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Identifying the Optimal Contract For Dylan Larkin

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USA v Canada - 2018 IIHF Ice Hockey World Championship Bronze Medal Game Photo by Martin Rose/Getty Images

It’s August 9th, and one of Detroit’s most important players is still unsigned. Based on reporting, it appears unlikely that Red Wings fans will see a repeat of last season’s Andreas Athanasiou situation, in which the young forward missed the first 10 games of the regular season.

In a Sportsnet article yesterday written by Luke Fox, the quotes from Larkin continue to be positive that a deal will get done sooner rather than later:

“Something’s coming,” Larkin promised Tuesday afternoon, following an intense skills-training session alongside Connor McDavid and other NHLers at the Power Edge Pro camp in Toronto.

“I’ve told everyone I think it’ll be before training camp. It’s right there. I’m just waiting to iron out the details.”

I’ve been a proponent of signing Larkin long-term for a while now, and that’s seemed the most likely outcome. However, a quote in the previously mentioned article raises the possibility of a bridge deal:

“That’s a pretty good honour — they’re showing a long-term commitment to you — but there are different offers out there, whether it’s a short-term bridge deal or a long-term deal,” Larkin said.

“Now we’re just trying to figure out what’s going to be best for both our futures.”

Past reporting from The Athletic Detroit’s Craig Custance indicated that the team wanted a five year term, while Larkin’s camp was asking for a six year term. Keep in mind that negotiations are a fluid process, and that may not be accurate anymore. But for the time being, it’s the best information we have to go on.

All of this raises an interesting question: Will it be a failure on the part of Ken Holland if he signs Larkin to a bridge deal as opposed to a longer term deal? If so, how big of a failure?

Comparables

It makes sense to start with two potential contracts that are likely close to what each option would end up being. For the long term option, I am using 6 years x $6.3M, which is what Matt Cane’s model predicts. This would be 7.9% of the current $79.5M salary cap. I think a six year deal would be in that ballpark. For the shorter term option, I am using Cane’s projection for 3 years, which is $5.3M year (6.7% of the current cap). I think that’s a little on the high side, but the same contracts come back on the comparison tool at $4.5 and $5.3, so if you think $5.3 is too high, just pretend it’s $4.5M.

Since we are comparing AAVs from different seasons, I’m going to use % of cap hit when the contract was signed as opposed to AAV for the following contracts.

Using CapFriendly’s contract comparable tool, two contracts for centers appear to be very similar: Bo Horvat (6 x 7.3%) and Sean Monahan (7 x 8.73%). Monahan’s deal was signed in the fall of 2016 and Horvat’s was signed the following fall. In addition to term and AAV, the tool also looks at points scored to that point, years in the league, and other factors to find similar contracts.

For the other option, by far the most similar recent contract is Nikita Kucherov, but he is not a center. I am going to include him, however, because even though he is a winger, his recent contract was $9.5M (11.5%), so if we are concerned that Larkin’s next deal will be much higher than $6.3M, it’s a good one to look at. Also, even though they are not the same type of player, the situation is similar in that they are each considered very important players for the team moving forward at the time of negotiations. His deal was signed in the fall of 2016, and it was 3 x 6.53%.

The two closest center contracts were Ryan Johansen (3 x 5.8%) and Ryan O’Reilly (2 x 7.78%). Those deals were signed in 2014 and 2013 respectively.

How Does Larkin Compare?

The questions that Ken Holland and his team have to ask themselves during the negotiation process are:

  1. Where is Larkin at this point in his career?
  2. What is his ceiling and his floor, and what are the chances he ends up at either end of his potential?
  3. If you sign him to a short term deal now, what are the chances that it will cost the team a lot of money on the next contract?

So, let’s look at each question.

1. Where is Larkin at This Point in His Career?

Using Corsica’s player ranking system, Dylan Larkin is currently the 38th best center overall, and the 84th best forward. The way Manny explains this ranking system is as follows:

We distilled all the statistical information that is available into one single number using machine learning algorithms. The rating captures all contributions made by skaters – offensive, defensive, even strength or special teams! All player ratings are updated daily to reflect the latest information.

