Myth-busters: Disproving the Idea that Stamkos “Left Millions on the Table” to Re-sign in Tampa

This article is being co-posted on Maple Leaf Hot Stove as well as on my own site, Find me @michael_zsolt on twitter. Author’s note: for those who noticed – my apologies for the 4+ month gap between articles in this ‘Myth-busters’ series. This piece has been about 80% complete since September, though between my day job and hockey consulting work I have had limited time to write. While Stamkos’ contract negotiation is now very old news, the analysis herein remained meaningful, so I figured I would finish this up and publish regardless.

 As introduced in my article in September on the topic of the Leafs use of analytics, this piece will be the second of my ‘Mythbusters’ series. The point of this series was to write a short set of articles that use data and objective analysis to try to go against the grain on some of the narratives that came out over the summer of 2016.

In this article – my topic will be the (now ice-cold) Steven Stamkos free agency situation. Although I am posting this on Maple Leafs Hot Stove, this ‘myth’ is one that has been spread around the league at large. Rumors of Buffalo or Detroit offering Stamkos an AAV of $10-11M+ had people suggesting Steven left an annual $2M-3M+ ‘on the table’ to stay with Tampa. Stamkos was sometimes quoted as having “taken a big pay cut for the chance at a cup”.

Today, I will argue that – although those teams or Toronto may have given Stamkos ‘headline’ contract offers that are significantly above the $8.5M AAV he ultimately took in Tampa Bay – Steven actually maximized his own income by staying in Tampa. The most important factor here will be estimating the tax impact of Stamkos’ hypothetical contract offers – which we will get into shortly.

Most people give Steven credit for the facts that he is the franchise player in Tampa, he is loyal to his teammates, he is the team captain, and is on a team that has been in two consecutive conference finals – but not many give him credit for actually making just about as much money as possible as well.

So – putting aside Stamkos’ current injury and reflecting back to his time of signing – lets dig in.

Situation Recap

Last spring, I wrote two articles about Steven Stamkos: one estimated Stamkos’ market value, and the second was a long term analysis of the Leafs’ salary cap – to see if they had room for him in their ‘plan’. In these, I argued Stamkos’ was ‘worth’ anywhere from $9.5M to $10.5M of AAV for the maximum possible term, and that the Leafs should attempt to sign him for the $9.5M-$10M range.

As we all know, Stamkos ‘shocked’ everyone by re-signing with Tampa Bay days before reaching free agency (granted – he had had the chance to speak to other teams), at a contract value that had previously been released publicly – $8.5M over 8 years. But did he ‘leave money on the table’?

Adjusting Stamkos’ Contract for Tax Implications

It is easy to discount the impact of taxes – especially when it isn’t your money. Unfortunately, the fact of the matter is that no employed person in North American walks home with their ‘full’ salary in hand – the tax-man has to take his slice first. Depending on the region, someone who ‘makes’ $50K per year may take home $40K, and someone who makes $150K will keep maybe $115K – and the highest brackets are even more impactful when these numbers become millions.

Looking at fully-burdened income tax rates (including both federal and state/provincial), Ontario and Florida are at opposite ends of the spectrum – Ontario’s top tax bracket being ~53% and Florida’s being ~39% (source: . In order to illustrate this impact, the chart below shows what each team has to pay (on the y-axis) in order for Stamkos to receive a given amount of take-home pay (on the x-axis).


This is bit of a simplified approach, so to clarify some of my assumptions:

  • Only applies the highest tax bracket (rather than each marginal bracket), which usually takes affect after a couple hundred thousand in income
  • Combines all levels of taxes (federal, state/provincial)
  • Excludes minor taxes/fees associated with playing away games in different cities/states
  • Ignores the impact of escrow – which would hit all teams equally as a percentage

What does this chart tell us? Quite simply – for Steven (or any player) to take home the exact same amount of money, Tampa Bay can pay him considerably less than other teams on an AAV basis, and still be ‘matching’ or exceeding the offers on a ‘actual take home pay’ basis. This amounts to a substantial financial competitive advantage for Tampa Bay (or the Florida Panthers), and a distinct disadvantage for high tax region teams like Toronto.

Now, given the public storyline was that Stamkos’ top two choices were Tampa or Toronto, let’s see how this would have made hypothetical offers to Stamkos from Toronto and Tampa Bay look on an ‘actual take home’ pay basis.


