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The Draft Lottery: It's great. It's perfect! But could it be better?

A new, great, perfect idea to change the NHL draft lottery that you 100% are going to hate!

Today is the 2020 NHL draft lottery, and many fans are therefore spending the day trying to cope with gut wrenching anxiety.

There’s a good reason for that – more so than any one game or even season, the outcome of the draft lottery can potentially affect a team’s fortunes for years, even decades sometimes. And that’s the way the league wants it. The NHL has a universal draft, three-year minimum windows for signing rights, and a restricted free agency system in which a team who drafts a player can more or less be assured that they will have exclusive control over him for about a decade. So not only is the draft a way to acquire and keep elite level talent, it is sometimes the only way to do so given the lack of movement among such players once they get into the league.

And while every draft has at least a hidden gem or two, generally the elite, franchise level players are going 1st or 2nd overall. So, the question is: what is the best way to determine which team gets the right to draft these players?

Full stop: If you believe that there is nothing wrong, objectionable, or undesirable about the basic reverse standings order (leaving aside the draft lottery), then you should stop reading. For the rest of you, let’s keep an open mind. A few guidelines:

First, instead of wondering how we fix the current system (inherently shackling the ideas to tradition), let’s think about how we would build our ideal system from the ground up.

Second, let’s not get lost in the weeds of specifics and try to think big picture. We can understand, for example, that sometimes first overall picks flame out, but that doesn’t mean the first overall pick is somehow not the most valuable asset in the draft.

Third, and similarly, let’s think in terms of systemic incentives for decisions rather than just what decisions get made. For example, did the last place team in every season tank? Absolutely not! But does the reverse standings order offer an incentive to do so? Of course.

What are we trying to accomplish?

Alright, so we’re building our system, and we need to consider what our purpose is here. Well the purpose is actually quite simple – we want to get young players in the league with specific teams. Now, in doing so, we have to consider what interests are we trying to achieve and what are we trying to avoid?

1. Facilitating the cycle

This is the most obvious one, because it’s the entire reason the universal draft was instituted in 1969. Prior to that, teams would simply go out and sign junior players to service contract, often having directly sponsored their junior teams. Essentially it was free-agency system – there was no limit or restriction on how many players a team could bring into the fold, sometimes as early as age 14. The league eventually ended the sponsorships, but it took until 1969 before the draft became universal to all junior players and the only means by which a team could acquire their rights.

The reasoning was simple – the league doubled in sized in 1967 and the six new teams did not come with built-in farm systems. Making the draft universal was seen as a fair way make sure all 12 teams had a shot at getting elite players, and ordering it by inverting the standings was meant to ensure that the best players would go to the new teams, who would presumably be the worst ones.

Building off that, our first interest is that we want to make sure that teams have a way of getting better. The reverse standings order facilitates a cycle: team is bad, and therefore acquires good players, and gets better, until those players leave or get worse and the team is bad again.

Obviously, it doesn’t always work out that way in practice. Teams sometimes are bad and stay bad, or are good and stay good. Sometimes teams go through the cycle without high draft picks playing any part in it. However, the reverse standings order draft is still very much set up with this cycle in mind.

Given the existence of the cycle, this brings us to our second interest.

2. Team Agency

Essentially this is a way of saying that we want a system where a team can make reasonable, large-scale managerial decisions to work within that system. If a team is going through a process of dismantling an aging core, the system we have makes it possible and reasonable to focus on removing existing talent from the roster (hopefully for assets). This allows the team to transition their team towards emerging talent, while likely positioning them better in the draft.

This may seem similar to the cycle interest, but the point here is that we want the teams to have a measure of predictability and agency over their own cycle. However, that leads to a problem, which is our third interest.

3. Competitive value (or, dissuading tanking)

The first two interests served by the draft lead to an inescapable conclusion – at certain times, it is better for a team to lose than to win.

As I said at the beginning of the article, some people may not see any issue with tanking, or the process of a team intentionally aiming to lose games to secure a better draft position. Some see it as the purest expression of managerial agency – if a team chooses to ice the worst possible roster, then it is their right to do so if it secures them a better position.

