Department of Hockey Analytics
Friday March 4th, 2016

For the past couple of seasons a standard narrative has cropped up around this time of year, and it has to do with teams allegedly tanking in order to secure the first pick in the June NHL Entry Draft.

Last year it was the epically bad Buffalo Sabres and almost-as-bad Arizona Coyotes. This year it’s supposedly the Toronto Maple Leafs.

A week before the trade deadline, The Hockey News’s Ken Campbell wrote a blog piece on the subject. Campbell even found an authority—a nameless GM whose complaints about the Leafs were expressed thus:  “It’s bullsh— … It drives me nuts.”

The GM then went on to imagine an alternate scenario that would most assuredly eliminate tanking: Teams that didn’t make the playoffs would be awarded picks based on how many points they could accumulate after being eliminated from playoff contention.

Campbell decided to one-up the GM by imagining a scenario in which draft position was based on a team’s winning percentage after elimination.

Since last July the Leafs have shipped out veterans Phil Kessel, Dion Phaneuf, Shawn Matthias, Nick Spaling, Roman Polak, James Reimer and Daniel Winnik. That fire sale arguably has made them a worse team in the short run and might improve their position for this year’s draft, but what’s at work is more complicated than simply tanking in the hopes of picking first.

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Let’s start with one obvious observation: The Leafs have been consistently bad all season. So while it’s fair to expect that their current four-game losing streak will continue, it’s also possible their current roster, which includes some promising prospects getting their first taste of NHL play, just might find its footing and actually put together a winning streak.

Nevertheless, let’s concede a point to Campbell and our nameless GM and assume the Leafs are in fact a worse team than they were a few weeks ago and do finish dead last.

There’s still a massive impediment to the realization of their allegedly diabolical scheme, and that’s the draft lottery.

Because of the new lottery format, finishing last only gives a team a 20% chance of landing the first pick. Last year the Sabres were absolutely terrible, had slightly better odds (25%), and still lost it to the Edmonton Oilers (11.5%).

To create a further disincentive for bad teams to mail things in down the stretch, the league decided to put the top three picks into the lottery format. Whereas up until now the last place team was guaranteed the first or second pick, now it could wind up picking fourth.

The table below gives the full odds of each non-playoff team picking first.

Regular Season Finish

Odds

30th

20.00%

29th

13.50%

28th

11.50%

27th

9.50%

26th

8.50%

25th

7.50%

24th

6.50%

23rd

6.00%

22nd

5.00%

21st

3.50%

20th

3.00%

19th

2.50%

18th

2.00%


If you don’t do the math (which is admittedly a little complicated because of the potential combinations that can arise at each stage of the lottery) you might just assume that a last place finish ought to still give the Leafs a really solid chance at one of the top two picks, but thanks to some generous and patient people who have gone to the trouble of crunching the numbers you don’t have to do it.

As the table below shows, the odds favor the last place team dropping to third or fourth by almost a 2:1 margin, and it’s roughly a coin toss between them landing one of the top three picks and picking fourth

Draft Position of Last Place Team

Odds

1st

20.0%

2nd

17.5%

3rd

15.0%

4th

47.5%


The Leafs have consistently been out of the playoff picture since the beginning of this season, so while we can debate how bad they were before their most recent fire sale, their record over the five previous seasons (which included their lone playoff appearance since 2004) is as good a guess as any.

As it turns out the Leafs were the fifth-worst team in the league during that stretch, meaning a similar finish this year would give them an 8.5% chance of getting the first pick.

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The current management group that is running things in Toronto is an intelligent lot, and it’s hard to imagine they’re contorting their entire strategy so that if they’re lucky enough to finish dead last they improve from an 8.5% chance of picking first to 20%.

For all the bluster on this subject, if anyone tells you the Leafs are tanking and are going to pick first overall, unless they’re asking for better than 4:1 odds you should ask them to put their money where their mouth is and bet on the Leafs actually getting that pick.

So what’s going on in Toronto then?