As you can see – if TML had offered my proposed $9.5M to Stamkos, Steven would only get to keep ~$4.5M per year. At the $8.5M offer that he ultimately accepted from Tampa, the much superior tax rate allows Stamkos to take home pay of $5.2M, a gap of $700K per season!

For Toronto to have matched Tampa’s $8.5M AAV offer, it would have cost them $11.1M AAV per year on Stamkos, which was undoubtedly outside of the range that Lamoriello, Pridham & Co were willing to accept. Put differently – in order for Tampa to match a hypothetical $9.5M AAV offer from Toronto, they would have only needed to give Stamkos $7.3M.

The table below summarizes how this tallies up over the life of his contract, including the fact that Tampa can give him one more year than any other team:


And – just to be comprehensive here – thanks to TSN’s helpful after-tax take home pay calculator (, anyone can see that even if Buffalo or Detroit offered Stamkos $11.0M AAV, they only come out at $40.2M and $41.7M in after tax total contract value, respectively – essentially matching the existing offer that Tampa Bay had already made.


 Financially speaking, it should now be clear that Steven did not ‘leave money on the table’ to stay in Tampa – in fact, he made just about the maximum possible amount when compared to rumored offers from other teams. Further, I haven’t spent any time in this article looking at the wide range of other factors that could have caused Stamkos to want to re-sign in Tampa, including:

  1. Stanley Cup Competitiveness (near term & medium term)
  2. Steven’s Role & Contribution (as Captain)
  3. Total Financial Compensation
  4. ‘Legacy’ Potential
  5. Geography (proximity to friends and family)

Tampa certainly outperforms Toronto on (a), and (b), above, and we just showed he was actually maximizing his total after-tax compensation (c) by staying in Tampa as well. Sure – Toronto would be close to friends and family, and be an unbelievable ‘legacy’ (should he have helped the team become a contender) – but it is hard to knock a superstar athlete for prioritizing the team he captains, who is a regular Cup-contender, that has also given him the best financial offer. It should be no wonder to us as outsiders that Yzerman succeeded again in a long, drawn out negotiation where his offer was fair – and final.


Does Stamkos Fit in the Shanaplan? A Long Term Analysis of the Leafs’ Salary Cap

This article is being co-posted on Maple Leafs Hot Stove as well as on my own site, Find me @michael_zsolt on twitter.

“We have a five year plan that changes every day” – Lou Lamoriello

I recently wrote an article focused on estimating the value of Steven Stamkos’ production over the next seven years. In it, I concluded a ‘fair’ price for a player of his caliber would be $9M-$10M for the maximum term (7 years). Further, I suggested that – given Steven’s negotiation position resembles an auction – we should expect Stamkos to find a team willing to give him the high end of that range.

So, the next logical question posed by fellow Leafs fans:

“OK – Stamkos is worth a lot. But does it make sense for the Leafs to pay him that much?”

In this article I will walk through a detailed review of the Leafs’ cap over the next 7 years, and the strategic questions facing them. Looking at this analysis, my own conclusion is that Toronto should definitely attempt to sign Steven Stamkos – however, like in any negotiation, they should do so own their own terms, and only in a manner that fits within their broader salary cap strategy.

So – let’s get into it.

Approaching Long Term Salary Cap Analysis

Teams must consider a wide range of factors when planning their long term salary cap management. Besides ‘team-level’ factors, like on-ice strategy and their ‘competitive window’, there are a range of factors that must be evaluated for each individual player signed (on both a near term and long term basis):

Naturally, writing an article that goes in depth on all of these topics would take thousands of words – so I will have to narrow my focus somewhat. Today I will be focusing strictly on the financial side: how to analyze a team’s salary cap strategy and contract commitments over the long term, and what that tells us about the Leafs’ decision to pursue Steven Stamkos.

Before getting into the Leafs’ cap situation, I want to first talk about (i) the principles behind this type of analysis, and (ii) an example of a team who has managed their cap along these principles in the past.

‘Asset-Liability Matching’

A major principle used by financial services companies is the concept of ‘matching’ assets to liabilities. In the case of banks, insurance carriers, and pensions – this means forecasting the future payments to their clients, and then building portfolios of assets (investments) to match when those liabilities will become due over time.

This line of thinking is extremely applicable for the strategic management of a salary cap. In the NHL the ‘assets’ are players – represented by a bottom-up forecast of each player’s individual production – and the ‘liabilities’ would be the length and term of each player’s contract. Production could be considered as either basic goals/points or as advanced stats like Goals Versus Threshold (GVT)/Goals Above Replacement (GAR).