If you want a more detailed explanation: click here.

According to CapFriendly, currently 23 centers make $6.3M or more (in terms of their yearly cap hit). 37 forwards make $6.3M or more.

Going back to our contract comparables, Horvat ranks 53rd (121st forward) for centers, Monahan 22nd (42nd forward), Johansen 37th (83rd forward), and O’Reilly 21st (40th forward). Kucherov is the top rated RW and the 6th rated forward.

One thing to keep in mind is that each of the comparable contracts were signed earlier than this past off-season. So we are seeing these players’ performance after signing their contract, which is not comparable with Larkin right now.

So here is the Goals Above Replacement breakdown for Larkin’s season last year and each of the other players’ season the year before they signed their comparable contract.

For each category, a positive number indicates performance above a replacement player (fringe NHL/AHL player for this model). Since we are looking at Larkin, I color coded it so that if Larkin was better than the other player for a category, the cell is blue. If Larkin was worse than the other player, the cell is red.

Data: Corsica.hockey

Like I have written in the past, this chart highlights just how poor Larkin’s shot quality against was last season. A few other areas are interesting. Larkin’s GAR per 60 minutes is only better than Horvat’s, although he was tied with Monahan.

The other is that Kucherov was providing so much more value than Larkin did last season. His total GAR was 14th in the league that season.

2. What is His Ceiling and His Floor, and Where Is He Most Likely To End Up?

So if we assume a $6.3M cap hit for a long-term contract, how likely is it that Larkin ends up in the top 23 centers in the NHL? Those are the numbers at each position who earn that much money. Obviously, that doesn’t mean that they are each worth what they are paid, although at the same time, others in that group are underpaid.

We can also use GAR to estimate the amount of value a player brought to his team last season.

Using that estimate, 24 centers provided their teams with at least $6.3M in value. So, it seems the question is: “Will Dylan Larkin be one of the 23 or 24 best centers in the NHL during his next contract?”

Going back to the Corsica player rankings I referenced in point one, he currently rates as the 38th best center in the league. To me, that seems about right. The 23rd best center, using these ratings, is Logan Couture, and the 24th best is John Tavares.

While that provides context for where Larkin would have to be for a $6.3M cap hit to be worth it, to give you an idea of the improvement he would need to have, here are the 24 top centers according to this model, in descending order:

McDavid, Crosby, Bergeron, Mackinnon, Malkin, Kuznetsov, Scheifele, Matthews, Kopitar, Seguin, Stamkos, Getzlaf, Barkov, Couturier, Eichel, Rakell, Eric Staal, Backstrom, William Karlsson, Point, Trocheck, O’Reilly, Monahan, Couture, Tavares.

Obviously, William Karlsson is a name that jumps out at you as someone who will likely not be as good as he was last season. At the same time, even if his goal scoring falls off to half of last season, it’s still one fewer than Larkin’s career high for a season.

Is it likely that Larkin will fit in with that group of centers in a few seasons? While I think it’s possible, I think it’s more probable that the answer is no.

Dom Galamini, the creator of the HERO charts, has a player evaluation tool that uses the last three seasons to project a player’s Scoring Tier Probabilities. Basically, the probabilities that a player will become a first line scorer, etc.

The model utilizes an empirical Bayes estimation that assumes near-league average scoring talent for a player. The more data you have for the player, the less the estimation relies on that prior belief.

ownthepuck.blogspot.com - Dom Galamini

While Larkin has a 13 chance of becoming a first line scorer according to this model, it’s almost twice as likely that he will be a second line scorer. That’s not to say that a second line scorer is a terrible thing, but if we are talking about paying him as if he was one of the top 23 or 24 centers in the league, that’s not promising.

Since Couture and Tavares are right at the cutoff for top 23 or 24 center, here are their charts:

ownthepuck.blogspot.com - Dom Galamini

Obviously they have more time in the league, but to belong in that group, Larkin’s next three seasons would have to look like these player’s last three seasons. That’s a big step up. Is it possible? Of course. Probable? I don’t think so.