After several years in a row of starting the season pretending the team would contend and then consistently missing the playoffs, both the front office and new coach Mike Babcock recognized that Toronto wasn’t a contender and wouldn’t ever be one if they continued to imagine they were on the cusp.

It was time to end the charade and embark on a full scale rebuild—of indeterminate length if need be. Indeed, many of their public statements last summer pretty much amounted to saying that.

When faced with a salary cap that prevents you from spending your way out of the kind of low end mediocrity the Leafs have faced every year, the smartest way to get better is by building a core group of younger players, and that generally happens via the draft.

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There’s no shortage of research out there on the expected value of an NHL draft pick (some of which you can find on our blog), but it’s fairly uncontroversial to say there are two key features to the draft: (i) very early picks tend to have a high rate of success; and (ii) once you get later into the first round and beyond, things start to get chaotic.

In light of the latter fact, the dominant strategy for any team is to view draft picks as lottery tickets, meaning the more of them you have the better your chances of hitting the jackpot.

You’re not going to find a Duncan Keith in the second round or Pavel Datsyuk in the sixth every year. But if you’re in the habit of accumulating as many picks as you can, your odds of that happening certainly improve.

Assuming the Penguins make the playoffs this year (the first round pick that came back in the Phil Kessel trade was contingent on that happening), the Leafs will double up on selections in five of the first six rounds this June. According to General Fanager, the team will have 28 picks (17 of them in the first four rounds) over the next three seasons.

This doesn’t guarantee that the Leafs will get better, but it does improve their odds substantially.

There’s an additional benefit to building a team around younger players, and that has to do with the NHL’s entry level salary system and restricted free agency rules.

For example, Connor McDavid is already producing at a better than point per game pace as a rookie, but is locked up for three seasons at a base salary of $925,000.  With bonuses (some of which he may not hit because of his injury), McDavid stood to make a maximum of $3,775,000 this season, still well below market for a player of his ability.

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While it’s true there aren’t many McDavids out there, the fact remains that the entry level salary cap, coupled with a poor market for restricted free agents, creates a huge incentive to try to find younger players from whom you might get a number of productive years at below market rates.

Take the example of Tampa Bay, which has managed to establish its Stanley Cup window by building around a core of young talent, all of whom are close in age and will soon be due for sizeable raises. The party won’t last forever, but Nikita Kucherov, Ondrej Palat, Tyler Johnson, Victor Hedman and Steven Stamkos are all making less than they would command on the open market.

Kucherov, in particular, is one of the NHL’s great bargains given his current entry level cap hit of $711,667.

If you’re a team like the Leafs, once you’re willing to confront the reality of your situation, it’s not inconsistent to acknowledge that veterans like Phaneuf , Kessel and Winnik are good players who can help put a good team into the playoffs or set a very good team up for a deep run while still recognizing that they do you no good if all they are to you (in the most optimistic scenario) is the difference between finishing fifth from last instead of dead last.

If those players can be turned into picks and prospects, that’s always the dominant strategy. The fact that your own first pick might improve as well is a bonus but is never going to be a major driver.

Tanking is a real phenomenon, and it’s a completely rational thing for bad teams to do.

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Moreover, it really doesn’t matter what kind of draft lottery format frustrated GMs and hockey writers might dream up. The overall strategy of a full blown reset is the right call for a consistently awful team like the Leafs and it’s also a reason why Leafs fans finally have cause for tempered optimism.

The same logic continues to apply even if the team happens to hit an unexpected winning streak with some promising kids in the lineup and regardless of how those balls drop on draft lottery day.

The Department of Hockey Analytics employs advanced statistical methods and innovative approaches to better understand the game of hockey. Its three founders are Ian Cooper (@ian_doha), a lawyer, former player agent and Wharton Business School graduate; Dr. Phil Curry (@phil_doha), a professor of economics at the University of Waterloo; and IJay Palansky (@ijay_doha), a litigator at the law firm of Armstrong Teasdale, former high-stakes professional poker player, and Harvard Law School graduate.  Visit us on line at www.depthockeyanalytics.com

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