The League of Extraordinary Statisticians: Draft Pick Value

The League of Extraordinary Statisticians (LOES) is a weekly forum bringing together top analytical minds in the hockey world to answer a variety of questions that straddle the line between stats analysis and something you might hear floating around section 304.  They have agreed to answer these questions in a few paragraphs or less, and with minimal formulae.  Because this is a forum, we'd encourage you to use the comments section to answer the questions yourselves, or to discuss or debate the answers given.

The LOES is not meant to represent the entire of the hockey stats community.  There are a number of people that either were too busy or too difficult to contact for the purposes of the forum.

As we roll into the time of the season when teams are either packing it in, dealing for the future, or looking to add some key players for the playoffs, it's hard to miss teams using their draft picks as trade chips for semi-tangible assets (read: NHL players).  Draft picks in themselves are of confusing value; in the NHL, even the first round is littered with players carrying a large amount of risk.  Many times, trades involving picks are evaluated based on the success of the player that is eventually picked (see Tyler Seguin).  This is probably not the best way to look at it; anything below the first pick is a combination of scouting and condition, when at any point in time an opposing team might decide to nab a quality prospect you wanted (see Patrik Stefan) or allow a highly-rated player to slide like a greased pig (see Cam Fowler).  The task for the LOES this week is to try to give us an idea of the value of the pick without the hindsight.  It's proven to be a bit of an arduous task, if nothing else because I can't seem to construct the dang question.

 

This week's question: What is the approximate one-for-one trade value of an NHL 1st-round pick? Assume a top-10 pick in an average draft talent pool. Feel free to use current players to illustrate a player type/talent level.

Note: I realize now that 1-10 was a little too broad; I sent a revision that the 10 picks could be broken down to their different values.

Draft value goes down sharply with each pick, and you never know where you'll draft until the actual lottery, so trading away a first-round draft choice is a risky thing to do, especially way in advance.  Just ask Brian Burke, or even Charlie Finley of the California Golden Seals (he traded away the pick used for Guy Lafleur).
 
Another important consideration stems from today's salary cap era.  Theoretically you get a discount for the first few seasons, and you can at least be compensated if you lose a player when he becomes an RFA, but beyond that you're paying full market value.  Simply put, having the rights to a player who is paid fair market value doesn't give your team an advantage over another who can simply sign an equivalent free agent for the same money.
 
So the value of a draft choice is linked to contract management.  Unfortunately not all contracts are well-managed.  Looking at last year's rookies, guys like Matt Duchene, John Tavares, Victor Hedman and Evander Kane actually cost their team wins, relative to how they would have finished if their same salaries had been used to get equivalent players instead.  
 
Still, the right contract gets you 3-5 discounted years, at which point hopefully the player will be willing to stay for less than it would cost to acquire an equivalent free agent.

- Rob Vollman, Hockey Prospectus

I don't think you can say "a top 10 pick" and leave it at that.  The difference in value between 1 and 10 is pretty wide.  What's a #1 pick worth - $25 million in value?  Look around the league and figure out who has $25 million in excess value and that's who can trade for a #1.  Doughty?  Myers?

- Derek Zona, The Copper & Blue

There is no real answer to this question: in the modern NHL, what a player is worth has as much to do
with his contract as with his talent. Brian Campbell is an untradable block of cement, while Tomas
Kaberle is the key piece of a Cup contender. They are similar players, but one is more
"valuable" than the other because of his contractual terms.

A more relevant question is what is the typical player you could expect from a top-10 pick. Excluding
the top 2 or 3, who may be franchise-type players, they will often be NHL-caliber but not star players.
Take the 2004 draft: after the top two (Ovechkin and Malkin), the rest of the top 10 was Cam Barker,
Andrew Ladd, Blake Wheeler, Al Montoya, Rotislav Olesz, Alexandre Picard (the defenseman),
Ladislav Smid and Boris Valabik. All decent players, but nobody you'd make the face of your
franchise. Obviously, if the draft pick is in a year like 2003, then the value goes up.

- Tom Awad, Hockey Prospectus

This question has different answers depending on how long before the draft the trade is made.  To my knowledge, in the last ten years, only two trades prior to draft day involved top ten picks (Kessel and Vokoun.)  But assuming you know which exact pick you're talking about, you're looking at about $3M in excess value for the #10 pick, up to $10M for the #1 pick.  There are a lot of players worth a #10 pick - established third-year players with no arbitration rights, or the very best players in the league, like Henrik Zetterberg, who can't be paid as much as they're actually worth.  It's a rare player who's worth a #1 pick - possibly Drew Doughty; essentially a high pick who's an All-Star before he hits his first RFA year.

- Gabe Desjardins, behindthenet.ca and, of course, Behind the Net

I think this question requires a lengthy essay to answer properly.  Instead of taking the time to write it, I will answer that it depends.  What are the prospects of the teams involved?  If the team trading the player has no short term prospects, they can better afford to trade today's talent for draft picks.  If the team receiving the player has a small window with a very good shot at the Stanley Cup, they might be more motivated to trade tomorrow for a shot today.  The salary cap hit and contract status of the player traded is an important consideration.  A player who is under contractual control for several years at a reasonable salary cap hit has a high value to a team that can afford the salary cap space.  As a result, I don't think I can easily list an example of a player or two worth a first round draft pick.  There are too many circumstances involved that will change the answer.  
 
We don't have an recent examples of one-for-one trades for early first round draft picks, so I cannot look at them and decide if the price was right under the circumstances.  Too long has passed since the last such deal was made for it to be a valuable comparison.
 
Trading is hard in the NHL today.  There are a lot of variables to consider.  It is not possible to give a fair one-for-one trade of an established player for a first round pick without considering a significant number of other factors and thus not be able to give any kind of universal answer.

- Greg Ballentine, The Puck Stops Here at Kukla's Korner

Phil Kessel.

- Geoff Detweiler, Broad Street Hockey

Zing!  

As you can see, even with a snippet of picks from the 1st round we see a great dispersion of value.  What jumps out to me is the impact of the salary cap, which truly demands "bang for your buck."  A draft pick that pans out quickly can certainly achieve that, leaving a team with a critical choice once the player moves beyond their entry-level contract.  But when you look at the top 10 picks, the contract might not even be that favorable at the outset.  What's consistent here is that the top pick, as you would suspect, is very valuable, on the premise that it will be used for a franchise player.  

For discussion: what would be your NHL-equivalent player value for the first 5 picks in, say, the entry draft this year?  Is player "signability" going to be a real issue in the future NHL, particularly among Russians (who have the KHL) and maybe U.S. college players?  Would you rather have the draft pick or the NHL player of equivalent value?  

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