While I agree with the agency aspect, I think a good system would be one where tanking is not incentivized, at least not quite as heavily, for a number of reasons. Firstly, it hurts the competitive integrity of the sport when one team (managerially, certainly never the players themselves) is incentivized to lose. Secondly, it harms the teams themselves by incentivizing a race to the bottom rather than allowing the cycle to flow naturally – teams that "tank" can and have done long term damage to themselves by outracing other teams to ice the worst possible roster. Third, and most importantly, it’s harmful to the entertainment value of the sport. While fans should, can, and often are on board with a tank season, this is purely a recognition of the incentives that, in a better system, would be removed or at least lessened.

The league has in fact done just that by instituting the draft lottery in 1995, thereby reducing the odds of the first pick for the last place team and increasing the odds of picking one spot lower. In 2016, they smoothed these odds even more and began drawing lots for the first three picks, meaning the last place team is guaranteed no higher than the fourth pick.

It’s a good countermeasure to be certain, but an imperfect one. It removes the incentives for tanking by introducing a measure of randomness, which is good for competitive integrity but comes at the expense of managerial agency. Additionally, it does nothing to resolve our fourth and last interest.

4. Player agency

Like tanking, this will be controversial. Some may not feel that giving agency to young players is important, often because it can come directly at the expense of our first interest of allowing bad teams to improve.

However, I don’t think it should be discounted entirely. For top selections, the draft determines which team will hold a players’ rights for a minimum of three years, and sometimes indefinitely. Once a player signs with that team, they control his rights for anywhere from seven to ten seasons. When it comes to agency, a player must choose between forgoing choice for his first seven to ten seasons (or virtually the entirety of his prime years of play) or potentially forgoing the first three to four seasons of playing in the NHL at all. Now, once again, it often does not quite work out this way in reality – if a player does not want to play for a team they can leverage the withholding of their services to force movement, sometimes even to a specific team. However, that is leverage, and we are talking about a collection of incentives.

The draft, in particular, creates one set of incentives where a player could have more benefit from not being selected at all. Obviously in real life, undrafted players would tell you differently, because the unselected tend to be late bloomers at best. However, think of this way – if the draft were optional for players, would anyone of them take that option? What if it were optional to either be drafted at age 18 or choose a destination team at age 19?

Finally, this incentive conundrum applies even more heavily to top prospects. Their reward for achieving the status of top draft selection is often to play for the worst team. Obviously in real life this is not enough to dissuade any players from wanting to be the top selection, but once again, we are talking about structural incentives, not just how they play out.

2020 CHL/NHL Top Prospects Game

"Everybody talks about which team needs Alexis Lafreniere. Why doesn't anybody ever talk about what Alexis Lafreniere needs?"

The Options

The various options that have been proposed all have their own strengths and weaknesses. The idea of a pre-1995 draft with no lottery is great for the cycle, but does little to dissuade tanking or give players agency. Similarly, getting rid of the draft altogether is great from team and player agency alike, but likely makes it difficult to facilitate the cycle for many teams.

Some creative options such as the Gold Plan do a great job of balancing the cycle with competitive balance, but ultimately may result in a number of unintended consequences and end up in a state of essentially pure randomness. That's certainly not the worst option, but it doesn't really do much to include team and player agency in the mix.

Key Lessons

I want to end this section with a conclusion about what the successes and failures of various systems can teach us about how a system can properly balance all the interests. Here are a few:

1) The system only needs to apply to the first round of the draft. It’s well documented that draft pick value drops down dramatically in each of the first five picks, then hits a cliff and continues to drop for the remainder of the first and second round before more or less plateauing by the end of the second round.

Additionally, the second round matters infinitely less for the purposes of incentives than the first round because every team has had an opportunity for a selection by the second round. In other words, no team would tank for the 32nd overall pick.

2) We want some connection between performance and draft pick priority, given that we use performance as a measure of which teams need the most help. This allows teams to facilitate the cycle with some agency.

3) Conversely, we also want something to make sure the connection between performance and draft priority is not complete, and it is better that this break in connection is related to agency rather than randomness.

4) Based on this, we want to strike a balance between helping the cycle without making the top selections an absolute reward for either poor performance or random luck.

5) Finally, we want to involve the players themselves in this process, and make agency to choose which team a player will spend the first half of their career with a reward for achieving the success of being a top prospect.

Well, this seems like a tall order, but luckily, I wrote this article so I know just how to solve it.

