A Modest Proposal To Replace The NHL Draft


... you are 18 years old. You are the best in your age group at what you do. The top recruit in a multi billion dollar industry. Tomorrow you will watch a lottery on tv, the results of which will dictate that to continue as a professional, you will have to move 3000 Km away from your home, to work for the worst performing company in your industry. Your first chance to leave your new employer on your terms won’t be for seven years. This bizarre set of circumstances is the reality in North American Professional sports. This is the tyranny of the NHL draft. What follows is a modest proposal for a framework to replace the draft with a system that addresses its inherent flaws while still respecting the need for parity.

"Tanking" and Issues with the draft:

The draft order in the NHL has traditionally been the reverse order of the standings from the previous year’s season. In more recent years a lottery has been instituted, at first only to award the first overall pick, and more recently the top three picks. This has been in part to combat "Tanking" the practice of intentionally fielding a team that is unlikely to compete in order to improve one’s draft odds, and acquire a potentially franchise altering player. While the lottery changes the odds, it does not address the root cause of tanking: That the only surefire way to acquire a good young player is to lose enough games to guarantee the right to unilaterally sign one. The key to breaking this cycle is not to change the odds on which team will get to unilaterally sign the year’s best rookie, but rather to give the players themselves a degree of autonomy, balanced with economic incentives to protect poor performing or small market teams.

An alternative to the draft

Any alternative proposal to the NHL draft would need to address concerns about parity, and ensure that certain teams are not shut out completely from the best new talent, to ensure the health of the league. Major League Baseball actually has a very interesting model for player recruitment, but it is not in the MLB entry draft, rather it is how the league regulates the signing of international amateurs.

The MLB international amateur model

Each year in the MLB, teams have a pool of money that they can spend on signing bonuses for International rookies (around 4 millions dollars). Teams from smaller markets receive larger bonus pools. The rules have undergone a number of changes and iterations, including teams’ pool money being based on the standings of the previous season (So the lowest finishing team would have the most money to spend). Teams also have the ability to trade bonus pool money (though there are a number of rules and regulations to this.)

Why is this model interesting?

It creates a balance between empowering players and teams. Players are given an economic incentive to sign for lower performing/smaller market teams, but are not forced unilaterally to do so. Teams may choose to split their bonus money, signing two $2 000 000 dollar players instead of one $4 000 000 for example.

Obviously the economics and development infrastructure of baseball and hockey are vastly different, with even the top prospects in baseball typically requiring years of minor league service before they can start earning substantial salaries, whereas the top pick in the NHL draft could make almost $4 000 000 in their first year based on performance bonuses,(however most NHL rookies would likely only make around $950 000) so any attempt to create a similar system would require substantial tweaking.

One suggestion would be to scale the salaries a team is allowed to offer on an entry level contract. So for example a large market team that did well the previous season can only offer the league minimum, or possibly one contract with a slightly higher salary (in the 1.25 million AAV range, to still give them the equivalent of a "first round pick") whereas the teams that finish towards the bottom of the standings would be able to offer one player a salary in the $4 million AAV range.

Why would this system be an improvement?

It would afford players choice in their destination, combat the problem of tanking, incentive teams to create better development environments for players and potentially lead to better affinity between players and fan bases, as fans know that players have signed with organizations they want to play for.

How would it combat tanking

You may be thinking "If the worst team still gets the most money to spend, won’t teams still be incentivized to lose?", and admittedly this is partially true. However in giving the players agency, the system would also incentivize building an organization the most talented rookie is going to want to play for. If the fifth worst team can offer a comparable amount of money to the worst team, and has a more promising core of players, they would hypothetically have a better chance at landing the best rookie, while the worst performing team should still be able to attract one of the most talented players by virtue of still being able to pay him a lot of money. Gone would be major incentive to lose a meaningless late season game between two non playoff teams.

What about geographic advantages this could give certain teams?

If a player wants to turn down a substantial amount of money to sign with a contending team, or a team from their hometown? Why not let them? As free agency has demonstrated, players will typically follow the money, and a few feel good stories are unlikely to destroy the system. The existence of the salary cap should help ensure parity even with this new proposed system, as players would quickly price themselves (or other talented players) out of town following their entry level contracts. Furthermore the globalization of the game is such that there are talented players from across the world. While this idea may have seemed unrealistic 20 years ago, in the current landscape the benefits seem to far outweigh any potential drawbacks, from the perspective of both teams and players.

For decades, the ebb and flow of the NHL has been dictated by a combination of random chance and planned ineptitude. Reforming the draft would be a step towards creating a more compelling league without sacrificing the parity that has come to define today’s NHL.

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