So to answer the question from the beginning of this section. I think it’s fair to say at this point in his career that Larkin’s ceiling is a top line center, and his floor is a 2nd line center. I think that the indications so far are that he has a stronger chance of being a 2nd line center than a top line center.

3. If you Sign Him to a Short Term Deal Now, What are the Chances That it Will Cost the Team a Lot of Money on the Next Contract?

This is the crux of the debate between a long-term contract and a bridge deal. In order for it to make sense for the team to sign a player in this situation to a long-term deal, they should believe that if he continues on the path he is on, he will cost the team a lot more money on the next deal.

To use the contract estimates from earlier, if the team signs Larkin to a 3 x $5.3M deal (or 4.5 or whatever), rather than a ~$6.3M deal, what are the chances that the team will have to pay much more than $6.3M in the next deal?

As done earlier, since we are talking about multiple seasons, rather than use AAV we should use % of cap. Right now, $6.3M is 7.9% of the $79.5M cap for next season. 7.9% of an $85M cap is $6.7M, and 7.9% of a $90M cap is $7.11M.

Of course we don’t know what will happen with the cap in the future, but in the last three seasons, the cap went up $8.1M in total. That increase over the next three seasons would lead to a cap of $87.6M, so a $6.3M hit now would be right around $7M using % of cap.

There are a few other factors to consider. Larkin will not become a UFA until after the 2021-22 season, his 7th pro season. So a three year bridge deal would end with him still as an RFA, while a six year deal would buy up two UFA years, which should cost a premium.

Also, his being an RFA when his next contract expires would give Detroit more leverage than if it expired with him as a UFA. While Holland’s UFA contracts have certainly left much to be desired in many cases (to put it mildly), he has a history of doing well with RFA contracts, with Mantha’s being the most recent example.

Another factor to consider is that in three years, Larkin will be 25. An eight year follow-up deal would end with him at 33, as opposed to 36 if he were to sign a max-term deal after a six year contract. Assuming he is the captain when he signs his next contract after this current one, which seems a more than reasonable assumption, an eight year contract would not be surprising. I would, however, likely argue for something more like six years at that point.

Taking all of that into account, based on the rest of this article, I don’t think the chances that Larkin has some sort of breakout like Kucherov did, which cost the team a 12% of cap contract, are high enough that it’s vital to sign him to a long term contract.

While as a fan, I certainly hope that he joins the group of top 23 or 24 NHL centers, objectively I think it’s more likely that he doesn’t.

Conclusion

Every writer and analyst, no matter how hard they try, has their biases. Before writing this article, I believed that signing Larkin to a long-term deal was obviously the correct choice. I’m surprised to say that I no longer think that.

While I normally feel that intangibles should not be looked at very much when determining a player’s worth, I do think there is a case to be made that Larkin is likely the next captain, and it’s important to make a long-term commitment to him.

While I see the logic behind that argument, I disagree with it because I think that signing him to a bridge deal will not make a difference in him assuming the captaincy when Zetterberg plays his last game, and all accounts paint the picture that a short term deal will not affect how Larkin feels about Detroit.

I also think there is a reasonable argument to say that if Filip Zadina plays on his line, then he could see a major increase in his points. Larkin has developed into a playmaker role, and if he can feed someone like Zadina, the assists could rain down.

That certainly could happen. At the same time, Zadina could end up on another line. They might not have the chemistry that we anticipate them having. I don’t think it overrides everything else that this article has shown.

So to answer the question raised at the end of the introduction: “Will it be a failure on the part of Ken Holland if he signs Larkin to a bridge deal as opposed to a longer term deal? If so, how big of a failure?”

Before writing this article, I would have said it would be a major failure. Now, I’m surprised to say that I would be completely comfortable with a bridge deal for Dylan Larkin. I will not be upset if they sign him to a long term deal, but if I had to choose one or the other, I would choose the bridge deal.

Poll

What is the better option for Dylan Larkin?

This poll is closed

  • 55%
    5-6 years at about $6.3M
    (344 votes)
  • 44%
    3 years at about $4.5 - $5.3M
    (278 votes)
622 votes total Vote Now