Sunday, January 28, 2018

Why NHL Teams Should Maximize Draft Picks Entry Level Slide

When NHL teams draft 18-year-old players, they have the option to allow them to continue playing amateur for 2 years before they turn pro. Over those 2 seasons, they are allowed to delay the start of Entry Level contracts. Once a prospect plays over 10 games in a season, his ELC kicks in. Over 90% of all draft picks will maximize their ELS, with just a chosen elite few getting rushed into the pros. The earlier an ELC expires, the sooner the next contract begins. Those prospects will get paid more at a younger age

To answer the question of how much it costs to burn a year of ELS, we'll look at 2 groups. One who started their NHL contracts at 19 (with 1-year of ELS remaining) and played at least 10 games; and those who started at age 20 after maximizing ELS and played at least 10 games. We're not including players who went directly to the NHL at 18, since that includes the most elite tier who will make more money on 2nd contracts because they are better hockey players. We're specifically looking at those who were "NHL ready" at 19 versus those who were "NHL ready" at 20, because we want to minimize the amount that talent disparity skews the results.

On top of salary increases happening one year later, those who burned their ELS at 19 appear to get an extra $500K in salary. For example, group one averaged $2.5M at age 22 and group two averaged $2M at age 23. So not only did group one get to their 2nd contract faster, it was $500K larger once they did. You could argue that's because the group who went to the NHL at 19 were more talented players and deserved more money on their 2nd contract.

The area between the two lines on the graph above represents the extra money paid out. The largest wage gap is at age 22, when group 2 will be in their last year of entry level. This is where teams are losing the greatest value by burning the last year of ELS. You can get a marginally productive player at age 19, or get a very productive player at an Entry Level price tag at age 22. To me this feels like a simple choice. It's possible that turning pro a year early will help a prospect reach a higher level later in his career.

Burning ELS at age 18

The group of players who go immediately to the NHL after being drafted (in their first year of draft eligibility) are a different class of player. Many of these players are good right away and deserve a shot to play in the NHL like Sidney Crosby, Patrick Kane, Auston Matthews, Nathan MacKinnon, John Tavares, Jack Eichel, Patrick Laine, Connor McDavid, etc. The Oilers botched the first year of Leon Draisaitl's ELC at age 18, then got stuck giving him a monster contract at 21.

However, there is also a group of players who were rushed to the NHL at 18 and probably could have used another year or two of amateur, like Jesse Puljujarvi, Noah Hanifin, Jakob Chychrun, Luca Sbisa, Rasmus Ristolainen, Mikhail Grigorenko, etc. Rushing young defensemen especially makes no sense to me. Entry level contracts are generally cheaper than standard contracts, at least when dealing with good players. Would you rather get that discount at age 18/19 or age 21/22 when the player is older, stronger, more experienced?

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