The objective of this exercise is to closely match the value of your players (assets) to the cost you incur to secure them (liabilities) over time – while maximizing total value. In the interest of time, I will not be building a Stamkos-like production forecast for the entire Leafs’ roster. Instead, I will focus strictly on the liability side of the equation, and try to build up the estimated contract dollars and term for all of TML’s future ‘core’ players.

Before getting into the Leafs, let’s look at an example of an organization that has applied this approach beautifully in the past.

Salary Cap Management: Best Practices

Despite their recent 1st round exit, Stan Bowman’s Chicago Blackhawks represent one of the model franchises in today’s NHL (as I have previously written about). Borrowing a chart from that article, you can see that Bowman has been able to closely match each player’s proportional contract dollars and total production, when compared to the team as a whole.

Hawks - roster construction

As you can see, most of Chicago’s top 8-10 players in AAV (average annual value) closely match their top 8-10 players in terms of Goals Above Replacement – with many ‘outperforming’ their cost to some degree (e.g. Saad).

Looking at Chicago and others around the league, the best practice appears to be assembling a ‘core’ of players that can be secured for the long term. These core contributors typically represent ~60-80% of the team’s cap, while the remaining 20-40% can be dedicated to short term contracts, strong prospects on ELC deals, and cheap, role-playing replacement-level players for depth and filling specific needs.

Now – enough pre-amble – let’s talk about the Leafs:

TMLs’ Long Term Cap Strategy

 To analyze the Leafs’ salary cap, I will to look at:

  1. Current contract commitments
  2. Estimating future cap constraints
  3. Estimating future commitments to ‘core’ players

Ideally this analysis will both help us understand Shanahan, Lou, (and namely, Brandon Pridham’s) plan for the organization, as well as whether or not Stamkos fits within it.

To be clear: the upcoming analysis uses almost entirely estimates and will require many placeholders to complete it. As a result, this analysis as a whole should be considered ‘illustrative’.

TML’s Total Contract Commitments

 Given the NHL has a 50 contract limit per team, let’s start by looking at how many players the Leafs have committed to over the next seven seasons (all data here is courtesy of

Leafs Contracts

(Note: Although the league limit is 50 contracts per team, General Fanager caveats that six of the Leafs’ contracts in 2015-2016 are exempt: Zaitsev, Marner, Dermott, Kaskisuo, Nielsen, and Timashov)

Beyond the 2015-2016 season, Toronto has a solid amount of flexibility in terms of total contracts. However, the number of contracts is likely the smallest piece of the puzzle, and salary cap dollars will be the more important factor.

Historical/Future Salary Cap Growth

In order to have a meaningful projection of the Leafs cap, we first need an estimate of their future cap constraints. To gauge that, let’s first look at the growth of the salary cap over the last 10 years:

Historical Salary Cap

This chart shows the NHL salary cap can change dramatically over time – it rose from $39.0M in 2005-2006 to $71.4M this year – a CAGR (compound annual growth rate) of 7%.

However, we shouldn’t assume this rapid growth will continue – especially given the recent weakening of the Canadian dollar. Instead, I have projected the future annual salary cap growth rate to be roughly ~3% on average, shown in the chart below.

Projected Salary Cap

Given the NHLPA’s tendency to use its ‘inflator’ clause, along with the general currency inflation rates in Canada and the US being in the 2-3% range, I consider this 3% estimate to be a conservative assumption. Although the chart above will likely be wildly incorrect on a year-to-year basis, over the long term it will serve our purposes of providing a conservative estimate to be used going forward.

Leafs’ Existing Contract Commitments

 Now, let’s look at the contract dollars the Leafs have already committed against their salary cap:

Leafs Contracts - Projected

Much like the last chart, you can see the Leafs have some flexibility for the upcoming season, with roughly ~$16M of cap space available (assuming the 3% growth materializes). After 2016-2017, the Leafs have a huge amount of cap space available – in large part thanks to their trades of Phil Kessel and Dion Phaneuf over the last two seasons.

Although the upcoming sections will be focused on the 3+ year future for the Leafs, for anyone interested in a detailed review of the 2016-2017 and 2017-2018 Leafs rosters on a player-by-player basis – check out this great post by @yakovmironov from Bloggers’ Tribune.

