After looking at DDC's post extolling the supposed virtues of spending money, I started wondering about the relationship between spending money on free agents and improving as a team (if such a relationship actually exists). I've long thought that spending money on free agents is overrated, or at least spending money for spending's sake. But does the data actually support that?
I looked at the free agent signings of each team (using the average yearly value of each deal) during the 2009 (I chose 2009 simply because I came across the TSN 2009 FA Tracker before I found the 2010 one, and I'm lazy) offseason, ignoring any re-signings, since I wanted to concentrate on the effect of new players added via free agency. Then I compared that total to the change in points for each team between 2009 and 2010. The following chart shows this comparison (each dot represents a team):
As you can see, there doesn't appear to be any sort of relationship between spending money on new players via free agency; in fact, 4 of the top 5 free agent spenders regressed following their shopping spree. The only big spender to improve? Chicago, who added Tomas Kopecky, John Madden, and most importantly, Marian Hossa. And even they were only the 11th most improved team.
What do I draw from this? Spending money via free agency for the sake of spending money doesn't have seem to have much of an effect on how you'll perform the following season. Good free agent signings, like Hossa, can certainly help. But a team that doesn't spend much in free agency is just as likely to improve (and may even be more likely to improve) than if that team spent a bunch.
So yeah, the Avs have had $39M in unused cap space the last few years. But using any more of that cap space certainly wouldn't have guaranteed any improvement in the team.