Wednesday, February 20, 2013

Doing the Right Thing Gone Bad

If you Googled “Alex Ovechkin” on Tuesday and checked his news links, you would have had almost 6,500 hits.  A lot of them share a theme: “something is wrong with Alex Ovechkin.”  It does get tiresome.  Consider this – since his alleged “slump” began in the 2011-2012 season, how many players have more goals than Ovechkin through games of Monday, February 19th?  Ten?  Fifteen?  Twenty?  Surely the world must have passed Ovechkin by in a big way by now.  Twenty five?

Four.

That’s right.  Steven Stamkos (114), Corey Perry (90), Patrick Marleau (77), and Jarome Iginla (76) have more goals that the 75 Alex Ovechkin has recorded since the beginning of the 2010-2011 season.  Ovechkin has played in fewer games than all of them, and only two – Stamkos and Perry – have significant leads in the goal-scoring rankings.

That is not to say that there are no issues with Ovechkin, but the problem, it seems, sits in the right church, but the wrong pew.  Before we embark on finding the right pew, let us acknowledge up front that hindsight is not just 20/20, sometimes it is 20/10.  This is not a blame-seeking exercise as much as it is a fable with a moral at the end.

And that brings us to two numbers that hover over Ovechkin like a dark cloud.  Neither have anything to do with goals, or points, or wins, or losses.  Not directly, at least. 

13 and 124.

The careful reader knows what those numbers are.  They are the terms of Ovechkin’s contract when he signed a long-term extension in January 2008.  At the time, everyone – from the fan in the top row of Verizon Center to the man who owns the team to the player who signed the contract – was thrilled with the prospect of Alex Ovechkin being on-board with the Caps through the 2020-2021 season.

Looking at the quotes from the time, the team and its followers looked poised to make the leap from perennial disappointment to championship contender…

"I cannot say how happy I am.  I didn't want to go nowhere. If I want to go somewhere, I could sign for three years."

-- Alex Ovechkin

"If you're going to make a long-term investment, who else would you do it with.  This takes away any of the issues about how committed we are to winning a [Stanley] Cup and how committed we are to keeping our team together."

-- Ted Leonsis

"Alex is the face of the organization. When people talk about the Caps, it's generally with him in mind. Him and Sidney Crosby are the faces of the NHL right now, and to have Alex here for 13 years, it means a lot the team, to the city. This could be a very good team for a very long time."

-- Olaf Kolzig


It seemed as if the deal would be a bargain.  Ovechkin was in the midst of his career season when he re-signed with the Capitals.  He was on his way to setting a league record for goals by a left winger – 65.  He would go on to sweep the major individual awards that season – Hart (MVP), Richard (top goal scorer), Ross (points leader), and Lindsay (outstanding player).  He would be named for a third time to the first NHL all-star team.  A Stanley Cup seemed a matter of time, not a matter of “maybe.”

Things change, though.  Today, Ovechkin is tied for 90th in points, tied for 45th in goals scored.  The Capitals are still waiting for that Stanley Cup and, in fact, look to be further away from it today than on the day he signed that contract.  He is not a bargain.

And that brings us around, not to the mysterious decline of Ovechkin, but the nature of the deal and the fork in the road taken before it was arrived at.  When the deal was signed in 2008, it was not unique on its face.  It was not even the longest deal in force at the time.  Goaltender Rick DiPietro of the New York Islanders signed a 15-year deal in September 2006.

It was, however, unique in its particulars.  Here is the deal, explained at the time by team owner Ted Leonsis…

“Alex was coming off his rookie contract, and he could have signed a four- or five-year deal.  Sidney Crosby had signed a five-year deal. Then [Ovechkin] would have been an unrestricted free agent. We talked to him and we told him we would give him another year, to make it six years. That was the first deal we negotiated, and that is why it came to $9 million. Crosby did five years at $8.7 [million]. We were buying a year of free agency — $9 million a year over six years.

