With the NHL Entry Draft 2013 less than a month away, many Leafs fans are amusing themselves with thoughts of who the Leafs should draft with the 21st overall pick, or of how we might be able to trade-up to grab a more desirable player. Leading up to the draft, I’ve tried my best to keep up with the prospects and have gotten a sense of where the “experts” think these young hockey players might be selected. We’ve also started our NHL Draft Profiles, with the next coming later on today. Many have compared this draft to the 2003 draft, where ample high end talent was available into the late first round and the likes of Shea Weber, Corey Crawford, Patrice Bergeron and David Backes were snatched up in round 2. In other words, if the hype is true this draft offers major opportunities for those teams that get their selections right.
The Trade “Market”
One of my inspirations for this blog was a Vancouver Sun headline reading “Tough guy Sestito re-ups with Canucks“. It wasn’t the signing in particular that got me thinking, but it was the way Canucks Assistant GM Laurence Gilman described Sestito:
“Players like Tom Sestito are a commodity, they really are.”
We’ve often heard players referred to as assets and commodities but when you think about what a commodity really is, you might hesitate to use it in endearing terms. To my knowledge, and I’m sure my freshman year econ professor will appreciate me remembering this, a commodity is a basic good that is interchangeable with other commodities of the same type.
Another word you often hear pandered-around is the trade “market” at the draft. Now, the use of “market” implies some sort of supply and demand of players and draft picks, all created and driven by the market participants, namely NHL teams. Each team has its own idiosyncratic set of resource endowments and seek to optimize their competitive make-up through acquiring, signing, and drafting players. At the micro-level, the Leafs’ strengths and deficiencies are well-documented, and fans seem to have a pretty good handle on what they think the team needs going forward. However, barring our ability to have complete knowledge of what each team is looking for (demand), and willing to part with (supply), we must look to other indicators to gauge the trade market.
One way to assess a market is to analyze the volume of transactions within a certain time-frame. High-volume is usually the sign of a liquid and stable market, where regulations are well-defined and participants are quickly matched with counter-parties that meet each others’ needs.
The following chart tracks the absolute number of draft picks transacted between teams and the relative percentage of those transactions that contained draft picks in future drafts, within a given draft year from 2008-2012.
You can see that the number of draft picks transacted has dropped precipitously from 2008 to 2012, while the relative percentage of future picks transacted has almost doubled. For example, in 2008, 73 draft picks were transacted between teams and 21 percent of those transacted picks were future picks. Fast forward to 2012 and the number of draft picks transacted falls to 22, with 35 percent of those picks being future picks.
Another way to assess a market is to observe the kinds of assets, or goods, that are transacted most often. To use a common investing analogy, investors are usually advised to diversify their holdings in order to reduce their overall portfolio risk. However, just as economies go through business cycles, the attractiveness of certain companies change according to the macro/investing/return environment. Likewise, NHL teams may have a propensity for trading for certain kinds of players over others. The following chart shows the total number of players traded within each draft year, and the relative percentages of the various positions.
A couple of things stand out in this graph. Firstly, it appears that the total number of players traded has been trending upwards since 2008. Secondly, center and defense continue to take the greatest share of players being transacted at the draft on a yearly basis. On the other hand, right-wing, left-wing, and goal consistently represent the three-lowest percentages of types of players transacted.
After taking a look at market volume and having dis-aggregated the volume into its component parts according to position, we should also seek to understand the market participants and the nature of their transactions with other participants. Namely, who is trading with who? The following pie-chart shows the average percentage of intra-division, intra-conference, and inter-conference trades over the past 5 drafts.
Judging from the data, it appears that on average, 64 percent of transactions occur between teams from the opposing conference, 32 percent between teams in the same conference, and 4 percent between teams in the same division.
Lastly, another way to classify teams within the pool of transaction participants is between playoff and non-playoff teams. The following chart shows the percentage share of transaction volume that is attributable to playoff and non-playoff teams since 2008.
