Dr. Burkelove (or, How I Learned to Stop Worrying and Hate Free Agents)

With all the dust settling after the free-agent frenzy, there have been some debates as to what the best strategy is come July 1. Specifically, some have criticized the Leafs generally and Brian Burke specifically for not trying hard enough to recruit top-end free agents (in particular, Brad Richards). 

Now, as some of you may know, I actually have a PhD in psychology. While that doesn't make me a particular worthwhile member of society, it does make me interested in the psychological factors that contribute to success in hockey, such as working memory span, or, more relevantly, incentives.

It has often been discussed as well that players who are ready to hit free agency may try extra hard that last year, so as to land big $$$. In other words, in the year before hitting free agency, players have a huge incentive to perform well. After they sign a big contract, however, the incentive disappears. What this means, of course, is that free agents may not be worth in the future what they were in the past. 

Now while this issue has been discussed a lot, I could think of no place where the numbers have been crunched. So, I decided to have a look at the numbers myself to see exactly how free agents perform before and after signing a big contract. 

Now the first thing I realized when trying to do this is that there are very few good records of past free agents (at least, none that are compiled in one place). So, I scraped together a list of what I considered top-end (or highly publicized) free-agents since 2007. For the full list, you can see the spreadsheet here. I tried to restrict the list wherever possible using a few criteron. 1) They had to be UFAs, and have signed after (or close to July 1). In a few cases, I took people who signed before hitting the market (i.e., they resigned with the team they played with, or the team that owned their rights), but more on that later. 2) they had to have played at least 2 years without UFA prior to signing. In a few cases (Brier, Hossa) they were only on 1-year contracts, only because the previous 2 years had been UFA seasons, thereby making a fair comparison. and 3) They were players of some significance (that is, I knew who they were). As a caveat, you should know that this list is by no means complete or unbiased, so bear that in mind. 

OK, let's look at a few numbers:

What the above table shows you is the PPG obtained in the 2 years prior to signing a contract, as well as the year immediately following. Interestingly, in the years immediately prior to hitting UFA, the PPG average doesn't change much at all. That is, contrary to popular belief, players don't put on a really good year before hitting the market. At least, no more so than they did the 2 years before. If there is an incentive to performing well before becoming a UFA, this lasts for more than a single year.

More importantly, there is a significant and real decrease in production immediately after signing those big contracts. Performance decreases from about .8 PPG to almost .7 PPG, a decrease of 10%. In other words, in a 70-game season, players are going to score only about 63 points after signing a big contract, whereas they were scoring almost 70 points in the two seasons previous. 

Now some of you are probably immediately thinking BUT THIS IS JUST REGRESSION TO THE MEAN! However, if the year immediately prior to signing the contract was a large outlier, we'd expect the values to be much lower 2 years before, whereas it's almost exactly the same. Similarly, this is likely no just the result of aging players getting worse, as we'd expect similar decreases in performance from years -2 to -1. 

Nope, what these numbers show is that when you sign an UFA, you're almost guaranteed to get a worse player than the one that you thought you were signing. 

But what about different UFAs? Are there differences between the types of players who sign long-term contracts for 15 versus those that sign short deals for a year or two? 

To examine this question, I split up the contracts by those who had signed for more than or less than 4 years. What you can see is that those players who sign shorter contracts tended to have a bad year immediately prior to signing. This makes sense, as their market value would have been much lower, resulting in a shorter (and therefore, less lucrative) contract. Surprisingly though, rather then the regression to the mean effect, these players continued to decrease by 7% after their UFA  year. A lot of this is no doubt the result of aging veterans signing 1 or 2 year deals, because if I look at only those players who sign 3 year deals, they stay roughly steady between the -1 and +1 years. In other words, it's worth gambling on a young, mediocre player for a few years, but if he's old, take a pass. 

On the other hand, those big-names who are signing all those long-term deals (Campbell, Kovalchuk, etc.) look like the prize pig in the year before signing those deals, as their point production increases on average about 7% in the year immediately before hitting UFA. However, while wily GMs think they're getting a great deal by locking them up for eternity (remember, you're here forever), those players show a significant drop in performance the year immediately after signing that long-term contract. Again, some of this might be regression to the mean, but notice how their performance drops off so much more so than those who sign shorter deals. Chances are, if a player looks too good to be true, he probably is. Let the nabobs snag him for a decade if they want, chances are they'll come to regret it sooner rather than later. 

This is where Burke's strategy this off-season is brilliant. Rather than burdening the team for a decade with a player who no longer has motivation to play, he signs guys to short contracts who are continually looking to score that next big pay-day, or who are looking for more than just money when singing. (Christian Jerkoff Ehrhoff, I'm looking in your direction).  

One other thing I wanted to look at was the actual value of hitting the UFA market. What about those guys who lock up with their current teams before getting to UFA, presumably because they like where they are, and are interested in taking a pay-cut to stay in the right place. Now I should point out that as far as I can tell, this is a fairly recent phenomenon (or guys used to get locked up long before UFA, such that old websites don't even list them as such). 

What you can see in this table is that those players who get market value for their services tend to drop off substantially more than those who don't. In fact, those players who choose location over money tend to increase their performance year after year. **(In reality, this effect is largely driven by the Sedins, but they still serve as a good example to the rule of players willing to sign in a place they belive they have a chance to win in, rather than looking for a big fat payday and heading to Bufflo instead). 

Again, I think this seals the deal on the current free-agency debate, as well as any one that occurs in the future. Burke's current strategy of signing 2nd-tier UFAs to short-term deals will pay off in the long run. Signing washed-up old dudes to 15-year contracts gets you 8 place for a few years, but it also gets you in a lot trouble cap-wise (as well as skill-wise) a few years down the road. 

That said, there are always going to be exceptions to this rule. But this is where the MSM (and us fans, occasionally) often fail to differentiate true elite talent from a flash-in-the-pan (or even just a good, but not stellar, player). However, signing players just for the sake of participating in the free-agent frenzy is illogical, irrational and completely irresponsible. 

But hey, Sather's gotta do what Sather's gotta do.