The Wonders of Free Agency

The offseason is always such an interesting time to be following hockey because of all the moves, trades, and signings that occur throughout the NHL.  This isn't really much of an analytical piece, but I was hoping we could talk about a question that I hear from people all the time during this time of year: "Players claim that they want to win, so why don't they sign a contract way below their market value so that their team can use the extra cash to sign other players?"

This question is, of course, not exclusive to hockey; and it does bring up an interesting debate.  Last year, Chris Bosh and Lebron James (James more so), both accepted less money from the Heat to join forces with Dwane Wade to make a run at the NBA title.  They made it to the finals, but fell short to the Dallas Mavericks.  The move almost worked.  Of course all three of them still made a ridiculous amount of money, but if they would not have been able to assemble that team if each of them signed according to their market value.  Miami offered Lebron the least amount of money and he still went there.  But back to hockey.

We have seen players over the course of history sign for a "hometown discount".  Sometimes a player will accept $1-$2 million less than he could have gotten elsewhere.  But never do we see someone like Joe Thornton sign for $500,000 a year.  This infuriates some fans that I have met.  I have heard people exclaim things like:

"A person can live perfectly comfortably on $500K-$2 million.  Why do they need $6 million?"

"He says he wants to win the cup, and then he makes his team resign him for $5 million? If you really want to win, sign for less and let us go after Player X, Y, or Z you liar!"

There is some validity to those statements.  A player making league minimum is still making 10 times as much as the median household income in America.  In reality, if star players accepted less, their team could go after more star players and they could increase their chances of winning the cup.  But here are my two reasons why most players don't (and shouldn't) take too steep of a discount for the sake of winning the cup:

1) Nothing is guaranteed.  In a contact sport, bad things can happen to you.

Let's say that Player X is a consistent player for an NHL team.  His first few years with the club have been outstanding as he averaged 80 points a season and only missed 6 games over the past 3 seasons.  His rookie contract just expired and he is a restricted free agent.  His market value is estimated to be between $5-$7 million.  But he decides he wants to win the cup with his current team and through pure altruism he signs a 5 year, $5 million contract.  A cap hit of only $1 million per year.  Game 10 of the first year of his new contract, and player X takes a terrible hit and breaks several vertebrae.  After careful evaluation, he learns that he can never skate again, his career is over.

Player X now has considerable medical bills to pay and is out of a job.  His life has revolved around hockey since he was 6 and he doesn't have much of a job history to fall back on.  If he had more money at his tender young age, he would be able to cover his expenses and continue to have financial security while he looks for a new career.  But his altruism has cost him.  Now he has no cup, and not enough financial security.

Players in several sports all run the risk of having their career's cut short.  That's why guaranteed money is such a big deal in the NFL, the most injury prone sport.  Players want some sort of financial security should the worst case scenario occur.

2) (Yet again) Nothing is guaranteed; like your tenure on the team.

Devin Setoguchi is a recent and tragic example of this.  He resigns with the Sharks for $3 mill per year.  An upgrade from what he was making before, but with his offensive upside, he might have made more on the free market.  Setoguchi is happy with the money he is making and happy to be with the Sharks.  The next day, he is traded to the Minnesota Wild.  He will still be making $3 million a year, but now for the Wild.  No imagine the scenario above with Player X making $1 million per year.  A good player with a low cap hit is certainly good trade bait.  It was worth it for him to accept less to make his team better; but is it still worth it to be making that little with a team with no shot at a cup?  This is why many players opt for NTCs, but not every player can negotiate for one of those.  Had Player X or Setoguchi known they were going to be traded, they may not have signed for so little.

The moral of my story is that when players say they want to win the whole thing they do sincerely mean it.  But in a sport where nothing is certain, you have to look out for number 1.  So when I read about players going into arbitration or leaving their team for more money, I'm not angry with them.  

What are your thoughts about this offseason phenomenon? And the questions/dilemmas that it presents.

This item was created by a member of this blog's community and is not necessarily endorsed by Fear The Fin.

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