In compiling the data for this particular chart, I was initially intrigued by the possibility that playoff teams might be driving the bulk of the transactions at the draft, and the trend between 2008 and 2009 certainly gives that impression. However, over a 5-year period, it appears that transaction volume, on average, is driven by an equal percentage of playoff and non-playoff teams.
Exhibit 1. I found this chart to be most interesting since the trend-lines are very clear. There might be numerous explanations for these trends, but I believe the most plausible answer is that in the face of regulatory uncertainty, or the most recent lock-out, teams reacted to this by opting to pick in the current year and to forgo future picks. However, if I had to choose one line to focus on, it would have to be the decrease in the number of draft picks transacted. Despite the limitation of not knowing the aggregate quality of the transacted draft picks, a decrease in the volume of picks should be most alarming, and something I expect to turn around this upcoming draft. A deep draft and medium-term visibility on the salary cap should be fertile ground for an uptick in draft pick trade volume this year.
Exhibit 2. I think it tells an interesting story. Most obviously, it reaffirms something Burke constantly reiterated, that defensemen are always in high demand. Defensemen and centermen, as a percentage of all players transacted in a given year, are consistently greater than almost all other positions. More interestingly, the number of transacted players is trending upwards over the past 5 years. I think the reason for this, once again, has to do with the expiration of the previous CBA. As the date approached, teams, having already been exposed to the system since 2005, were in a rush against time to complete certain transactions before the expiration of the old CBA. Therefore, for this upcoming draft, I think it’s safe to say that defensemen and centers will be involved in at least 50 percent of all the player transactions on the day of the draft. Might this finally the year that Nonis decides to leverage or abundance of defensive assets to move-up in the pecking order or to acquire our long-awaited first-line center? History clearly shows that the preference for defensemen and centermen is well and alive.
Exhibit 3. There is almost nothing new here except for the visualization. It comes as no surprise that the ideal trade partner is usually (64%) native to the opposite conference. If you are so inclined to play an armchair GM, this might be useful for spotting a suitable counter-party for your favorite team, come draft day. In other words, don’t expect the Leafs to deal with anyone from the same division.
Exhibit 4. The reason why I looked into this was because, as I was collecting data for the other charts, I thought I noticed a trend where playoff teams were more active in the trade market than non-playoff teams. As it turned out, on average, playoff and non-playoff teams are just as likely (50%) to participate in the draft day trade market. Therefore, for this upcoming draft, I wouldn’t expect a deviation from this trend.
– – –
VLM: We need a modern-day Brett Olmstead – Is he a UFA this summer? Someone please find this Olmstead fellow.
TLN: Who to target with Leafs’ 21st pick – Cam Charron advises Nonis to go for the home-run.
Hope in the Big Smoke: Better Call Paul (Stastny) – Yes please.
Backhand Shelf: Hegel, Tasarov, and the Evolution of Hockey – One of the best things I’ve read in a while. Grab your thinking cap and some popcorn. **Caution, philosophy ahead**
Aaron, just a last thought on the material you provided above.
In examining these trends and looking to explain the shift from a high percentage of picks/low percentage of players to a reverse of this scenario I feel you failed to properly identify the role of the most current CBA upon the data. Instead of focusing on the uncertainty of an expiring CBA on these trends, I think you should have properly identified the role that the rules brought in with the birth of that CBA played. Namely, the salary cap.
In the old market, there was no limit on player spending, and less limits on player earnings based on their seniority in the league. The salary rules relating to ELC and RFA contracts have created a vast shift in the value of these players to the the teams in question. And that is only compounded by the effect of the salary cap requiring teams to get the best "bang for their buck" in a way that did not previously exist.
The role this has on the decline of picks being traded and player movement increasing is twofold. One, as these young players and their cheap controllable contracts become more valuable, teams are less willing to part with them, and more willing to part with veteran players (often on expiring contracts) or RFA players about to gain UFA status. Two, this has led teams to locking up their own young talent in a way never before seen. This push to lock up and create a role for their younger stars has led to older players being made available in trade to either allow for that players role in the lineup, or as these veteran role players were replaced with younger cheaper options out of necessity with so much cap space being allocated towards retaining young talent.
