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Buyer Beware

Three things are guaranteed to happen once today’s NHL free agent frenzy begins at 11 a.m. central – ridiculously stupid money will be spent, fans will overreact on social media and, in many cases, teams will regret the contracts in three years.

The new CBA limits teams to signing free agents to seven-year contracts, though there is no free agent on the open market this year that should warrant that kind of deal (the key word there is “should”). Still, silly money will be thrown around like it’s going out of style. It’s bound to happen. The Predators could even jump into the fray today. You’ve been warned ahead of time.

For fans, it’s one of the most anticipated days of the NHL calendar year. It’s also the craziest. Players change teams and find new homes like it’s a Chinese fire drill. Watching the frenzy on Twitter as it happens will cause you to reach for the Advil – or step away from your computer altogether.

The free agent frenzy is finally here. Not only will signings go down, but trades have been known to occur as well. It’s why they call it the “frenzy.”

However, the frenzy is where tickets are sold – not where Stanley Cups are won. Successful teams are much more likely to build good teams through the draft versus free agency, especially now in the salary cap era. Just take a look at this year’s Cup finalists as a brief example.

Twelve players on Chicago’s roster were drafted by the Blackhawks. The only key player nabbed in free agency was Marian Hossa, whose contract may be a candidate for a buyout next off-season if the cap doesn’t rise as expected. For Boston, seven players on the roster were drafted and hulking defenseman Zdeno Chara was the only key player obtained via free agency.

On the other end of the token, the Minnesota Wild was the NHL’s big winners last July. Though they will have more success long-term, the combined $196 million they spent on Zach Parise and Ryan Suter yielded just one playoff win in the duo’s first season with the club. It should be mentioned that the Wild find themselves up against the cap thanks in part to Parise and Suter.

There are also examples where spending big in free agency can go terribly wrong. The New York Rangers were the prime example just a few years ago, as Chris Drury and Scott Gomez were enormous busts after fetching a combined $86.75 million on July 1, 2007. Terry Pegula’s Buffalo Sabres are the present-day poster child after wasting $67 million on Christian Ehrhoff and Ville Leino. That single 24-hour period has set the Sabres back for years.

Memo to general managers: Spend your money wisely.

The reason why teams have to be cautious during the frenzy is because of where the players tend to be in their careers. They are 27 years of age or older, and most are on the wrong side of 30. The going rate seems to be a three- or four-year contract, which means teams get the players as they start their career decline (or just crash to the ground altogether).

Nowadays it’s rare for all-stars to hit the open market. Even the ones who do don’t tend to maintain their career averages.

In 2010, Ilya Kovalchuk signed a 15-year, $100 million contract. Before he hit free agency his career points per game average was 1.03; since then it’s at 0.89. Hossa is in a similar boat. In his five seasons leading into free agency, Hossa averaged 1.06 points per games. In the five seasons since signing in 2008 with Detroit, that average has dipped to 0.91 points per game.

Teams will fill needs today, and no one can fault them for that. This is the only time where they can get immediate value without giving up assets. Teams may even find bargains that help them more than expected. In most cases, though, free agents don’t produce or contribute as much as they are expected to when they initially sign.

For that reason alone, GMs around the league must proceed with caution during the free agent frenzy.

 
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