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Summer Signing Series – Okposo

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 #1 – Kyle Okposo

To start our series we begin in the great state of New York where Kyle Okposo makes the move clear across the state from Long Island to Buffalo.

The Details

On July 1st Okposo signed a 7 year, $42 million contract with the Buffalo Sabres which works out to an AAV of $6 million/season. Last season Okposo had 22 goals and 42 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 Okposo’s rates:

EVEN STRENGTH Last 3 Years Last Season
Goals/60 Min 0.77 0.55
Assists/60 Min 1.34 1.15
POWER PLAY Last 3 Years Last Season
Goals/60 Min 1.44 1.69
Assists/60 Min 3.12 4.01
PENALTY KILL Last 3 Years Last Season
Team Goals Against/60 Min NA NA

Although scoring rates are less intuitive for fans to get a sense of, I can assure you that these rates are very good. When you weight the Points/60 minutes of every player in the league by their ice time you find that the ‘average’ winger scores at a rate of about 1.6 Pts/60 minutes at Even Strength. Over the last 3 years Okposo has substantially over-performed this average however by producing roughly 2.1 Pts/60. For context, Evgeni Malkin and Sidney Crosby have produced about 2.3 Pts/60 over that same period of time…

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 Okposo’s case he has played the following:

ICE TIME Last 3 Years Last Season
Even Strength 14.87 14.47
Power Play 3.59 3.26
Penalty Kill 0.08 0.05

As you can see he has had pretty consistent ice time over the last few years and is solidly in the 18 to 19 minutes a night range. This is pretty typical of a first line player. You can also see that plays virtually no time on the penalty kill. Obviously, if he killed a few penalties he’d be worth more than he is today but once we crunch the numbers we’ll find out that he’s probably fine doing what he’s doing.

The Forecast

Once we bring this all together we can do a calculation a lot like we did in our first post but this time I’ll save you the math and show the results…basically, if Okposo is able to keep his scoring rates at their current levels for the remainder of his 7 year contract he is actually going to be a bargain for the Buffalo Sabres. In fact, the contract starts the first two years being almost perfectly fair and then gets better and better for Buffalo as the cap grows and ultimately results in Okposo being worth almost $8 million/season by the end of the term. In sum, the average value Okposo provides in this scenario is actually worth $6.8 million/season.

Pic 4

Now, I’m sure some of you are looking at those last few years of this contract and wondering about a potential decline in performance. That is probably a fair assumption to make given that Okposo is currently 28 years old and most players peak at around his age or within the next few years. That said, if we run another scenario where Okposo stays at his current level of performance for the next 3 years before declining at about 5%/year we get the following result.

Pic1 2

While this scenario is obviously not as good as the first it’s still not bad and it’s definitely more realistic. To make it even more realistic we could probably start to reduce Okposo’s minutes in the later part of the contract as well. For example, by year 7 we have his performance at ~1.7 Pts/60 which is a little better than average but would probably result in a move from the 1st line to the 2nd and could even mean less Power Play time as he (potentially) drops to the second unit. In any case though there appears to be sufficient room in his contract for this to happen and still make the contract a good value.

Verdict

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Summer Signing Series – Okposo

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