Essentially, the value of assets was totally changed with the new factor of a salary cap. Or at the very least the way assets were assessed and valued. Veteran leadership and experience was once valued and worth paying for, whereas now cheap youth producing at a high level is the new golden calf. You still need that leadership, but its accepted place in your roster as most likely of only temporary status has shifted its value. In fact, basically, it gave birth to asset management in a way that only existed previously as a function of an owners willingness to spend.
Still, all in all, great look at the shifting trends in the marketplace and a great conversation starter. As to this year, I imagine that it in fact will simply be an outlier. The trends may shift, but it will only be due to a very short term market effect in the form of a reduced cap and the existence of compliance buyouts. Otherwise, I would expect the trends referenced above to more or less continue as they are and more or less level out at these rates in two or three years time. The only caveat I would place on this prediction is the yet unexplored role of eating salary in trade. But that being said, I imagine that would only make player, rather than draft pick, movement more likely.
Good write up. Now that the leafs are going to a division format, i wonder if trading partners will expand to three of the four divisions. That is, NYI, PHI, NYR, PIT, CAR, NJD, WSH.
That's it, this "Burke tried to turn the Leafs into Team USA crap has me wishing for a non-stop dose of HonestHockey and UncleBob. I'm outta here.
Just finished the article. Nice work, Aaron.
More widely, I dunno what to expect this draft and off-season in terms of player movement. The cap crunch will create some interesting situations. As much as I chirp the pie in sky notions that have corrupted MLHS this morning (lol), there will probably be some crazy shit going down.
Breaking....#stlblues forward Andy McDonald retires because of post-concussion concerns http://www.truehockey.com/articles/Post-Concussion-Concerns-Lead-to-Andy-McDonald-Retirement…
JVR - Stastny - Kessel
Clarkson - Kadri - Lupul
Frattin - Coleborne - Kulemin
Komarov - Gordon - McClemment
Stastny can probably be had with a 2nd round pick and a decent prospect
The thing is, Malkin is probably going to test the market next summer if he doesn't resign in Pittsburgh for less than market value. He'll want to see what the NHL can offer over the KHL. So trading for him is probably a bad idea unless you're sure you can extend him - but by acquiring him, you give him all the negotiating power as you just traded half your team for him. It's funny, but he's almost too valuable to be traded.
We also can't even come close to matching the KHL offer....
Crazy pie in the sky MLHS this morning.
The theme of "this team isn't going to win the Cup this year so they'll trade their best player (one of the best in the world btw) to us for very little" needs to stop.
Actually even crazier is the idea that Malkin isn't a top 5 player in the world. He's got like 100 pts in 80 playoff games. How is this a floater?
I'm sure this was answered long ago but how come we still have nested comments? Seems we are on a new system now. Sorry, I have been away from the site for a couple of weeks.
Unless they're trading up into the top 5, the Leafs might as well trade down. There is a drop in talent after 3, 5, and 15, IMO. The 6-15 guys aren't worth losing extra assets to move up for, though. The 16-35 range is full of very similar players, in terms of potential. I'd move 21 for a later first to pick up something extra, unless someone really good falls to 21.
Bergeron's winning goal was initiated by a obvious hook by Jaromir Jagr (of all people) on Evgeni Malkin. Malkin is one of the great skill players in the sport, and Jagr was, and as Malkin headed up ice with the puck to lauch an attack on the Boston net Jagr used his stick to haul in the Russian and nearly lift him right off his feet.
It was the kind of play that was commonplace in the NHL about 20 years ago. So illegal, and so obvious. Heck, the way the game is supposed to be called now, Jagr should have been called just for putting his stick horizontally across Malkin's body.
But with Gary Bettman's administration having already embarrassed itself with the way in which the rules have been called both during the regular season and even moreso in these playoffs, both referees simply waved play on in the "let the players decide it" philosophy.
