Matching Thomas Vanek’s Offer Sheet

After the Sabres lost Briere and Drury to free agency in the summer of 2007, the Oilers signed Vanek to a 7 year, $50 million offer sheet. If the Sabres had not matched, they would have received four first round picks from Edmonton. Regier matched the offer sheet immediately, viewing it as a statement, “It was important from so many directions, from inside the locker room to outside the locker room with the fans and making a statement to the rest of the league.” With his job resting on short term results, Darcy had to match. Focusing on the long term and looking back over the last four years, was this the best move for the Sabres?

Just 23 years old, Vanek’s offer made him the highest paid Sabre with a cap hit of 7.14 million. At the time, Vanek had just put up 43-41-84 in 82 games, and led the league in plus/minus at +47. His great numbers were due in large part to the talent around him, but a 40 goal scorer gets paid (ask Brad Boyes), especially when he’s that young. Comparing Vanek’s production (136-118-254, 7.14M cap hit for 7 years) from 2007-08 to 2010-11 to Patrick Marleau (138-137-275, 6.9M cap hit for 4 years) and Anze Kopitar (118-179-297 6.8M cap hit for 7 years), Vanek’s cap hit is a little high based on production over the contract period, but it is reasonable with the assumption that he would at least continue the production in the year before he signed the offer sheet. Vanek’s contract was structured to make it difficult for the Sabres to match, rather than to save cap space, contributing to the overpayment. However, as the salary cap increases while Vanek’s cap hit remains constant (and hopefully his production increases), he becomes more valuable for the percent of the cap space he is using.

A few early first round picks can turn around a franchise in a few years-Pittsburgh was able to build a Stanley Cup team in 2009 after having the first pick in 2003 (Fleury), the second pick in 2004 (Malkin), and the first pick in 2005 (Crosby).  The Oilers drafted 12^th in 2008, 10^th in 2009, and first in both 2010 and 2011.  Having Vanek would affect the Oiler’s performance, most likely for the better, but for the analysis we’ll just say the Sabres would have a pick in the 11^th -15^th range in 2008 and 2009, and a top 5 pick in 2010 and 2011.  After going through all of the players drafted in the 11^th -15^th and top 5 positions in the drafts between 2001- 2008 (chosen to represent the present quality of players, but allowing for time to reach the NHL), I found that about 34% of top 5 picks are currently NHL role players, while 53% of all these picks are “first line/first pairing/starting goalie” quality (referred to as very good players from now on), for a total of 87% as current everyday NHL players.  Of picks in the 11^th-15^th range, 35% are currently role players, and 22% of all these picks are very good players, for a total of 57% as current everyday NHL players.  The time it took each player to become an everyday player was roughly 2-3 years.

Carrying out this crude analysis based on my own evaluation of the quality of players, the table below shows the expected yearly value of the draft picks and of Vanek over the seven years of his contract.  Each pick is assumed to reach the NHL in the third season after his draft year and immediately contribute in his mold of very good or role player. The total values ignore discounting years further in the future, although Darcy Regier must make decisions that discount the future and emphasize the present.  Over the first three years, Vanek is uncontested by the draft picks, but by the seventh year, the expected value of the picks has yielded 1.5 very good players and an additional 1.38 role players.  It should be noted that the value of the Sabres’ own picks would increase very slightly assuming that the team finished lower in the standings without Vanek.

I would make the same decision as Darcy: pay a little more than fair to keep Vanek and forego the draft picks. Paying Vanek a little more than he’s worth is not ideal, but it’s acceptable, and he likely would have been more expensive if acquired through free agency. The main consideration in needing to keep Vanek is that there are few very good players available through free agency, and there is great value in having one signed. Teams like the Rangers that can continually attract top free agents like Gaborik and Richards would be able to let Vanek leave; the Sabres, with money to spend this offseason, landed arguably the second best forward available in free agency, Ville Leino. Unless a team is trying to clear cap space so they can overpay a goalie, maintaining the rights to their best players in a hard salary cap league is crucial, and it is doubtful that the Sabres would have been able to sign a big name free agent to replace Vanek. Further, the time required until the draft picks could replace Vanek, not even considering the risks that all of them are busts, would have led to less competitive teams over the past few years. Additionally, losing three big name players in one offseason without replacing any of them would have done long lasting damage to the fan base. Although the team would be expected to be better in 2012-13 with the draft picks instead of Vanek, Darcy Regier made the right move in keeping the core of Pominville-Roy-Vanek-Miller together by matching the offer sheet.