In investment finance, sophisticated investors can sometimes find ways to make money from market inefficiencies. With the salary cap, sometimes a herd mentality in terms of scouting and ranking players and other rules, I think analyzing what the crowd is doing could similar yield nice gains in terms of building an NHL roster. I think the Hurricanes are already headed in this direction in a few areas, but I also think there could be more opportunities to exploit.
Today’s Daily Cup of Joe takes a quick look at potential opportunities to be exploited in today’s NHL.
Scouting and drafting
Missing the crowds
I wrote about this in some detail awhile back. The Hurricanes have pretty clearly placed an emphasis on spending more draft picks where there are fewer scouts. It makes sense. As the number of scouts watching players rises, so does the chance that at least a couple like a player and boost his draft stock. It only takes one team to like a player enough to have him come off the draft board early. At the other extreme are players playing where there are fewer scouts. Players in those areas have a much better chance of being underrated or not making it onto the radar at all. In recent years, the Hurricanes have (intentionally by my estimation) drafted more players from less scouted areas. Europe and especially Finland are most notable, but the 2019 draft went even farther off the radar taking a couple BCHL players playing a notch below the three major Canadian junior leagues.
Turning over more stones to find goalies
The goalie position is arguably the hardest to scout. Many NHL goalies take 4-6 years to develop, and many come from later in the draft. As such, many teams including the Hurricanes go with quantity to try to find a winner or two. The Hurricanes have pretty consistently drafted a goalie for a number of years now. Each gives the team another possibility. In addition, the Hurricanes quietly did something interesting with goalies for the the summer prospect camp. Despite having four drafted goalies in camp (which would be enough to cover drills and the scrimmage), the team still chose to invite three unsigned players to camp. My thought is that recognizing that goalies can be late bloomers that the team is using every opportunity it can to look at more goalies. The move gives the team visibility into the personality, attitude and level of play of a few more goalies which could be useful if one continues to develop and becomes worth considering as a free agent.
In addition to playing a numbers game, I also think it would be interesting to prioritize goalies who are maybe 6 foot 0 or 6 foot 1 in height. Since awhile back, there has been a huge bias toward ‘the bigger the better’ for goalies. I completely agree that size helps, but my thinking is that the difference between say 6 foot 1 and 6 foot 4 is not as big as teams seem to have it right now. As such, I have to wonder if it would be possible many years to find a good slightly smaller goalie is underrated because of size.
The value of cap room
The single biggest trend right now in the NHL is how many teams are pushing up and over the salary cap and its implications. Today, the Vegas Golden Knights traded away promising Nikita Gusev for only second and third round draft picks. The move was yet another to add to the list of trades necessitated by salary cap problems. The Hurricanes benefited in obtaining Erik Haula and also collected a first round draft pick for taking on Patrick Marleau’s cap hit. The New Jersey Devils have made a summer of leveraging cap flexibility. They won P.K. Subban because they could take on his full salary and also obtained Gusev as noted above. With more teams pushing up to the salary cap ceiling, I would expect the trend to continue. Teams that have cap room and flexibility should continue to benefit by virtue of preying on teams that need cap relief to make the math work. If I was the general manager of an NHL team, I would be trying very hard to enter each off-season with $6-10 million of cap flexibility not counting what I needed to re-sign and replace players. I think this flexibility will very likely continue to yield bargains each summer.
The middle price tier
Building off of the salary cap challenges that many teams face, I think the best bargains to be had are in the middle price range that pivots around $3 million salary. Every summer, there are a handful of top-tier free agents whose price gets bid up in crazy bidding wars. I like Artemi Panarin as much as the next person, but $11.6 million? C’mon. Similarly, Sergei Bobrovsky is now scheduled to make $10 million per year between the ages of 31 and 38. If nothing else, this contract is incredibly risky. And because of the massing sums being doled out for the top-tier free agents, very few teams seem to have both budget and interest in good players who fall short of the elite level. Ryan Dzingel is a good example. He is a proven middle six type forward who can score. And his salary is barely above one-fourth of Panarin’s. In a game where 19 out of 20 players on the roster contribute fairly significantly each game, I think the market inefficiency to be exploited is to buy low on middle-tier free agents and also be ready to acquire good middle-price players via trade when teams find themselves in a salary cap bind and desperate to move salary.
What say you Canes fans?
1) Which of the four situations detailed above has been the most beneficial for the Hurricanes thus far? Which will be most significant going forward?
2) Who has other market inefficiencies or situations that the Hurricanes and other teams should be looking to exploit?