If you have not already, check out Canes and Coffee’s coverage of the UNC versus NC State men’s hockey match up at PNC Arena at 7pm on Thursday night.
With our ‘Midterm’ series on Carolina Hurricanes’ prospects below the AHL level in process and also a couple recent debates on the appropriate balance of ‘draft and develop’ versus ‘trade to fill gaps’ in a rebuilding process, I have been thinking about player development on a number of different fronts.
The necessary foundation for the Carolina Hurricanes
As a team that will at least for the foreseeable future be forced to build its roster with a budget significantly less than the salary cap ceiling that many teams push against, being competitive will require filling the roster with some number of players whose level of play is above their pay grade. While it is sometimes possible to do this by signing or trading for players on discounted contracts (usually coming off of a down year), the greatest potential to put a couple bargains on the roster comes from drafting and developing players.
Players playing at the NHL level on entry-level contracts for 3 years at less than $1 million per year can go a long way toward building an inexpensive roster that is competitive or even better. Look no further than the current Hurricanes roster that finds all of Jaccob Slavin, Brett Pesce and Noah Hanifin scheduled to make less than $1 million each for this season and next. Add to that Teuvo Teravainen who is playing the last year f his sub-$1 million contract. And best of all is that Sebastian Aho is playing the first year on his entry-level contract and will be paid less than $1 million per season for 2 more seasons past the current one.
Even after entry-level contracts expire, there is still usually reasonable savings to be gained on second and even third contracts when players are not yet able to test the open market and are limited in negotiation ability by the collective bargaining agreement free agent rules. On the Hurricanes, Elias Lindholm is earning $2.75 million per season on his second contract.
The common denominator for gaining salary cost advantages for young players is developing as many good players from draft and development as possible.
And Ron Francis is committed
From day 1, Francis’ mantra has been to build system depth and then a playoff team from it such that when the Hurricanes next return to the NHL playoffs, it is in a sustainable way. Since taking over as general manager Ron Francis has collected and hoarded all combinations of prospects. He has added extra draft picks, drafted NHL prospects, waiver wire additions/trials and even a good young roster player in Teuvo Teravainen via trade.
When you net out prospects, young NHL players and draft picks that Francis has traded or traded for since taking over as general manager in April of 2014, he has added almost an entire extra year draft of selections having added 1st, 2nd, 3rd, 4th and 6th round picks and having in net given up only a 7th round pick. He has also added prospects Roland McKeown, Aleksi Saarela and Valentin Zykov. And along the way he added young roster NHLer Teuvo Teravainen.
Any evaluation of Ron Francis in terms of adding to the volume in the team’s prospect pool and also sticking to his original plan easily nets an A letter grade.
NHL contract rules
The basic goal is to build the vast majority of the team’s roster from players drafted and developed within the system in order to avoid the need to participate in the pricey free agent market that almost always sees bidders overpay. But as I alluded to above, there is a more subtle game to be played in terms of managing the prospect pool to gain the maximum financial benefit from a draft and develop strategy.
Important to note is that teams have some control over when the sub-$1 million entry-level contract start, and the situation always varies a bit depending on where the prospect plays. In simplest terms, the 3 years on a typical entry-level contract can be delayed by as much as 4 years depending on where a player is developing.
NCAA players: For US NCAA players, the team basically keeps the players rights until his graduation year without signing him. Because of that, it is possible for a draftee to not even start his 3-year entry-level contract until 4 years after being drafted. The limitations are twofold. First is that the player cannot make the jump to the professional level until he signs his entry-level deal. Second is that waiting too close to graduation runs some risk that the player just decides not to sign and instead opts to become afree agent a little bit like Jimmy Vesey this summer. Examples for the Hurricanes are Noah Hanifin who signed immediately after being drafted and therefore started burning his 3-year entry-level deal. At the other end of the spectrum are 2016 draftees including Matt Filipe, Jack LaFontaine and Max Zimmer who could play up to 4 years of NCAA hockey before signing a contract with the Hurricanes and only then starting their 3 years on the cheap.
