The Great Contract Debate

It’s that wonderful time of year where free agents are re-signing with their current teams or being traded to new teams and hopefully signing a contract in their new home. It’s also the time where people dredge up past contract values that “prove” new contracts to be terrible investments. Since this was the most recent one that has people getting their pitchforks and torches blazing, let’s take a quick look at the Kevin Hayes contract.

The Contract Comparisons

Hayes and the Philadelphia Flyers agreed to a 7 year $50 million contract that has a cap hit of $7.14 million per year.

via CapFriendly

According to the great resource that is CapFriendly, his contract is most comparable to those that Cam Atkinson, Evander Kane, and Ryan O’Reilly have signed. Now that we have some players to compare, let’s take a look at point production and games played when the contracts were signed

Hayes: 229 pts / 381 gp / .60 pt per game $7,142857 Cap Hit / 8.98% of the cap

Atkinson: 233 pts / 397 gp / .58 pt per game $5,875,00 Cap Hit / 7.83% of the cap

O’Reilly: 246 pts / 427 gp / .58 pt per game $7,500,000 Cap Hit / 10.50% of the cap

Kane: 354 pts / 574 gp / .62 pt per game $7,000,000 Cap Hit / 9.33% of the cap

From a point production viewpoint, they all produced at a very similar rate leading up to their respective new contracts. Comparing actual dollars, it falls in line with those guys as well. Even looking at the percentage of the cap, when the contracts were signed, its right there with the other guys. Let’s try some other, bigger names that Hayes will be paid more than. How about Brad Marchand, Patrice Bergeron, and Max Pacioretty.

Hayes: 229 pts / 381 gp / .60 pt per game $7,142857 Cap Hit / 8.98% of the cap

Marchand: 289 pts / 454 gp / .64 pt per gm $6,125,000 Cap Hit / 8.39% of the cap

Bergeron: 433 pts / 579 gp / .75 pt per gm $6,875,000 Cap Hit / 10.69% of the cap

Pacioretty: 448 pts / 626 gp / .72 pt per gm $7,000,000 Cap Hit / 8.81% of the cap

The one that stands out the most is that Bergeron comparison. Let’s keep in mind that these contracts are 76.6%, 59.8%, and 59.1% matches compared to Hayes’ deal. Bergeron’s deal, a 59.8% match, looks like the biggest head-scratcher compared to Hayes. But we need to stop looking at the actual cost when doing these comparisons. The most important piece of information in this whole article is the percentage of cap used.

Percentage Of The Cap

Using the percentages, rather than the actual dollars and cents, provides a much clearer look at the contracts. For instance, if Bergeron has signed at a 10.69% of cap rate with the new cap, he’d had a cap hit of $8,872,700. When Sidney Crosby signed his massive deal, he took up 14.5% of the cap. In today’s NHL that would be good for a $12,035,000 Cap Hit. But since he signed in the summer of 2012, he now has a team friendly cap hit of $8,700,00, just over 10% of the cap. This why comparing the dollar amounts of contracts signed in different years is pointless.

If we start to look at these contracts as a percentage, I think we will have a better idea about the actual value of the contracts. There will always be bad contracts. That’s inevitable. But utilizing all information (i.e age, position, health, team cap situation) along with the percentage of the cap, you can get a more definitive idea of contractual value.

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2 Comments

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