Thursday, August 09, 2007

Offer Sheets and Dustin Penner

A friend of mine, around the time of the Vanek offer sheet, sent me an e-mail regarding RFA offer sheet, and RFA benefits, in this new CBA.

In the past we have generally agreed that RFA offer sheets were inevitable, and should have been used earlier in the CBA (IE. Spezza when OTT was pinched to the cap right after the lockout, as one example) by someone.

Here were a couple of his thoughts, and my expansion upon them, regarding the benefits of owning a draft pick:

(1) A team gains some (unspecified) value if a player over-performs his entry level contract. This benefit is most likely to occur with players taken at the top of the draft, as they are the ones most likely to be true contributors in their first 3 years in the NHL.

(2) You will probably underpay, by some unspecified amount, in the post entry level RFA years on a drafted player vs. a UFA. This is more true as the player moves up the pay scale, but less true at the very top end [Crosby, Ovechkin vs. Thornton (or his equivalent that is interested in maximizing his earnings)] and as the player is less of a clear difference maker (RFA 4th liner vs. UFA 4th liner).

(3) You have the right to match any offer sheet when a player is a RFA. Any ridiculous offer a team can decline to match, while any "fair" market offer a team can match and keep the player.

(4) In a NHL where offer sheets are common, the value of a draft pick drops even further than its value in the old CBA (where a team owned a player's "rights" for up to 13 years instead of 7 in the new CBA). As such, the compensation for each offer sheet becomes less in the eyes of all teams, further encouraging offer sheets.

(5) There is some non-zero chance that you can sign a player for under market value if he chooses to sign such a contract. Additionally, there is a (probably) improved chance that you will be able to retain said player as a UFA (maybe even at a discount) as compared to the scenario where you are just one of 20 or so teams bidding for a player with no previous playing connection to that player.

This all came about right after the Vanek offer sheet. After the Penner offer sheet, I sent an e-mail, saying:

Penner- So, are we agreed, Burke won't match and the Oilers are stuck with this contract?

I suppose it could work out, but the odds are long enough (IMO) that I wouldn't have made the bet especially given the value/potential value of EDM's 2008 1st rounder.

His response was along the lines of(I edited a little bit here and there):

Imagine that the 2008 pick is a player. He might be a UFA at 25 or so, and the team would probably get 5-6 good years out of the player. How much does the team pay him during this time? If he's really good I'm probably forced to pay him close to his fair market value either because of an actual offer sheet or the implied threat of one in a landscape where offer sheets are commonplace. If he's mediocre I might pay him something like 10 mil over the course of his RFA years (speeds's note - "And his value, over a comparable UFA, is probably not all that high).

Of course the deal turns based on Penner's performance, but I don't think everything has to be perfect for it to work out.... You take you chance that he's a complete bust and move your spending forward in time a little bit.

With Penner in particular I wasn't a fan of the offer, and even considering the above I still think that I wouldn't have made that offer were I in Lowe's position. It would be interesting to know exactly how much less the Oilers could have bid and still not had ANA match. 250K a year? 500K? 750K?

In any case, given the above along with all the other thoughts I've had about RFA's over the last while, I would look pretty hard at the RFA list every summer unless I expect my team to be awful in the next season or two.

I've read that some teams say a good draft lands a team 2 good players. A team can land two a year if successful with 2 offer sheets; one in the 1st and 3rd comp category, one in the 2nd rd comp category.

14 Comments:

Blogger Lowetide said...

It may not be rational of me, but if the Oilers gave 21.5M for Penner over 5 years and ANA gets Ales Hemsky I'm going to view it as a bad deal.

Because you don't let those guys walk at 25, they're too important. You sign them to 30 and then if there's been enough success then maybe they hang around for another contract.

Penner's a good player, he gives the Oilers another bat in the lineup they didn't have for 07-08. But if things n 07-08 go according to Hoyle, and ANA drafts wisely, this offer sheet will be just another devastating blow to this organization in Chris Pronger's curse of the Babe trade request.

8/09/2007 8:26 pm  
Blogger Asiaoil said...

This comment has been removed by the author.

8/11/2007 1:53 am  
Blogger Asiaoil said...

If..if..if..if..if..

If the Oilers do badly this season..

If ANA picks well..

If the player makes the NHL..

If the player becomes a star..

versus

Penner putting up numbers similar to last season and improving other parts of his game over the next 5 years.

I can't for the life of me see how you can continue to say that a complicated low probability draft pick scenario with multiple points of potential failure is more likely than Penner simply putting up similar or better results than he has already proven this past year.