TML’s Future ‘Core’ Players

When looking to the Leafs’ future, I will focus my efforts on the Leafs’ ‘core’ players and rough estimates of these players’ future contracts. As the Blackhawks’ strategy shows, the other ~40 contracts will likely change on a year-to-year basis, so it makes sense to focus strictly on the major assets. Although some other players may warrant inclusion, I think most fans would agree on the following guys:

  • Nazem Kadri
  • William Nylander
  • Mitch Marner
  • Auston Matthews (assuming they take him)
  • Jake Gardiner
  • Morgan Rielly
  • Nikita Zaitsev (assuming Zaitsev plays out as hyped; otherwise, consider him a top-3 D placeholder)

Of these seven guys, the Leafs recently locked up Rielly and Kadri until 2021-22 – six years each – and have three years left on Jake Gardiner’s contract. Of the players omitted, the strongest argument for inclusion would be JVR. Given Van Riemsdyk’s UFA deal will likely be significantly more expensive than his current one (at $4.25M AAV until 2017-2018), I have not included him in the ‘core’ group; however, I will re-visit JVR later on.

Let’s look as this group as a whole in terms of dollars that have been committed to them to date:

Core - Commitments

Notably, the Leafs’ don’t currently have an answer for their long term option in net. Maybe Reimer returns or maybe Kasimir Kaskisuo becomes the long term option – it is too soon to say. Regardless, having a #1 goalie is essential to any teams’ success, so I have included a placeholder for the Leaf’s future goalie in my analysis.

Forecasting the Leafs’ Next Seven Years of Salary Cap

Although the Leafs’ core players don’t have huge contracts yet – those deals will eventually come. The issue Stamkos presents is 3-5 years down the road, when many of these young stars need new, big-dollar deals. In order to understand how much space the Leafs could offer to Stamkos while not sacrificing their top young talent, I have estimated the AAV of each core player’s next contract. To do so, I simply picked a relatively comparable player for each and used the comp’s AAV as a proxy (see footnotes for specifics).

The next two charts summarize a high-level view of the Leafs’ future cap situation, both in absolute dollars and as a percentage. I have included Steven Stamkos for the sake of illustration.

Leafs core projected - aav

Leafs core projected - cap percentage

Looking at the charts above, I think there are reasonable grounds to argue the Leafs should pursue Steven Stamkos, given:

  • The Leafs project to have ~$25M in cap space remaining in their tightest future year (2019-2020), representing 30.4% for non-core players, almost exactly the amount of the 2014-2015 Blackhawks
  • Assuming long term salary cap inflation, this number continues to slowly decline thereafter

Based on the above, I think it is safe to conclude that there is space for Stamkos within the Leafs’ future salary cap space. Naturally, we could debate the appropriate number to project for each player, but treating the ‘core’ as a whole, I think the outcome will be largely the same. Some fans may argue they would rather have 3 or 4 more of the current Marlies for 4-7 years than have Stamkos; however, I personally subscribe to the view that NHL teams require ‘elite’ talent (15-20+ GAR) to win a Stanley Cup – and not just a lot of ‘good’ talent.

One last note: including JVR at $6M per year starting in 2018-2019 would put the Leafs at 77% of the cap allocated to a core of 10 players (in 2019-2020). I think this is the absolute high-end of the range to give to a core group. That said, it would be hard to argue with the strength of that set of top 6 forwards and top 3 defensemen, all ideally supplemented by a goalie that deserves the $6M per year being allocated to his position.

Before wrapping up, I want to touch on two final areas: mitigating ‘over-payment’ risk, and TML’s negotiation strategy.

Minimizing Over-payment Risk

Many fans are concerned that signing Stamkos’ could create a cap drag in the last 3-4 years of his deal. Generally, I agree that this is a reasonable concern – but as I mentioned earlier, I believe the Leafs should attempt to sign Stamkos, but only do so on terms that fit their own strategy and needs.

The Leafs can limit their over-payment risk by refusing to give Stamkos a full No Move Clause (NMC) or No Trade Clause (NTC) – instead, they should only offer deals with a modified NTC (allowing Steven to list ‘X’ teams he will accept a trade to). A modified NTC is a strong hedge against the potential downside of the Leafs overpaying Stamkos, as even if he declines, they likely will be able to offload him for some combination of picks, prospects and retained salary. There happens to be a clear precedent for this clause in Stamkos’ UFA comparables  with 50% of them (Ovechkin, Nash and Kessel) having agreed to modified NTCs. Last, the Leafs would also be wise to front-load Steven’s cash compensation (salary), to increase his outer-year appeal to ‘budget’ teams that are cash-poor but have ample cap space.

