Salary Cap: The Endless Speculation Edition

[TKalltheTime]

Guys leaving 5-10-15 MILLION dollars on the table to come play here because we have Sid & Geno...

YouMustBeNewHere.gif

 

[Louis Hensler]

Pedantry alert maybe, but getting market value and being able to get a better payday elsewhere aren't mutually exclusive. I'd say that given free agency's proud history of mad overpayments, it might in fact go hand in hand.

With all due respect, you don't know what "market value" means. It doesn't mean fair value or rational value. It means what you can get in the market. So if you can get overpaid, then that's "market value."

 

[Andy99]

With all due respect, you don't know what "market value" means. It doesn't mean fair value or rational value. It means what you can get in the market. So if you can get overpaid, then that's "market value."

no...let’s say stores are selling Louis Hensler bobble head dolls for $5 and people are buying them...and I go to my neighborhood store to buy one and there’s one left and someone else is about to purchase it, so I tell the store owner or would-be buyer, “I’ll pay double for it if you sell it to me”...while I can go out of my way to go to a mall further from home to get one for $5, it’s worth it to me for convenience sake to pay $10 for the doll....that doesn’t make the intrinsic market value of the doll $10 just because that’s what I’m willing to pay under those circumstances, unique to me, for that doll..

 

[BlindWillyMcHurt]

For the record I simply meant that every one of those players listed got right about what they would on the open market*... in other words they were paid right at or maybe slightly above "fair" value. In general I don't see any notable "discount" players over the years for the Penguins. Aside from the big two.

Sorry if I didn't quite express that clearly.

*barring an obsessed GM dead set on paying his target whatever so he doesn't have to bother negotiating. I understand that can artificially inflate prices and is the danger of the FA market.

 

[Louis Hensler]

no...let’s say stores are selling Louis Hensler bobble head dolls for $5 and people are buying them...and I go to my neighborhood store to buy one and there’s one left and someone else is about to purchase it, so I tell the store owner or would-be buyer, “I’ll pay double for it if you sell it to me”...while I can go out of my way to go to a mall further from home to get one for $5, it’s worth it to me for convenience sake to pay $10 for the doll....that doesn’t make the intrinsic market value of the doll $10 just because that’s what I’m willing to pay under those circumstances, unique to me, for that doll..

The example you cite points out that the price received by the seller isn't the full price of products. That price also includes costs of acquisition (such as shipping charges, and the like). You are willing to pay "double" the price because of the inconvenience (which is a cost) of going out of your way to get the doll. We so see some of those market effects in the NHL as well (e.g. different tax rates, costs of living, etc). But the price you pay in your example still is the market price. It is the price for which you can get the item somewhere else plus whatever the convenience of getting it now is. Because you picked very small numbers, you were able to come up with an example where inconvenience "doubled" the market price of the item. Of course, convenience factors don't have such a large effect when we're talking about multi-million dollar salaries. (Interestingly, your example probably is somewhat anachronistic since Amazon has all but mooted the convenience factor.) Another factor that comes into play here is that each NHL player is a unique item, so you can't just go down to the mall down the street and get the same player at a different price. That means that the market for NHL players isn't perfectly efficient, as markets for mass-produced items nearly are. GM's have to consider not only what value they place on a player's services, but also what values other GMs will place on those players' services. GMs may well miscalculate, but that doesn't change the fact that whatever a GM is willing to play is the market price for that player. Your fundamental error is in thinking that if one GM is willing to pay more than all the others (perhaps because he has miscalculated) for the services of a particular player, then that GM is paying over the market price. But, definitionally, whatever that GM is willing to pay IS the market price (assuming there's no fraud involved and that the deal is negotiated at arms length). There is one GM who puts the highest value on each player, and it's that GM's valuation that sets the market for that player's services.

 

[BlindWillyMcHurt]

So... uh... where can I buy one of these dolls?

Lay off me, I'm American. We can't help it.

 

[Andy99]

The example you cite points out that the price received by the seller isn't the full price of products. That price also includes costs of acquisition (such as shipping charges, and the like). You are willing to pay "double" the price because of the inconvenience (which is a cost) of going out of your way to get the doll. We so see some of those market effects in the NHL as well (e.g. different tax rates, costs of living, etc). But the price you pay in your example still is the market price. It is the price for which you can get the item somewhere else plus whatever the convenience of getting it now is. Because you picked very small numbers, you were able to come up with an example where inconvenience "doubled" the market price of the item. Of course, convenience factors don't have such a large effect when we're talking about multi-million dollar salaries. (Interestingly, your example probably is somewhat anachronistic since Amazon has all but mooted the convenience factor.) Another factor that comes into play here is that each NHL player is a unique item, so you can't just go down to the mall down the street and get the same player at a different price. That means that the market for NHL players isn't perfectly efficient, as markets for mass-produced items nearly are. GM's have to consider not only what value they place on a player's services, but also what values other GMs will place on those players' services. GMs may well miscalculate, but that doesn't change the fact that whatever a GM is willing to play is the market price for that player. Your fundamental error is in thinking that if one GM is willing to pay more than all the others (perhaps because he has miscalculated) for the services of a particular player, then that GM is paying over the market price. But, definitionally, whatever that GM is willing to pay IS the market price (assuming there's no fraud involved and that the deal is negotiated at arms length). There is one GM who puts the highest value on each player, and it's that GM's valuation that sets the market for that player's services.