When will they understand that when they let the players decide it, usually the players will decide it by breaking the very rules the league is supposed to enforce? When will they understand that Malkin could only be stopped on that play by a blatantly illegal play, and that it's vital to the integrity of the sport to make that call? >> from Cox, hate to agree with him but this time he is right
Bruins officially announce Gregory Campbell has a broken right fibula. He is out for the rest of the playoffs.
And the guy finished his shift. Full respect for the guy.
Oh, and after all the Seguin vs. Kessel talk that went down on here yesterday, I can say that there is at least one area where Seguin's performance directly matches Kessel's.......serving Too Many Men penalties. lolol Thank you Boston!
Nice article. Also, I finally cracked and watched a game that Boston was in since the Game 7 incident. And holy crap does Pitt look bad. And that's the "best" apparently that they've played the Bruins in this series? I didn't see that Boston was any better than their series with us. Pitt was just employing terrible strategy, couldn't get their shots off, and when they did firing it right at the goalie. It was like watching the Leafs first season under Ron Wilson or something.
I'd like to see Toronto take Eric Locke from Saginaw with a later pick. Not a huge guy but incredible compete level and skill.
nice little article about why it would be good for nonis to take on the dipeitro contract.... http://wewantacup.com/headlines/1666-hump-day-headlines-nonis-can-he-qbuyq-a-better-tomorrow
yup horvat is the guy i want.. great on both sides of the puck.. will never be a top line center but a 2nd line center who will play on your top pp unit.... reminds me of mike richards a ton.
This si the guy I want
Penguins dont have Phil. RT: @JimLang590: What is the biggest reason the #Bruins have a 3-0 series lead over the #Penguins?beauty response
im on board with drafting frederick gauthier... kid is a beast physically.. started off blistering to start the season.. so much so.. iss and button had him moved into the top 11 for 2 months.. then the amount of games tired him out since he was a rookie.. but 60 points in 62 games is pretty darn good.. plus in the final game at the u-18s he was the best player on the ice.. outplayed connor mcdavid by miles.
It would be interesting to look at the general quality of defenders and centers moved in trades. I suspect you get a lot of middle of the road, second pairing type defenders moving, but not a lot of top six centers. But generally, you need only look at the D corps' around the league to realize why defenders are almost always the most sought after position. No one seems to ever have enough.
"Craig Button, just for frame of reference, ranked Rimouski's Fredrick Gauthier at 21 overall Tuesday afternoon. I've never seen Gauthier play, and there are few players I have seen from the QMJHL this season, but he doesn't strike me as one of the skilled players in the class, a little lunkier than classmates Adam Erne, Anthony Mantha and Laurent Dauphin."
Come on, Cam. You're better than that.
Really nice work, Aaron.
Exhibit #1: I think teams are more willing to sell draft picks due to the uncertainty of a lockout hangover. Teams are willing to take more risks because the season after the lockout is usually quite unstable. In the case of this year, due to the shortened season, the margins between 1th to 15th are probably much lower than over the course of a full season.
Exhibit #2: Yup, no surprise there. Nice to see that trend in a graph form though. People talk of it, but I don't think anyone has actually counted the number of centres and defensemen moved.
Exhibit #3: Another unsurprising finding. Conference to Conference transactions are clearly done to prevent giving an divisional or conference opponent a competitive advantage.
Exhibit #4: Well, trades between competition is likely not going to happen. I can't remember the last time Conference opponents made a trade in the middle of a playoff run. Did you count ALL the trades throughout a calendar year or just through the season?
Mornign Gents. Yep the B's are putting it to the Pens.The Pens now have as many goals as Clarke MacArthur. And just like Clark, the Pens haven't played in all the games of the series. Friday could be the end.
Morning Lander, the Best actually, Boston got Lucky as it is and will lose players in the off-season. Maybe Horton Ference, Siedenbiurg ETC. While we will Gain.
We are number 1 !
Mornin maggots.....B's up 3-0.. wow....God dam....how good are our Leafs? 2nd best team in the East I figure!!!