Side note – @yakovmironov also included a great table in his article that summarizes the production of many 33-year old NHL players (Stamkos’ age in the final year of his contract) –it isn’t as bad as you might think.

Approaching the Stamkos Negotiation

Based on all of the information above, I think the Leafs should give Stamkos an ‘opening offer’ of $9.5M for 7 years, including a modified NTC for the duration of the contract. Depending how the negotiations proceed, I would recommend Toronto be willing to increase this offer up to $10M per year, and to reduce their NTC to only the final 3-4 years of his term. I personally suspect that if Stamkos has interest in coming to Toronto in general, that he would be willing to accept somewhere in this range. However – as in any negotiation – it is essential Toronto knows their maximum offer, and that they are willing to walk away from the deal if Stamkos pushes for anything beyond it.


Overall, I think the Leafs would do very well to try to sign Steven Stamkos this July. Stamkos is an elite shooter, a former first-overall pick, and a potential captain who could lead Toronto through a key stage of their rebuild. Projecting forward the Leafs’ core talent shows there should be a reasonable amount of room in the Leafs’ cap space for him, while keeping roughly ~30% of their salary cap to be allocated outside the top ~10 players on the team. Finally, by only offering Stamkos a contract that includes some version of a modified NTC – and otherwise walking away – the Leafs can carefully mitigate their biggest risk in this contract while also signing a hugely valuable asset at the same time.

In the end – I suspect the Leafs’ front office has a very clear view of their current long term roster construction plans, approach to salary cap management and their strategy for negotiating with Stamkos and his agent. As a result, all that is left for us fans to do is to sit back and count down the days until July 1st.


Valuing Stamkos: Estimating What Steven’s Next 7 Seasons are Worth

 This article is being co-posted on Maple Leafs Hotstove as well as on my own site, Find me @michael_zsolt on twitter.

 All season long, Toronto fans have been talking about Steven Stamkos. It is well known that Stamkos will be an unrestricted free agent (UFA) this July. This means that – you guessed it – Steven Stamkos could become a Leaf. Naturally, if it happens, many fans have presumed Stammer would be named captain, immediately become the face of the franchise, and lead the Leafs through its centennial season and beyond.

As a result, many have also asked – what is Steven Stamkos worth? Assuming he reaches UFA status, what will it cost the Leafs to sign him? Does he deserve the same type of money as Kopitar, Kane, and Toews? Back in January, Ryan Kennedy over at made some reasonable comparisons and suggested that he sees Stamkos as being worth roughly ~$9M in AAV. Full credit to Ryan – as that was earlier in the season and somewhat different situation – however, in this article I will argue that it is extremely unlikely that any team, Toronto included, will be able to sign Stamkos for an AAV of less than $10M, or for much less than the maximum term of 7/8 years.

Before getting into the approaches to valuation, let’s look at some of Stamkos’ key statistics to understand exactly how he adds value.

Stamkos’ Goals Above Replacement (GAR)

Stamkos GAR BARs

 (If this data doesn’t mean much to you – I recommend you check out my summary of the practical applications of Goals Above Replacement).

For individual player analysis, GAR (Goals Above Replacement) can be a useful starting point to illustrate the big picture. Looking at Stamkos’ GAR shows us:

  • He performs at an elite level, hitting 15-20+ GAR all but his rookie season, something done in fewer than ~6% of all player-seasons
  • Stamkos contributes value to his team almost entirely through his offensive play:
    • 95% of Stamkos’ career GAR comes from his offensive ability, approximately 2/3rd of which coming from his shooting percentage (15.2% at 5v5) and 1/3rd from his impact on shot-rates (Corsi For)
    • At times over his career he has been a slight defensive drag to his team – but ultimately he is a relatively neutral contributor in non-offensive areas
  • As noted in the chart, Stamkos’ 2012-2014 results may not be indicative of his capability as the seasons were impacted by the lockout and his broken leg, respectively

We likely didn’t need GAR to tell us any of the above, as many would know most of this from simply watching Steven. However, GAR will be important to keep in mind for when we estimate Stamkos’ value later on.