European players: European players are somewhat similar to NCAA players in that the NHL team retains draft rights for a number of years if they continue to develop in Europe. Last season, Sebastian Aho stayed in Finland, so his entry-level contract rolled forward 1 year giving the Hurricanes 3 years remaining still when he jumped to the NHL level this season. Aleksi Saarela is playing in Finland this season, so he could arrive in North America for the 2017-18 season still with all 3 years remaining on his entry-level contract.
Canadian junior players: Canadian junior players are handled quite differently. They can actually be signed to NHL contracts without forcing the move to the professional ranks or burning entry-level years. Basically, the NHL has a deal with Canadian juniors that for the first 2 seasons after being drafted, a player must either stay at the NHL level or be returned to his Canadian junior team. Only if 10 or more games are played at the NHL level is a year of the entry-level contract burned. For the Hurricanes Jake Bean, Julien Gauthier and Nicolas Roy are among a group of players who are still playing at the junior level and therefore not burning entry-level years this season. Though players can stay at the junior level for an extra year as an overage player, the norm is for a player to play 2 years at the junior level and then move up to the professional ranks to play in the AHL if not able to make the NHL roster.
Patience yields better returns
The result is that patience and waiting until players are ‘overripe’ to use a Ron Francis term can yield significant financial benefits. Looking at the handling of a couple of players highlights how this works.
The unfortunate case of Elias Lindholm: For whatever reason, Elias Lindholm was anointed as an NHL player before even setting foot in Raleigh. When he had 2 injury setbacks and just did not look all that ready in preseason, it seemed to make sense to send him back to Sweden for another year of development. But Jim Rutherford and the Hurricanes organization forged forward with the original plan. The result was that the Hurricanes burned all 3 years of Lindholm’s entry-level contract getting a player who was still very much learning and not much, if at all, better than any run of the mill free agent who could have temporarily filled that slot. The result is that now in his fourth season since being drafted, Lindholm is also on his fourth season in the NHL and his second contract earning $2.75 million per year. Had the Hurricanes let Lindholm develop 1 more year in Sweden, he would still be on the final year of his entry-level contract earning less than $1 million per year for a salary cost savings of about $1.7 million.
The incredible bargain of Jaccob Slavin: Jaccob Slavin was drafted in 2012, 1 year prior to Elias Lindholm. Yet Jaccob Slavin is still on his entry-level contract not just for this season but also the 2017-18 season. The reason is because Slavin played 3 years of NCAA hockey after being drafted therefore pushing back the start of his 3-year entry-level contract by the same 3 years.
There is a balance to be maintained between building the best roster possible for the current season using all of the players at your disposal and trying to gain as much benefit as possibly by delaying the start of players professional contracts. Especially in the case of high-end draft picks, the options are limited. Sending Noah Hanifin back to college just was not an option, and based on what Sebastian Aho did last season, it was clear that he was ready to at least try to make the jump to the NHL.
What does it all mean for the Hurricanes?
In simple form, the financial realities of the Carolina Hurricanes less than salary cap budget combined with the contract rules noted above should introduce a fairly powerful bias toward delaying the start of entry-level contracts when in doubt. It is uncertain to what level and at what pace Julien Gauthier will progress to the NHL level, but it is almost certain that taking 3 cheap years between age 20 and 22 years old will yield a better player than taking the 3 years between 18 and 20 years old. In addition, there might be a slight draft bias toward drafting European or NCAA players in the later rounds. The reason is that these players’ rights can be maintained for longer without committing money to a contract and also 1 of the 50 available contract slots.
The upshot for the Hurricanes is that there should be a bias (not automatic rule) to keep Jake Bean and Julien Gauthier in Canadian juniors next season too unless 1 or both is not just good enough to make the NHL roster but also good enough to be a difference-maker in 2017-18. If not, Francis is better served filling the slot with an inexpensive free agent signing or prospect already at the professional level and saving that year of the 3-year entry-level contract.