“We were all happy.  We shook hands. We had a deal. Then it was, ‘Do you want to stay longer?’ And it was, ‘Sure, what do you have in mind?’ Then we did some research and asked, what is the average free agent deal, how long is it? Last year there were several seven year deals. So we thought, why not just negotiate his free agent deal now?

“So while $10 million sounded like a lot of money, I will bet you that in six years, when a player like Alex hits the free agent market, they are going to be paid a lot more than $10 million a year.  Dany Heatley this year makes $10 million. That is how we broke it up — do his first year now, then let’s negotiate his free agent deal. That is how it got to be 13 years.”

So here we are in Year 5 of the six-year portion of the Ovechkin contract, and if the second “free agent” portion of the deal had not been made, the club would be at a crossroads, given Ovechkin’s performance over the past couple of years.  For while he is that fifth-ranked goal scorer since the beginning of the 2010-2011 season, there is a clot right behind him that don’t command either the dollars or the term in compensation that Ovechkin does – Matt Moulson (74 goals), James Neal (73), Bobby Ryan (70), and Patrick Sharp (70) among them.

It begs the question, if there was no “free agent” portion of the Ovechkin contract, would he be re-signed by the club, and if so at what terms?  It certainly seems inconceivable that there would be a seven-year extension paying a total of $70 million.  But it certainly seems just as inconceivable that the club would let Ovechkin walk without making a concerted effort to re-sign him.  This is, after all, a club that re-signed Mike Green, Brooks Laich, Nicklas Backstrom, and even Alexander Semin to high-dollar and/or long term deals.  The club does take care of its own in that regard.

In Ovechkin, the club has a player whose production dropped significantly from his highest-producing years, but one who still has averaged 36 goals per 82 games in the “slump” he has had over the past two-plus seasons.  The complication is his further drop-off in production this season.  With five goals (tied for 45th in the league) and that being his expected contribution to team success, he is less and elite scorer than he is one of the pack, running with the likes of Colin Wilson, Nazem Kadri, and Mark Letestu.

Would such a player command the sort of deal that any of his post 2010-2011 goal scoring cohort command?  A six-year, $30 million deal such as that James Neal (73 goals since the start of 2010-2011) has in Pittsburgh? A five-year, $27 million deal under which Phil Kessel (72 goals) is laboring in Toronto?  Or even one with a cap hit equal to that of Ilya Kovalchuk (73 goals) -- $6.67 million?

But even that consideration jumps the gun.  This would be a player about to embark on his contract year, the last year on his original six-year deal.  Would the club be better served by trading such a player, if not now, then at some point over the next year?  And what would a 27-year old (or 28-year old next season) command in trade?  What does a team get for a player whose goal scoring has gone from 50 in 2009-2010 to being on a pace for 27 over 82 games, especially when that player carries a $9.00 million cap hit for next season (assuming the six-year, $54 million portion of the current deal)?

In 2008 the team took a risk in an effort to do the right thing – wrap up a unique talent that would hold the club’s fans in thrall for more than a decade, gambling that the deal would be a bargain in time (consuming a declining share of the salary cap) and over which the club would not just be a consistent championship contender, but would make good on their contender status by winning a Cup (or more).

These are not dumb people making these deals, but intelligence and clairvoyance are not synonyms, either.  The Capitals have eight years remaining on the Ovechkin contract after this season with an annual cap hit of $9.538 million.  At Ovechkin’s current level of production (perhaps somewhere between 25-35 goals per season) it would seem to be untradeable.  And, it encumbers an outsized share of the team’s salary cap, given that level of production.  On the other hand, if the player was to at least partially return to his early career level of production (perhaps a 35-45 goal scorer) the bill does not seem nearly so dear.

But the point is not the player, it is the deal and the difficulty in peering with clarity into the crystal ball.  Wanting to do the right thing, clearly what the Capitals intended for the club and its fans, does not always have the happy ending you intended.  And the Caps right now are not in a happy place, not with a player underperforming his contract and the team underperforming expectations. 

