Wednesday, 9 May 2007

Garth Snow and the DiPietro Contract (the Finale)


Is 15 Years So Bad (Part Three)

I will now, finally, finish up my series of posts on Garth Snow and the Rick DiPietro contract. The other posts in the series are here
(part one) and here (part two). Oh, in case you wondered - yes - I am not very good at photoshopping...

This post will be done in a Question & Answer format as most of what I have left to say is just miscellanea. Since I am only asking questions of myself please rest assured they will be easy.

Question: Doesn't the chance of injury make the length of the contract a stupid one?

Answer: When the injury happens matters a lot. While it is true that more years means there is a greater chance that a serious injury will occur the chance that a serious injury will occur in any given year is completely independent of the number of years in the deal. Also, the more years that pass the less the cost of said injury.

Given that young goalies rarely get injured in such a fashion it is probable that an such injury will not occur until much of the contract has already been paid out. That said, DiPietro suffered a concussion just this year so fate may not be favoring our new GM. No question about it - Garth Snow shaat his pants when DiPietro went down.

Finally, in regards to injury issues, any such injury would allow the Islanders to place DiPietro on the LTIR list and once done the team could seek to get another goalie to fill his skates - the Cap issues are almost irrelevant.

That leaves budget considerations. I believe most teams self-insure because of the premiums but on a contract like this the team may just have paid the money anyways. Wang has the money and has, historically, had the wilingness, to cover salary costs exceeding revenues.

So, after examination, I can safely say that a career ending inury would not be fatal to the team. The real danger is a chronic malady (a la Dunham's groin issues when with Nashville) that leaves DiPietro on the active roster drawing full salary and affecting the Cap.

Question: Straight-up - why such a long contract?

Answer: It is a hedge. Plain and simple. Hedging is the act of buying something at a price today in order to either protect yourself from, or make gains on, changes in future prices.

Snow has a MBA. No surprise then that he would see a contract in its financial sense as much as anything. He will make some substantial gains off this contract.

Question: What if he is less Martin Brodeur and more Jim Carey?

Answer: No big deal. The Cap would be well in excess of $50 million by the time it would be established that DiPietro sucked so bad. The deal is small enough, and Wang's wallet big enough, that it isn't crippling.

Also, Yashin's contract HAS to END sometime doesn't it (2010 actually)? DiPietro's would just be a nuisance compared to that.

Besides. DiPietro is a player. He will be around a long time.

Question: What is the upside of all of this?

Answer: Besides the NHL inflation protection, the player-contract inflation protection and career-year-itis protection all now inherent in the contract of a player who will probably be a top-10 goalie for the next 10+ years? Besides having the most important position on a team competently played by a guy underpaid?

You don't want much do you?

Okay, okay... you are the one asking the questions. But I think I just answered it anyways.

One thing can happen here. As the Cap goes up it will be increasingly hard for many teams to bring their budget up to match the Cap. Once the Yashin contract is gone the Islanders will have a lot more budget flex - hopefully they will spend it wisely this time. At the very least they won't have to worry about overpaying their goaltender.

Question: Any other downsides to the deal?

Answer: Yeah. One interesting one. Do the Islanders still draft goalies? I don't know if they will and if they do will they be the next team that trades a guy like Hasek away for peanuts because they already have a good goalie?

It happens.


Have a great evening everyone.


PunjabiOil said...

An excellent blog YK.

You've basically convinced me that it was a good deal.

Vic Ferrari said...

Good stuff again YK, though I was on board with your assessment of this with your first post. You had me at 'hello' on this subject.

Interesting that Garth Snow has an MBA. I've never read that anywhere before.

On the insurance issue, I think that the first six years of the contract are insured, which an option to renew for another six years at that point if DiPietro is healthy. That's what TSN said at the time of the deal in any case, and they were quoting Newsday iirc.

Apparently DiPietro expressed interest in playing his whole career as an Islander two years ago, but a failure to find reasonable insurance was a stumbling point to a long term deal at that time. Again this last bit is hearsay, but it meshes with the way Wang dealt with Bates and Martinek when they expressed the same sentiment.

YKOil said...

Thanks all. I went long on this series of posts simply because I wanted to cover the bases.

The first post was just general curiosity while the second was me answering my own questions on the finances of it.

I figured that no matter how well I covered the financial aspect of it that someone would say "what about injuries?", etc.

Good info on the insurance Vic - I figure insurance is one of the great 'randoms' in team expenses with some players being covered and some not.

The MBA was from the University of Maine I believe.

Showerhead said...

Today marks the first of many ventures to your blog for me. Thanks for the excellent reading!

On the note of insurance, how exactly does it work? My best guess is that DiPietro is guaranteed to receive the money regardless of health but NYI has insured with an outside agency to receive payment if DiPietro goes down? I assume the cap hit is the same regardless, though long term injury cap allowance would still factor? Seriously I have no idea so any information would be appreciated.

Mr DeBakey said...

I heard, or read, that the insurance was a rolling 5 or 6 year coverage.

The contract was covered for 5, Wang was then on the hook for whatever remained owing

PunjabiOil said...

I don't think Snow played a role in this 15 year deal.

Either Milbury (who still works behind the scenes) or Wang made a strong push for it, IMO