Tuesday, August 02, 2005

Are GM's Really Overspending?

Today was a busy day in the NHL, with 25 players inking contracts. Sportsnet and TSN both have daily transaction lists. With almost every signing, someone (sometimes including myself) says the team overpaid. So I was wondering, what exactly is overpaying, which teams can overpay, and who has overpaid so far?

Overpaying is giving someone more money than they are worth. Seems simple, right? But it's not. The Blackhawks paid Adrian Aucoin $4 million a year and Columbus gave Adam Foote $4.6 million a season. Most people believe that these players got more than their market value, which is probably true. But the Panthers and the Blue Jackets did not overpay. Why? Because they were not going to spend the cap anyway.

These two teams are going to add some money to their payrolls this season, but will not approach the $39 million mark. So if Columbus got Foote to sign for $3.8 million (which most people would consider a fair price for a good D-man) then they would have saved $800,000. But that would not mean much. If they planned the team exactly the same, all that would happen is the money would line the owners pockets. If they spend that $800,000, they could pick up a fringe player, or upgrade a 4th liner to a 3rd liner. The difference is negligible. But by paying a little more than market value, they secure the player they want. They don't have to worry about good free agents passing them by because they went out of their way to lure a good player to a club that has never made the playoffs. The overpaying is much more beneficial than if they played it cheap and Foote said no.

The teams that need to worry about overspending are the Rangers, Flyers, Red Wings, Avalanche, etc. These teams will spend up to $39 million and while an extra $500,000 to secure the player you want is not much, by giving away a million here and a million there where it's not needed, it could be deadly for the team.