That’s my point...there is no “market value” really for individual nhl players...market value is an economic term... what one GM wants to pay for Tavares is not market value for all nhl centers because they all wouldn’t hold him to the same value...market value is the wrong term

 

[HandshakeLine]

I also really enjoyed my high school econ class.

 

[Deport Ogie]

Cetaris parabus and caveat emptor and barba teneo lupum all up in here

 

[Louis Hensler]

That’s my point...there is no “market value” really for individual nhl players...market value is an economic term... what one GM wants to pay for Tavares is not market value for all nhl centers because they all wouldn’t hold him to the same value...market value is the wrong term

Your original point was that the Pens paid market value for a few of their stars even though those stars could get a better payday elsewhere. I think that's wrong because if they can get more elsewhere, then THAT's their market value. I think what you meant was that our stars got "fair value" (in terms of their contribution to the team) here even though they could have obtained what you called "overpayment" through the market somewhere else. I probably should have left it alone because I think we knew what you meant. You were saying that a smart GM doesn't use free agency (where he has to pay market value) but instead uses the draft, trades, and re-signing the team's own players, where players can be had at a discount from what the GM would have to pay in a free agent market. I think your fundamental point is valid. My point was merely semantic. There can be a market price for unique items such as players. Typically, that price is established through an auction (which is essentially what free agency is). In the world of collectibles, expert appraisers can estimate the "fair market value" of such unique items even without an auction. In fact, for accounting purposes, such estimates sometimes are necessary. It's a different kind of market price, but it's still a market price.

 

[BlindWillyMcHurt]

So... what... 10 bucks?

Do they come with limited edition accessories that are preorder exclusive?

If so I'll take 20.

 

[ZeroPucksGiven]

Cetaris parabus and caveat emptor and barba teneo lupum all up in here

My 4 years of Latin in HS have finally paid off!~

 

[Andy99]

So... what... 10 bucks?

Do they come with limited edition accessories that are preorder exclusive?

If so I'll take 20.

It’s a bobble head of a HF Board poster and Penguins fan...it comes with a head that moves around in circles, and a voice box accessory that shouts “shoot the puck” and complains incessantly about our bottom six players and bottom pairing D men

 

[BlindWillyMcHurt]

It’s a bobble head of a HF Board poster and Penguins fan...it comes with a head that moves around in circles, and a voice box accessory that shouts “shoot the puck” and complains incessantly about our bottom six players and bottom pairing D men

So you're saying it will make the perfect Christmas gift for the sports fans in my life?

 

[EightyOne]

It also has magnetic hands. You can attach either "Marry Me, Kris" or "We Love MAF" signs to it.

 

[BlindWillyMcHurt]

It also has magnetic hands. You can attach either "Marry Me, Kris" or "We Love MAF" signs to it.

I want a "Put It In My 5 Hole, Sidney!" included with mine if I'm gonna stick my neck out and preorder here, c'mon.

 

[Peat]

With all due respect, you don't know what "market value" means. It doesn't mean fair value or rational value. It means what you can get in the market. So if you can get overpaid, then that's "market value."

I know what it means and was using the terms as used in the post I was quoting instead for ease of communication.

 

[Shady Machine]

We're still going on about this?

 

[Gurglesons]

We're still going on about this?

So no Phil talk and no arbitrary discussion about what the term market value is?

What do you want us to talk about? Dominik Simon not being a top six winger?

 

[ZeroPucksGiven]

We're still going on about this?

Sounds like a challenge to me!

 

[TheGoldenJet]

This team still needs another left wing.

It would be nice if once, just once, we went into the playoffs with four top 6 wingers for our big two Cs.

 

[dogthateats]

I kind of want that kraft mac n cheese and fritos. I never had canned chili like that but I might like it lol.

 

[DeadPuckEra]

Anyone willing to give Kovalchuk a shot? He’s apparently been told to not show up to work anymore, but he can practice with team. King’s fans alluding to an issue with coaching and that Kovalchuks play is not the issue.

 

[EightyOne]

Anyone willing to give Kovalchuk a shot? He’s apparently been told to not show up to work anymore, but he can practice with team. King’s fans alluding to an issue with coaching and that Kovalchuks play is not the issue.

That's a no from me, dog

 

[66-30-33]

I rather keep with young speedy players tbh. He will probably go to Dallas.