Why I Want Draft Picks: The Importance of Low-Cost Production

We have had many conversations about the Flyers propensity to trade draft picks. There are obviously two schools of thought on this – one says it’s working, keep doing it and the other says it’s dangerous and they need to keep their picks – and the truth is probably somewhere in the middle. But what needs to be cleared up is the question of just how valuable those picks are.

There have been analysis of drafts prior, showing that 63 percent of first round picks in the 90s played at least 200 NHL games and from 1999 through 2005, that number was 61.1 percent. Needless to say, first round picks are important. There is obviously a drop off as you go down the draft, and this has recently been shown using ice time as the indicator of draft-pick value.

Now, we can show all this and it wouldn’t likely change anyone’s mind. Not even when you see that the Flyers hit on 71.4% of their first round picks from 1999 to 2005. But this post isn’t about how likely the Flyers were to get good players with those picks that they traded. Instead, it’s about how important it is for the Flyers to try, since the value of those picks goes beyond the individual player to the production per cap hit they provide.

In other words, those draft picks (and lucky acquisitions) provide cap space for the team to re-sign their core, sign free agents, and acquire players like Kris Versteeg.

Since the 2007 draft (when the Flyers drafted second overall), the Flyers have made 17 selections, only one of which (Luca Sbisa) prior to the 67th pick. If we extend this to the 2011 draft, the Flyers draft picks for the past four years look like this:

Not a single first or second round pick in four years. Only six forwards selected in three years. Only five defensemen. Only one selection earlier than 81st overall.

Let’s go back through the two arguments: The Flyers don’t need high picks because they have a low probability of succeeding. Plus, there are good players in there. The counter: The Flyers need high picks because the League average success rate from the 3rd round or later is a paltry 8.7 percent. The Flyers weren’t even as good as that, since they only hit on 5.9 percent of those selections, therefore they aren’t getting much, if any, from the picks they have kept. Using ice time as a judge of value, those players above are less than half as valuable as the late first round picks the Flyers are trading.

Based on the Flyers 8.7 percent success rate from 1999 through 2005, the team can expect one (or, more accurately, 1.65) of those listed above to play 200 NHL games in their career. Obviously, these are just percentages, with draft success depending on many factors – including luck – but we see how well the Flyers draft in the first round, so assuming league average success isn’t overly optimistic.

Why is it important to show that the Flyers can only expect one NHL player from the past four years, you ask? Because in a salary cap world, teams must have production from low-cost players. This isn’t the same thing as getting production from draft picks, but that’s the more common way to do it. The Flyers are no different in this regard:

Those five players are all either on their entry-level contracts or their first NHL contracts. They have combined for a $5.87 million cap hit, and they have delivered 166 points, over 4,119 minutes in ice time (plus another 2,489 from Bobrovsky) and 37.8 GVT.

I’m not the biggest supporter of GVT (Goals Versus Threshold), but since we’re looking only at forwards and goalies, the defensive aspect (my main complaint with GVT) is marginalized. As a result, GVT is a good way to judge these players’ contributions. Their 37.8 total GVT equals roughly six wins above replacement – since six goals roughly equal one win. Take that contribution and spread it out over an 82 game season, and those five players are on pace to contribute 47.4 GVT, or nearly 8 wins (16 points) in the standings.

Those five players are giving the Flyers 1.25 wins per million dollar cap hit. For frames of reference, free agent Nik Zherdev (who many considered a great value signing) is on pace (5.9 GVT/82) to have contributed 0.5 wins per million dollar cap hit. The combination of Jeff Carter, Mike Richards, Danny Briere, Scott Hartnell, and Darroll Powe are contributing (63.1 GVT/82) at less than 0.5 wins per million dollar cap hit.

In other words, these five players have produced about two and a half times as much value as is available on the free agent market. Yes, this is over-simplified. But the 2010 free agent market saw the GMs receive 3.35 GVT per $1 million spent, or 0.56 wins per million dollar cap hit, so it isn’t far off.

To make things simpler, Rob Vollman introduced Goals Versus Salary at Hockey Prospectus, which shows a players’ GVT in relation to their cap hit. Admittedly, there are flaws to this system. He ran down the list of flaws over at Behind the Net recently, and one of them was that players on entry-level contracts throw the average off because of their low-cost. But that’s precisely the point: Players on entry-level contracts are disproportionately valuable because their salaries are so low. As a result, five of the Flyers’ top six values are the five we just looked at; Giroux, Leino, Bobrovsky, van Riemsdyk, and Nodl.

(To look at the Flyers’ complete GVS, click here.)

There’s really no way to look at low-cost players like Claude Giroux, Sergei Bobrovsky, and Ville Leino as anything but great value since they are contributing two and a half times as much value per cap hit than even “low-cost” free agents. The Flyers likelihood of getting players to replace that value has shrunk in the last four years because they are pulling from a pool of players with a 92 percent chance of failing to play 200 NHL games.

Going forward (and really, it was a problem this year too), the biggest value in the group (Giroux) sees his cost quadruple. The third most valuable player in the group (Leino) will see his cost triple. The Flyers will then be paying an estimated $6.75 million just to Claude Giroux and Ville Leino, while their production will stay roughly the same. That value is lost, with nobody to replace it.

Next year, the Flyers will have to rely on the salary cap going up, since they don’t have anybody capable of stepping in and filling the void caused by Giroux and Leino’s raises. It is this area that draft picks show how valuable they are. The only reason the Flyers even have value on the team this year is because Sergei Bobrovsky fell into their laps (the team wanted Jonas Gustavsson, then Jusii Rynnas, before having to settle for Bobrovsky as their third choice) and Ville Leino was given to them for nothing (remember, Leino was a bust when he came to Philadelphia) by a cap-strapped team.

Can the Flyers be successful next year? Definitely. And after next season, the current Collective Bargaining Agreement runs out, so we can’t really look too far ahead. However, after the 2011-12 season, the Flyers will see the following players reach free agency: Kris Versteeg, James van Riemsdyk, Blair Betts, Matt Carle, and Braydon Coburn.

The problem only compounds on itself as the team’s core requires new, more expensive contracts. Oh, and everybody gets older. Danny Briere will be 35, Scott Hartnell will be 30, and both Pronger and Timonen will be 38. Other than that, the team’s core will be Richards, Carter, Giroux, Meszaros, and Bobrovsky. Suddenly, the “young core” is not very young, and not very large, while the two largest cap hits on the team are on the bad side of 35.

Without the first and second round picks (as JVR, Giroux, and Nodl were) the Flyers will be counting on defying the odds once again. Unless Eric Wellwood, Brendan Ranford, Zac Rinaldo, Mike Testwuide or any other player with fewer than an 8% chance to become a career NHL player finds a way to contribute at two-to-three times the value of a free agent, the Flyers will be left struggling with the salary cap for years to come.

Next year, the Flyers will see two of their three biggest values get new contracts, costing between three and four times as much as they currently do. The Flyers are good right now largely because their leading scorer costs less than their 6th defenseman. Three of their top-7 scorers combine to make roughly the same amount as their 5th highest-paid defenseman. Without that value, the Flyers are nowhere near the top of the Eastern Conference.