The Weighted Auction

This solution boils down to a simple idea: get rid of the first round of the draft.

That’s probably a misnomer, as really what you end up with is the same seven rounds. However, the idea is that every year, each team is given a slot to sign one draft eligible player to an entry-level contract. After 31 players sign, they are removed from draft eligibility and the draft continues (or starts, really), with the "first overall" pick being someone who is essentially being selected in the second round.

Now, some of you might already have caught that this is hardly different from abolishing the draft totally, as I said that one of the lessons is that all these considerations only apply to the first round. And that’s true, which is why I’ve added a second rule.

Each of these ELCs will be special in that they can carry higher bonuses than the normal ones can (currently capped at $2.85M), let’s say somewhere in the realm of $4-$4.5M, and all the bonuses are based on individual performance, not team performance. This includes things like ice-time, points scored, point per game, relative ice-time, etc.

Like the draft abolition idea, this significantly fulfills the interests of managerial agency, competitive integrity, and player agency. However, unlike a full abolition, you can see part of this idea includes incentivizing top players to sign with teams who require their services immediately and are therefore more likely to be bad. Plus, there’s one other portion.

The amount of bonus money a team is eligible to offer a player is inversely proportional to where the team finishes in the standings. The 31st place team will be able to offer whatever player they sign the full amount of performance bonuses, while the 30th place team will have slightly less, the 29th even less, and so on until the Cup winning team which will have the lowest amount (for example, say somewhere in the realm of $300k, hypothetically).

This results in a system where the top prospects will have a two-pronged financial incentive to sign with lower-seeded teams. Firstly, those teams will have greater amounts of bonuses to offer them. Secondly, those teams will have more opportunity for top prospects to hit the achievements necessary for the bonuses, as presumably these teams, being worse and most in need of elite talent, would be able to slot these players higher into the lineup than other, better teams.

In this system, finishing last does not translate to guarantees of priority on a top prospect, but it certainly offers an advantage to courting one. It’s a system designed to take the advantages of draft abolition but put checks on the drawbacks, while offering a better balance between our four interests than any other system.

McDavid

What if teams could bid on Connor McDavid signing with them? Many of you hate this smart idea.

Now, let’s get to those objections:

1) This will just allow bad teams to miss out on top players and have good teams swoop in instead!

Yes, that is a possibility, but as is the point of this system, were trying to create a balance between all of our interests. A system that where standings position is the sole deciding factor in priority puts the balance too far in favour of one factor at the expense of the others.

2) It seems like there’s very little difference between finishing last and finishing second last in terms of priority.

As is the case currently, where lottery odds gradually decrease in reverse standings order. That's sort of the whole point - we don't want finishing last to guarantee getting the first overall pick.

3) Some teams will just be at a permanent disadvantage because players don’t want to play there.

Maybe. We have that in UFA as well, and it’s so far not been a reason to do away with that system. Teams find a way, and remember that not only does every market have something to offer, but every team has a slot to sign one of these players. We have to come back to the idea of balance of all our interests, and one in which the top players have no say in the most important determination of their careers does not.

4) This will never happen.

True. There has never been a voice willing to advocate for more rights for young players, which is a huge part of this system, so it's hard to see it gaining enough support. But that doesn't make it a bad idea. Or even not the best one!

Conclusion

As I said from the outset, if you're someone who thinks that there is no problem with tanking, you're going to hate this idea, and you probably hate the draft lottery anyway. There will also be a lot of you who object to the idea of giving players any choice about where they start their careers. In the end, the point here is to nudge the system in a direction that balances the various interests more than the current one does.

The weighted auction gives an advantage to the worst teams (facilitating the cycle), while also not guaranteeing priority to those teams, thereby helping competitive integrity. Rather than resolving that contradiction with the randomness of a lottery, we've introduced an system that prioritizes both team and player agency.

The weighted auction gives an advantage to the worst teams (facilitating the cycle), while also not guaranteeing priority to those teams, thereby helping competitive integrity. Rather than resolving that contradiction with the randomness of a lottery, we've introduced an system that prioritizes both team and player agency.

Plus, wouldn't the courting period be so much more fun than watching a glorified bingo call?

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It feels like this should not be the most exciting moment of the season for fans of professional hockey teams...

- KungFu Canuck

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