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Summer Signing Series – Eriksson

As the summer free agency period comes to a close MPS is taking this opportunity to review the biggest signings of the summer from a purely financial perspective. To be fair to all the teams and players we’ll be looking at we’ll be using the same set of base assumptions throughout the series. Principally these assumptions are:

– The performance metrics we want to pay for are:

o Goals (40%) and Assists (60%) when the players are out at Even Strength or on the Power Play.
o Team Goals Against (100%) when the player is on the ice killing penalties.

– The salary cap starts this season at $73 million and increases 5%/year for future years (obviously this is up for debate but it basically reflects flat revenue growth and the assumption the NHLPA uses its escalator clause).

Signing #7 – Loui Eriksson

After a few years in Boston it appears Erikson is ready to play for his 3rd NHL team, the Vancouver Canucks.

The Details

Like many of our previous signings this contract was signed on July 1st, 2016. The contract is for six years and a total of $36 million (AAV of $6 million/year). Eriksson had some inconsistent production with the Boston Bruins but last season he scored 30 goals and 33 assists.

Breaking it Down

As explained in our earlier blog, point totals are fine but valuation needs to be done using rates (if this doesn’t make sense to you please check out that other post because the rest of this article/series takes it for granted) so let’s take a look at Eriksson’s rates:

EVEN STRENGTH Last 3 Years Last Season
Goals/60 Min 0.69 0.85
Assists/60 Min 1.04 1.12
POWER PLAY Last 3 Years Last Season
Goals/60 Min 1.87 2.46
Assists/60 Min 2.17 1.23
PENALTY KILL Last 3 Years Last Season
Team Goals Against/60 Min 5.43 4.51

We’ve had a number of $6 million/year contracts already in this series (Lucic, Okposo, etc.) so these rates look pretty familiar. What’s interesting with Eriksson though is that, while his rates from last season fit with the rest of the $6 million group, his 3 year averages are a little behind. Even without looking at the rates this is obvious as Eriksson only put up 37 and 47 points in his first two seasons with Boston, respectively. This will obviously lend to some subjectivity later on as we forecast what he’s likely to do over the next 6 years.

Ice Time

The other key factor to determining a player’s worth is how much ice time they get (again if you haven’t read this article yet you may want to do that so you can see the logic behind this). In Eriksson’s case he has played the following:

ICE TIME Last 3 Years Last Season
Even Strength 13.24 13.77
Power Play 2.60 3.13
Penalty Kill 1.62 1.90

In relation to the other large contracts in our series Eriksson plays a little more than average. This can mostly be attributed to his extra ~2 minutes/night on the Penalty Kill and obviously this additional responsibility will help his value.

The Forecast

In the interest of consistency and transparency we’re going to start forecasting Eriksson by using his 3 year averages for performance and minutes. As described earlier we know this will be lower than it would be if we used last year’s numbers but we’re going to look at both scenarios in any case.

Erik1

As we might have expected, using Eriksson’s 3 year numbers results in a contract value below the actual amount. In this case it ends up being above $800,000 short and we haven’t even adjusted for the fact that Eriksson is 31 and is very likely to see his performance decline at the end of the deal! That said, Eriksson put up much better numbers in Dallas and he bounced back last year to show he can still do it. So let’s see what the forecast would look like if we used just last year’s results.

Erik2

So this obviously looks a lot better for the Vancouver Canucks and I assume is where they were coming from when they made this signing. However, similar to when we looked at Andrew Ladd’s contract we’re probably not done with just a straight line forecast. Just like Ladd, Eriksson is over 30 and father time will eventually catch up with him. To account for this let’s look at the forecast assuming Eriksson’s performance starts dipping 5%/year in the 4th year of this deal.

Erik3

Our final forecast comes just shy of the actual terms of the deal. However, while this forecast is probably the most realistic of the three, it is also probably a little generous. There is still considerable downside risk in this contract if Eriksson reverts back to his 3 year averages and then also begins declining with age. On the flip side, a scenario where this contract working out significantly better than this forecast is harder to imagine.

Verdict

Verdicterik

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Summer Signing Series – Eriksson

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