Complaining about the salary is legit - but worrying about the picks is like freaking out on the wife because she spent $10 on pizza instead of lottery tickets.

8/11/2007 1:57 am  
Blogger DeeDee said...

Lots of if's in your scenario too Asiaoil...

For Penner to post similar to better results requires that he play on a lower pressure 3rd line with two very gifted linemates, and that ain't going to happen.

This season he will be playing on the first line, or second (at the very least) due to the size of contract he signed, and will end up facing very stiff opposition.

Like it or not he will be taking over the Smyth minutes and facing the best in the NHL.

The kid will be under tremendous pressure and in the unenviable position of having to replace Captain Canada, but that is ok right? Because Smyth was never elite at all and Penner will be able to outperform him because he is after all 6 years younger and 3 inches taller.

Penner was brought in to shore up the weakest offense in the western conference and whose own GM has admitted is still a few players away from being "complete".

Coupled with local media bragging that Penner will outscore Smyth he'll probably get about 1 months grace before the boobirds come calling for him.

The last kid playing under that kind of pressure was Jimmy Carson...

8/11/2007 11:18 am  
Blogger Asiaoil said...

I would actually not have Penner on the top line this season - 2nd line with Stoll and Hemsky makes way more sense and they are just as "gifted" as Perry/Getzlaf. They don't get the soft parade - but they don't play against chumps either - all 3 of these guys need to play against decent opposition to keep developing - they are the future.

Toughest minutes would go to a Torres Horcoff Pisani line - that's not a straight up checking line - but it's not full out offensive either and it CAN play tough minutes. Horcoff and Pisani are proven tough minute guys and Torres took some good steps last year. Butter minutes go to Moreau MAP and Nilssen (offensive focus) and Sanderson Reasoner Thoresen/Stortini (defensive focus).

In my mind Penner is in pretty much the same place as Hemsky and Stoll - a bit of a record and they all need to be playing against tougher - but not the toughest opposition this coming year. I can see Penner thriving if handled in this manner - and the odds of success are much better than a non-top 10 draft pick becoming Bobby Hull (no way we finish lower than 20th this season IMHO). Let Horcoff and Pisani shoulder the biggest burden as they have shown to be capable of it.

Complaining about the salary is legit at this point since that's where the future risk is should Penner underperform. Complaining about the loss of picks with the number of prospects already in the Oiler system and a second #1 pick next year still available is questionable at best.

8/11/2007 1:05 pm  
Blogger Lowetide said...

Asia: The Oilers have prospects who are 6's and 7's, and the Jacks and Kings hang out at the top of deep drafts.

Which is where the EDM pick may end up being. I understand that you don't agree with me, hell I'll be cheering like mad for the Oilers to make the post-season.

However, a deep draft year and an average target mean that at least two tumblers that have already dropped.

Seems to me that the nightmare scenario I'm suggesting is at least as real as expecting Dustin Penner to go mullet.

8/11/2007 1:36 pm  
Blogger speeds said...

I still don't think this specific Penner move is one I would have made, but I do in some ways agree with Asia that too much may be being made of the draft pick loss, though I do think the draft pick loss, in this particular case, is significant and not to be waved away. This move would be easier to stomach if the Oilers were expecting to draft where the Red Wings are expected to draft.

Training camp, and its optimism, are sure fun though. IF Pouliot and one other prospect (any of the numerous prospects) can be legit top 6/top 9 players, along with some improvement from Thoresen, a relatively healthy season, Penner not tanking, etc, it's not very hard to imagine a scenario where the Oilers make the playoffs.

There are a lot more ifs in EDM than in other places, but that doesn't mean it couldn't work out. It may mean that it probably won't work out, but I'm not sure how one would judge that at the moment.

8/11/2007 2:58 pm  
Blogger Big T said...

Agree that the value of picks continues to fall as Speeds and his buddy have illustrated. Fourth line players will only get cheaper as GM's overpay the marquis names leaving little cap room to fill out their rosters.

If the value of a draft pick used to be 'x' that value is now 'x - (something)'.


T

8/11/2007 3:58 pm  
Blogger Devin said...

Lots of "ifs" for sure, but look at some other WC playoff teams and the assumptions they are making.

MIN and NSH are expecting inexperienced goalies to repeat their exceptional forms from 06-07 over the long sched. COL has young unproven goaltending too. NSH lost Vokoun, Timonen, Kariya, Hartnell. That's a major gutting. CGY, SJS, and to a lesser degree VAN have no backup plan in net. VAN's forward depth is atrocious. DAL's fws are questionable, and their D is aged. ANA needs broken down Bert to produce in a big way to offset their losses of Teemu, Penner, Nieds. Any number of things could go wrong for any one or four of these clubs that rely on full health in key positions.

