Suzuki and Cole Caufield in the near future, throwing that much money to Kotkaniemi, a kid who’d have to be requalified to a tender for the same amount next year (if he didn’t accept a pay cut), would likely be a massive disaster. Without cost certainty, he could break the team under the weight of his new deal or, if not qualified a tender, walk as a UFA to any team who’d pay him. Even if he’s known for his flash, GM Marc Bergevin doesn’t own a suit that can hide that much ugly truth.
Second, Carolina thinks he’s worth it. The money and term for Jesperi does not make sense in the short term, and the contract is a wonderful oddity to talk about during hockey’s horse latitudes, but that all sees the forest for the trees. For those balking at the term, there’s no reason not to believe that, during the contract negotiation, an extension framework is already set in place. For those balking at the money, keep in mind 1. no one reasonably expects this kid to perform 6.1 million dollars worth of on-ice production and 2. The agent, player and GM relationship is predicated upon honesty and trust. GM Dan Waddell probably said something along the lines of "Consider the 6.1 million a signing bonus and we’ll begin the performance based negotiation of your client’s extension from there. This is what your client can expect moving forward, long term. Do we have a deal?"
Is this illegal? No. Can Kotkaniemi walk? Yes. But, from all parties involved, this specific contract requires an extraordinary level of trust that lets an organization place appropriate value on a player, allows an agent to work under absolute clarity on behalf of their client, and frees the player to bet on himself. Carolina’s goal, one they achieved, was to obtain an NHL ready player, in a position of need, ready to enter his prime and maximize his value over the course of his career at minimal investment. ...and they’re about to do just that.
Remember what I said about draft picks maturing? Currently playing as a 3rd line center, with 3 regular seasons and 2 playoff appearances under his belt at age 21, while it doesn’t justify his draft billing, is a pretty solid feat, especially when you consider that centers who can play both an offensive and defensive role are hard to find. So if we account for the fact that he’s already a decent NHL player, that he’s a center, and that there’s still a ton of time for him to reach his prime and/or exceed his potential, (the trajectory of Florida’s Barkov comes to mind), there’s extraordinary value in the developmental wheelhouse where Jesperi finds himself. In Coach Rod Brind’Amour’s system, a system that leans on communication, speed and team effort puck possession, the "High IQ" Jesperi is expected to fit right in and comfortably slide behind 2nd line center Vincent Trochek. Not a bad place to be.
...and not to get too mathematical, the cost for Jesperi’s offer sheet, a first and a third round pick have a 7.6% chance of both making it to the NHL. A bird in the hand…
So Les Habitantes are in a pickle. Let their youngster go for a couple of scratch-offs, a 1st rounder and a 3rd rounder or pay him. It isn’t a fun place to be and it's going to be interesting to see how Bergey squirms out of this predicament. But this isn't about MTL, it's about a smart, incisive business decision that will reverberate in the back of the minds of 31 other GM’s. And who knows? With more Offer Sheets, the UFA market as we know it may never be the same again and the value will find the money in the NHL, not the other way around.