There are 16 players in the NHL playing on deals of at least 10 years in length.  Five of those contracts have annual cap hits of more than $7.5 million, including Ovechkin’s (Shea Weber, Vincent Lecavalier, Ryan Suter, and Zach Parise being the others).  What is unique about Ovechkin’s deal is that it was built as two separate deals negotiated one after the other in the same negotiation context.

It would be easy to the point of simplistic to say that the team made a mistake in entering into the seven-year portion of the contract (although the team had in hand a deal that would have ended on the eve of Ovechkin’s 29th birthday).  The team wanted it, the player wanted it, the fans were thrilled with it (yes, us included).

But with that 20/10 hindsight, the Caps did not earn that Cup, the player’s production has declined, the team has lurched from coach to coach trying to find the key to unlock the secret to winning a championship, and while red is still being rocked, the Caps have a certain “yesterday” look about them as the Redskins and Nationals stake their claims to being the next big thing in D.C. sports.  What will eight more years of a contract that commits so much to one player – one whose best days might be behind him – do to the team’s brand? 

In making that 13-year commitment the team essentially decided to implement a 13-year strategic plan with the player being the central element of that plan.  Everything else flows from that commitment, including substantial commitments to other players.  But how many organizations have the capacity to plan that far in advance, to be able to predict with, if not certainty, then at least a reasonable expectation that they will be able to execute that plan?

What is the moral of the story?  This stuff is hard.  Cold-eyed decision making and the emotion of being a fan intersect here. We said a few weeks ago that “sports is a business.” It is, in most respects.  But in one respect it is not.  “Business” does not usually inspire rooting interests that border on the fanatical (the root of the word, “fan”).  And maybe that was the root of the question posed at the time, “why not just negotiate his free agent deal now?”  If the team did the research on what length the average free agent deal was, was that the right research to be doing?  Did the team do the research in terms of predictability of a player’s performance in years 7-13 of a contract, the term of which would not begin for another seven years?  How reliable could any such predictions be that would justify in a business sense the commitment of $70 million so far in advance?

This is not an issue unique to the Capitals, although the Ovechkin deal is unique in important respects.  There are a lot of teams out there who engaged in action that looked upon from afar would inspire the question, “what are they thinking?”  If you are much closer to those decisions – if you are a fan of the club making them – your question might be more of “when does the season start?!”

The collective bargaining agreement just negotiated denies these temptations for long deals to a point, but the decision-makers are still there, still looking for ways to do things that might seem like a good idea at the time, but in the passage of years look quite different.  For all the ink devoted to the decline of Alex Ovechkin, or the disappointment (should it come to pass) or a Zach Parise or a Ryan Suter in Minnesota, or the soap opera that is Roberto Luongo, the problems are not generally the players.  The problem lies at a higher pay grade in their respective organizations, despite the well-intentioned efforts to do the right thing by their franchises.

3 comments:

FAUX RUMORS said...

1) Excellent post on a subject few discuss objectively. I never liked long term contracts. Certainly any that go for 10+ years are insane.
2) Its a shame the original deal wasn't the one on the books now. At worst if 8 had continued his previous level of production he'd of commanded 10 mil, perhaps.
3) However, being a top 6 forward, but NOT a world class forward would at most put him in the 6-8 mil range for 3-4 years.
4) The caps are in a no win situation. They can't trade him. Won't buy him out, and as the "face of the franchise" have to continue to promote him, despite plummeting stats.
5) They will(are) going to go down with their "super star". The Verizon will soon resemble the empty edifice it was prior to Ovi's entrance onto DC ice.

None Listed said...

Very insightful but it's only half a loaf. Hindsight is fine, but it's time for foresight. How should the Caps proceed? Should they try to renegotiate his contract? Should they move him for the best deal possible? Should they even consider cutting him outright just to get out from underneath that contract?

Jeremy said...

Everything Ted Leon$i$ touches BLASTS OFF with a FLASH....... only to fizzle into a dreary, empty state.