December 28, 2012
From Daigle To Datsyuk
A World With No Draft

by Corey Pronman

With the NHLPA potentially filing a disclaimer of interest and beginning a antitrust lawsuit battle, I thought it would be interesting to preview a scenario that would occur in the unlikely event the NHLPA wins and pursues a CBA-less environment to work in. It would create a world with no salary cap, no free agency rules and no NHL Entry Draft.

The closest comparable to this kind of environment would be European football. There are trade unions, although they do not collectively bargain for the players. Kids can be acquired by organizations well before the age of 18 and it is a free market type of environment with transfer fees. When I reached out on Twitter for someone to enlighten me on the system (I know little about European football), I got several helpful responses. Here is one from Chris Phillips from the Press Association:

The vast majority of professional clubs in Europe put a lot of money into developing academies where kids from as young as six will join and be taught by professional coaches within each club's academy. It's only a couple of hours a week for the youngest ones and increases as they get older but there is no contract or anything like that for players until they are 16.

Players work their way up through the system from age group teams to the youth team and eventually the first team. Most teams also have a reserve team and there are numerous reserve leagues across Europe.

The bigger clubs can invite the top players to their clubs from the smaller ones in lower Divisions and as there is no contract there is no transfer to be made as such but there is a system of compensation given to a club for the time and effort they have put into developing the kids up until the point they move.

A player cannot sign a professional contract until their 16th birthday but there is no minimum age for a player to play a professional game. If they are good enough they can play. The youngest guy to play professional soccer was a 12 year old.

Once you have signed a player to a professional contract you own their rights and for another team to sign them a transfer fee will be due. Anyone older than 24 can move freely to another club once their contract is up but below that age a fee is due for the player to the club.

European hockey works in a somewhat similar fashion. For example, Swedish teams will have youth programs for several age groups that are linked to the top club. As a U16 player, Ottawa Senators top prospect Mika Zibanejad started with AIK, an SEL team, but transferred to the Djurgarden organization for his 16-year-old season.

So would the NHL world be similar to the one we see in Europe? I asked SBNation's Bruce Peter—who is an expert in international hockey and the structures of hockey leagues—what would happen if this new way of living came to pass:

I guess initially the amount of NHL teams doesn't change and their policy of not signing players under the age of 18 remains the same. The junior ranks would remain an amateur circuit, as would the NCAA. I think initially all that changes is the players are probably allowed to turn pro at 18 and leave the amateur circuit.

The age-18 remark is in regards to the September 15 cutoff in the draft. It's there for a reason. The last sentence refers to the CHL-NHL agreement to keep drafted players from the CHL under 20 from going to the AHL. It's linked to the CBA so early pro careers would be allowed.

The big change that would occur is if the antitrust lawsuits open up the NHL to becoming a promotion/relegation circuit. Farm clubs I think would cease to exist, some major junior markets would turn pro… That's when things get crazy. But if the end result of this is simply no players union and no draft, then I think things stay similar except more money involved in paying prospects and smaller markets getting a tough time attracting top talent. I don't think the NHL can operate as a closed 30-team league with no draft or salary cap. I think they'd be forced to go to a completely open market system and that means promotion and relegation. But I don't know how long that would take to do it.

Transfer fees and loans between clubs would be common practice. I could also see teams purchasing and operating their own junior clubs down the line to replace the current farm system. But they'd have to operate in their own markets. Much like there is a Frolunda J20 team or the CSKA Moscow MHL club.

Now those last two paragraphs is where it gets interesting. Do the London Knights become a pro hockey team? Will the Coyotes ever get a top prospect again? Will the Panthers be relegated? Will the Syracuse Crunch be promoted? Will the Leafs give Columbus 20 million for Ryan Murray?

The closest thing we have in North American sports to a free market is baseball although it's not even that close. Baseball has the strictest contracting rights of the four major sports and there is a draft. While the amount a player can sign for out of the draft in the prior MLB CBA was very free market outside a "recommendation" that meant little, players could only negotiate with one team. It still created a unique spending environment, and when now Houston Astros employee and former Baseball Prospectus writer Kevin Goldstein wrote about the topic he said in response to people complaining about the non-linear fashion of draft talent being selected:

For all the wailing and gnashing of teeth, the fact remains that draft picks are still the biggest bargain in the business, which is why more and more teams are following suit and spending money not only on their first round pick, but well beyond.