I agree with Asia on the draft picks. I think it's even money that the Oilers picks ends up within 5 or 6 slots of ANA's 1st (ANA could easily finish 6 or 7 and Edmonton 9 or 10). Big deal. This is revisionist in a big way, but maybe they look at replacing Smyth as a job for Raff and Penner. Combine for a similar cap hit and it's not unreasonable to assume they would combine to produce as much +, rate wise, as Smyth will alone over the next 5 (and easily more points).

It's unlikely to get a player of Penner's value in any given draft, especially for an elite team. I can't for the life of me figure out why Detroit didn't go after Lundqvist with a 50m/7 offer on July 1st.

8/11/2007 6:35 pm  
Blogger Asiaoil said...

LT - no your nightmare scenario is way way way less likely than Dustin Penner continuing to develop and build on a 29 goal rookie season. As I said - for the nightmare to happen you need about 4 major uncertainties to break against the Oilers (very poor year for Oilers, ANA drafts right player, player makes NHL, player turns into star). Plus Penner has to be a flop. The odds of the drafted player turning out to be a star are probably 1 in 20 outside the top 5 picks. Add that to the odds of Penner flopping - and the chips are way way stacked against you LT.

Like MacT said - the Penner move is a risk - but it is a calculated risk largely related to future cap issues. The draft pick part is the least of their worries

8/11/2007 7:40 pm  
Blogger RiversQ said...

Great stuff speeds. Very interesting take on this stuff.

deedee makes a great point about Penner's hill to climb. We're talking about a 24 yr old rookie that didn't put up great numbers away from really soft opp and good linemates. He's now in a totally different world...

Which brings me to Asiaoil.

Why wouldn't you play Hemsky on the top line against the best? I'm pretty sure he's ready. He had a pretty good year at ES and the Oilers need him to be their best player.

Furthermore, why would you play him with a couple of mediocre skaters like Stoll and Penner?

JMO, of course, but I think the Oilers deperately need a player that can produce against top opposition. This is Hemsky's team now and he needs to grab it by the throat. He won't do that playing with slow guys on a 2nd/3rd line against middling opposition. That's not enough impact.

8/12/2007 12:48 am  
Blogger RiversQ said...

One more thing...

This quote...

"In my mind Penner is in pretty much the same place as Hemsky and Stoll - a bit of a record and they all need to be playing against tougher - but not the toughest opposition this coming year."

...is a major disservice to Hemsky. Those guys aren't close frankly. Hell, Stoll only played 20 decent games last year and Hemsky has spanked him by the results every year. Hemsky has played tougher opp to my eye as well.

8/12/2007 12:53 am  
Blogger Asiaoil said...

"JMO, of course, but I think the Oilers deperately need a player that can produce against top opposition. This is Hemsky's team now and he needs to grab it by the throat. He won't do that playing with slow guys on a 2nd/3rd line against middling opposition. That's not enough impact."

Riv - Selanne didn't seem to do too badly in this setup last year right? If we have proven tough minute guys like Horcoff and Pisani who can match up against opposition top lines and come out even - why the hell would you not let Hemsky beat up on middling opposition? You don't give him tough minutes for the hell of it when you can effectively send those elsewhere and not get hurt. Let Hemsky beat up on weaker opposition every night if that allows us to win - it's not like padding his numbers will cost us any more cap space in the near future.

This is a suitable role for Hemsky now - create the offense that allows the team to win while Horcoff and Pisani play a shutdown role against the opposition top lines. A Horcoff Torres Pisani line isn't even a true checking line since they can put up points against the Thorton's and Iginla's of the WC.

As for skating - while and Stoll and Penner would not be considered fast - they aren't slow either. They're average skaters but I would make sure we have some offensive dmen with this line such as Pitkanen.

8/12/2007 3:40 am  
Blogger MetroGnome said...

The odds of the drafted player turning out to be a star are probably 1 in 20 outside the top 5 picks.

I looked at this recently. Over the course of the 90's (1990 - 2000), 110 players were drafted in the top 10. Eighty-two of them became contributors at the NHL level and about 35 of them became what most would consider a "star".

35 stars/110 total players = 31%.

That percentage might go up in a deep draft, but who knows by how much. Certainly isn't a sure thing by any means, but it's not 1 in 20 shot either.

8/12/2007 3:40 pm  

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