With all of the furor over the Kovalchuk contract, I started to wonder what really makes sense as far as contract terms and duration are concerned. I decided to take a look at the top 20 scorers in NHL history and figure out their average value to their team, as measured by point production, over the course of their careers. My hope was that I could construct a model for a superstar "lifetime" contract that had some defensible basis. Lots of graphs and techno-babble after the jump.
I rejected a simple averaging of points across all 20 players for each career year. The top few players would overwhelm the impact of the bottom few if taken on raw points. Instead, I normalized all players yearly contributions by their career average. Meaning that an average year would have a value of 1.0. A better year would be greater than 1.0 and a worse year would be less than 1.0. In this way, each player would have an equivalent contribution, at least for the length of his career. I then averaged each career year across all 20 players. In the outlying years I averaged across the number of active players (which results in some goofiness in the last couple of years). I only included NHL regular season points in this work.
The first thing to notice is that the average superstar peaks somewhere between his 4th and 6th season. From there, point production tends to fall off almost linearly to year 20. After that point, it's all noise as there are not enough players to make a reasonable average. The average superstar career lasts about 20 years.
It is interesting to note the uptick at the end of the curve. It seems that the longer careers tend to belong to more consistent scorers, so the average rises near the end. The bump in the average in years 23-25 is entirely due to Gordie Howe who had his career best year in his 23rd NHL season (the guy must be an alien).
So, what does this say about the structure of a superstar NHL contract? First, the average superstar player will peak just before he is eligible for Unrestricted Free Agency (7 years in the NHL). From the numbers, a front loaded contract makes sense, but the average superstar is still scoring at 57% of his career average (42% of peak) at year 20, so a drastic fall-off makes no sense.
Now, this assumes that a player's value is measured exclusively by regular season points and does not account for the post season or the value of a respected veteran presence in the locker room. Post-season points are a bit scatter-shot, but locker room presence should increase the value of the late years of a "lifetime" contract. Defensive ability is not considered at all, and that tends to be easier to see on the ice than measure in the numbers.
With these caveats, a 15 year duration for the UFA "lifetime" contract should be typical with a linear trend down from the peak to 42% of peak for the final year. Obviously the peak would be adjusted up or down to account for actual point production.
I've added a graph that shows how Joe Sakic and Peter Forsberg compare to the average. Until his injury, Sakic was on a flatter slope than the average (more consistent), suggesting that his back gave out long before his skills. This is even more the case with Forsberg, who peaked early and then paid the price for his physical style of play.
This graph also shows what a model lifetime production might be for an average superstar. The light blue line shows a linear decline between year 6 and year 20. The slope is 0.041/year. It would suggest a model where the peak annual value would be in the first year of the contract with a decrease of 4.1% of the peak each year. I'm guessing this would be unpopular with General Managers trying to control their cap number, and players like Howe and Ron Francis who were extremely productive right up to retirement.
Now to Kovalchuk. I'll assume he wants $100M to close out his career. If we carry this over 12 years (with his 8 years in the NHL this gives the average superstar career), his salary will start at $10.8M, end at $5.9M, declining each year by $0.45M, with an average (cap hit) of $8.3M.