Teams that don't like the way the draft works need to flip their way of thinking, much like the Pirates and Royals have begun to do, as well as many other teams, and make the draft work for them. The current draft system allows for the most flexibility and rewards those teams that do the best job in indentifying talent and properly valuing it. I don't understand how anyone would want it any other way.

While some prospects didn't have negotiating leverage, most had some form of leverage even if they were just allowed to talk to one team. In 2010, the top pick got a little over $6 million, the third pick a little over$ 5 million, the fourth pick a little under $3 million while by the end of the first round it was getting to around a million dollars and falling. Thus, in a static 30-team league, it made sense for small market teams to not build up a big payroll and to get good future value out of the draft while not spending a whole lot. Big market teams spent on the draft, but to them, the logic was more spend on free agents who can help now as opposed to directing your budget to players who may be ready down the line. Baseball players take longer to develop and with more uncertainty than hockey prospects, but there are some similarities between the two sports.

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I bring up the baseball example without just relying on European football for a reason. Should the hockey world flip upside down and operate in a CBA-less league, it's highly unlikely that the NHL would instantly become a promotion and relegation league with established, aligned youth teams and academies. However, as Bruce Peter said, prospects would immediately become free agents. The valuation of these prospects would be one of the first hurdles for front offices to overcome. A direct correlation to baseball can't be made because 1. baseball is a richer sport and 2. hockey's prospect negotiations would be completely free market.

Given these two differences creating opposing incentives, it is a fair assumption that hockey prospect values would be at least what they are in baseball even with a draft although at the top that could differ (elite prospects likely get paid a lot). In free market negotiations with prospects, teams would be put to the test in terms of their scouting and budgeting. Out of this scenario interesting questions will have to be answered. Questions such as how much money would Montreal or Toronto really devote to acquiring non-elite prospects as opposed to trying to buy the best NHL players? When teams have no contract amount limits, do the smaller market teams just dump the big league salaries and splurge on cheap prospects? Could the NHL keep under-18 players from turning pro, or would Donald Fehr—who has a history of doing so—sue the league for collusion? Sure, he said he's going to retire, but there's no way he isn't sticking around for something this juicy.

Eventually though, there would have to be a new structure phased in to make the whole process work. As Phillips mentioned, that would mean team academies, youth teams, reserve teams, the IIHF overseeing transfers and transfer fees, the CHL being involved in the pro ranks, and a promotion/relegation system being implemented. Tyler Dellow discussed at length, the possible benefits of this kind of system versus the current North American model.

That said, there's a ridiculous amount of uncertainty to these possibilities in terms of how it would work in North America—whether it would foster a competitive environment like baseball, or a couple of perennial juggernauts like in the English Premier League and Spanish La Liga.

As an NHL owner, someone who has been fighting tooth and nail in these CBA negotiations—and from what has been reported, it has been the small market teams pushing the stoppage—imagine if all of a sudden you're not guaranteed a seat at the table? You actually have to win to stay in the NHL, and that might mean spending a lot of money!

The owners, despite having losses in recent years, have it ridiculously easy in the modern North American sports system with the many ways they violate normal business operations in terms of the Entry Draft giving linear talent acquisition starting with the worse teams, free agency rules, capping employee expenses and operating in a cooperative competitive business model with a more or less guaranteed chance at remaining in the NHL. The mere threat of losing any of these things should send fear down the spines of the small market owners who for the most part are the hardliners. It's why going through a lengthy court battle is not worth it for a difference of three years in contract term limits, two years in CBA term limit, and a tens of millions over the life of the CBA even if there's a small chance of this kind of hectic restructuring occurring.

Corey Pronman is an author of Hockey Prospectus. You can contact Corey by clicking here or click here to see Corey's other articles.