Next, I have copied Domenic Galamini’s WARRIOR chart of Stamkos, showing Steven’s relative performance within the league on a number of metrics. For those not familiar with WARRIOR charts, Dominic provides a great summary here.Stammer solo

Looking at this chart confirms the following:

  • Stammer is an elite scorer and a solid playmaker, scoring very high on Goals/60, Primary Points/60, RelCF60 and RelxGF60
  • Stamkos should not be considered a two-way forward: his defensive contribution is sub-par, as shown by his shot/goal suppression (CA60Rel/xGA60 Rel)
  • As a result, when valuing Stamkos, we should be comparing him to similar elite shooters (e.g. Ovechkin, Kane, Perry), as opposed to the leagues’ finest two-way forwards (e.g. Toews, Kopitar, Bergeron)

Given that elite shooters don’t always excel at driving 5v5 CF%, it will be important to keep in mind shooting percentage and power play results when comparing Stamkos to other players.

Before we get into valuing Stamkos, let’s quickly look at the qualitative side of the equation.

A Note on Intangible Factors

Although the hockey analytics community tends to discount ‘intangible’ factors, I personally consider them very meaningful. Consider: if you have two players with similar stats – would you pay more for the driven, hard-working, high-character guy, or the player who demonstrates none of these traits?

We all know Steven Stamkos is a strong leader. Last season he captained his team to game six of the Stanley Cup final. He also has an incredible work ethic; he is well known for his rigorous offseason training with Gary Roberts. While these strong intangibles are difficult to quantify, they still should play a meaningful role in justifying a premium valuation for Stamkos. But first – what aspects can we quantify?

Approaches to Financial Valuation

In the world of corporate finance – buying and selling companies – great effort is spent attempting to value the businesses being acquired. Generally speaking, there are two approaches:

  1. Relative (market based) valuation methods
  2. Intrinsic valuation methods

Let’s start with relative valuation methods.

Market Based Valuation: Comparable Company Player Analysis

For investors, ‘comparable company’ analysis is a key aspect any deal. The valuation multiples of companies across an industry (e.g. ‘Enterprise Value / Earnings’) set the baseline for determining what the price should be for a similar one. As many readers will know, the exact same approach is often applied to players: we can look at a set of comparable elite shooters to help derive a benchmark for Stamkos’ market value. Keep in mind – relative valuation methods like comparables tell us what others are willing to pay for an asset (the market), not necessarily the inherent or ‘true’ value of it.

Using Corsica’s Similarity score feature, focused specifically on Stamkos’ most important stats (e.g. G/60, P/60, Sh%), I have arrived at the following set of comparables. All players listed below had a similarity score of at least 85% with Steven. I have also tried to present this similarly to how it is done in finance:

Comp Table

(Note – All data shown is all situations, except where specifically noted).

As you can see, few players in the league score goals and contribute primary points at the same rate as Stamkos. Compared to this set as a whole, Stamkos outperforms the group average for all metrics listed, except for the Corsi stats and FirstA/60.

However, for this analysis to truly be relevant, we can only really compare Steven to players in the same free agency situation when signing, i.e. UFAs. As such, I have highlighted the four UFA players that I consider as having the most comparable performance statistics to Stamkos: Patrick Kane, Alexander Ovechkin, Evgeni Malkin, and Corey Perry. I have also shown their four-player average at the bottom of the table. As you can see, Stamkos is neck and neck with these players on every metric.

In terms of dollars, these four players averaged an AAV of $9.7M, and had an average term of the maximum 8 years. Considering that these players are also not historically known for their exceptional leadership qualities – which Stamkos has in spades – you can begin to see the case for Steven to be earning $10.0M-$10.5M+ per season.

Intrinsic Valuation Methods

In financial markets, the other approach to valuation is using ‘intrinsic’ methodologies – e.g., trying to derive what is a company is worth in an absolute sense. When valuing a company, this is based on the discounted ‘present value’ of a company’s future cash flows – how much money a company will generate cash for its new owner in the future.

My view is that the best ‘intrinsic’ player valuation method available based on public stats is using GAR, which I introduced at the beginning. The first approach I will use is valuing a player based on his historical GAR score, which I have shown previously. The second is a new approach, where I will show a high level attempt to forecast a player’s future GAR – and use that to derive what he should be paid. When we have confidence in a forecast for a player – (which I won’t necessarily say about my own Stamkos GAR forecast today) – forward-looking analysis will be the most ‘pure’ measure we can use in valuation.

Historical GAR

First I will plot Stamkos on the Fair Market Value curve, in order to see what he is worth based on what he has done historically. Typically I would encourage using a 3-year average GAR – however, due to the issues of the lock-out season and Stamkos’ injury, I will instead use his career average (ex-rookie season) GAR of 22.

Historical GARLooking at this chart shows:

  • Stamkos’ career Avg GAR/season of 22 values him at $10.8M in AAV
  • However, historical GAR will tend to over-estimate a player’s value, as it is backward-looking, and does not adjust for how players decline with age
  • As such, though this is a useful data point, we should take it with a grain of salt

Forward-Looking GAR: A High Level Estimate

To truly estimate a company’s, or players’, intrinsic value we need a forecast of how it/he is going to do in the future. Of course, like any prediction, this type of estimate is inherently flawed and almost never is how reality actually plays out. However, creating a forecast can help us to see some reasonable scenarios of how Steven might perform in the future. To do this, I will combine his past performance with the aging curve of a typical NHL forward.

Fortunately for us, part 2 of Moneypuck’s Building a Contender Series has an excellent chart that summarizes the league-average GAR aging curve for forwards (is anyone tired of me referring to this series, yet?):

Moneypuck GAR Aging curve

(Source: Moneypuck)

In order to connect this to Stamkos’ expected performance, I will use a rather blunt methodology of simply applying the same absolute value of decline in GAR score showed here to ‘extend’ forward Stevens’ historical performance. The most accurate way to do this would likely be to base Stamkos’ long term decline on how his comparables declined at the same age. However, for the purpose of brevity, I will use this simplified approach to help illustrate the methodology.

Stamkos GAR Forecast

In the chart above I did the following:

  • Extended the ‘historical’ performance by one year in 2015-2016, assuming his current season is comparable to 2014-2015
  • Starting at Stamkos’ current age of 26, I applied the absolute decline from Moneypuck’s chart to Stamkos in five and three year chunks
    • (As you can see, the projection begins to decline more quickly after 2020-2021F)
  • Last, I adjusted this ‘base’ case by +20% and -20% to create illustrative upside and downside cases

Although this is a very high level estimate, I think this gives an interesting, basic idea of what we could expect from Stamkos over the next eight seasons. What does this equate to in terms of dollars? The base case results in an average GAR per season of 18.3, equating to $9.1M per year in AAV. The downside and upside cases each average GARs of 14.7 and 22.0, respectively, coming out at AAV values of $7.4M and $10.8M.

Sizing it all Up

So – lets stack these all up next to each other:


Naturally, looking at a wide range of methods gives a wide range of potential values. However, all three of these approaches can be used to justify a valuation for Stamkos at $10.0M+ of AAV. There is also every precedent for him to get the full 8-year maximum term, or 7 years with the Leafs (in the case of a UFA signing with a new team). We can all be sure Stamkos’ agent is well aware of all of these approaches and will be pushing for the high end, trying to secure as much as possible for his client.

Practicalities of TML’s Negotiation Position

Much like in valuing and buying/selling companies – you can do as many fancy calculations as you want – but something is ultimately worth what someone is willing to pay for it. Given that Stamkos is a UFA, he is essentially able to auction his contract to the highest bidder – putting all of the power in his hands. This power dynamic, combined with the prior valuation approaches, gives me strong reason to believe Stamkos deserves $10M+ – and teams should be willing to pay it, if they have the cap space available.

I’m sure some readers will point out that Stamkos’ basic counting stats (goals/assists/points per game) have declined in the past two seasons, which may be a red flag for the future. Travis Yost and Stephen Burtch both addressed this somewhat, arguing that his quality of teammate and usage are both factors that may be impacting his performance. However, in terms of the value he commands, the strength of his negotiation position will ultimately rule the day. If teams want him, it will take big dollars to get him – either they will be willing to pay for an elite player, or they will not – and I suspect there will be at least one team left standing at a double-digit AAV.


In the end, I know Leafs fans will continue to argue that Stamkos wants to come home, and that maybe he will take a hometown discount to join the Leafs. Although this is possible, in reality the Leafs should not be expecting to walk into a bargain contract with Stamkos. He is an elite scorer, a strong leader, he deserves a top dollar contract, and I strongly believe there will be a team willing to step up and give him the $10M+ per season he commands. Stamkos is entirely worth that amount, and he is an excellent candidate to lead this young Leafs’ team through their centennial season, and six more after that. All us fans can do now is sit and wait.

Your move, Lou.


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