Jeff Rubin is an author and former chief economist at CIBC World Markets. His latest book is A Map of the New Normal: How Inflation, War, and Sanctions Will Change Your World Forever.
Just how much is any one player worth? Baseball phenom Shohei Ohtani just signed a 10-year contract for US$700-million. Just as the world’s wealth has become more concentrated in the hands of the few, so too are many sports teams’ payrolls. But as the puck drops for the start of the NHL Stanley Cup finals to determine the best team in the league, it seems pertinent to ask: does the practice make any sense?
If it did, you would expect to see the Toronto Maple Leafs in the finals, since the Leafs are one of the most egregious examples of this type of payroll strategy. Next year contracts call for the team to pay their top four forwards: Auston Matthews ($16.7-million), William Nylander ($13.5-million), John Tavares ($7.95-million) and Mitch Marner ($8-million) more than $46-million from a projected salary cap of about $87-million, accounting for an unprecedented 53 per cent of the team’s total payroll. No other team in the league comes close to devoting as much of its payroll to only four players.
In relation to their teammates, particularly those who toil away in relative obscurity on the team’s third and fourth lines, players like Mr. Matthews are the Jeff Bezos or Mark Zuckerbergs of the hockey world. And just as the wealth of these men dwarfs that of their 19th-century predecessors like Rockefeller, Mellon or Carnegie, so too do the salaries paid to Mr. Matthews and Mr. Nylander are, even in real dollar terms, a vast multiple of what was paid to Gordie Howe, Bobby Hull or Bobby Orr, the golden stars of yesterday.
Does such a skewed distribution of income work any better in pro sports than it does in our economy? There is no question: The ranks of the middle-class have been decimated as the richest gobble up more and more of the national income pie. All the indicators tell us the same thing. Whether you’re looking at stock ownership, debt levels or the fate of middle-class brands such as Sears and JCPenney, the trends all point in the same direction: the economy is being hollowed out. Since a strong middle class has been the calling card of Western democracy and capitalism, its disappearance can only be terrible news. Is such inequality a harbinger of failure in sports as it is in our economy?
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Let’s ask the hallowed Maple Leafs. The guiding philosophy behind their payroll strategy is that the team can be made up of interchangeable expendables who can be paid the crumbs left over once the stars have been paid. The role of the expendables is simply to chew up enough minutes from the game clock until the team’s much exalted stars can catch their breath and go on to score the game’s winning goal. Sounds plausible, right?
Except the history of Stanley Cup-winning goals suggests otherwise. How many cup winners have been scored by third and fourth line journeymen? Look back at history. The Detroit Red Wings won back-to-back Stanley Cups in 1997 and 1998 thanks to winning goals in each series from third of fourth-line expendables, Marty Lapointe and Darren McCarty. Could those Red Wings have successively had the depth to roll out four lines if they paid their stars at the time, Steve Yzerman and Nicklas Lidstrom, the type of money currently paid to Mr. Matthews or Mr. Nylander?
And the Red Wings were by no means the only team that sipped champagne from the Stanley Cup thanks to the heroic exploits of their expendables. How about Travis Moen’s game winning goal for Anaheim in 2007? Or Dave Bolland’s cup winning goal for Chicago in 2013? The expendables often found the back of the net when it never counted more.
To be sure all of those cup-winning teams had their quotient of stars. But they had depth, too – which is ultimately why they prevailed. Without depth you go nowhere in the grind of playoffs. Hockey is quintessentially a team sport – and the allocation a club’s payroll needs to reflect that reality for the team to be successful. Failure to recognize that is a surefire formula for failure – something that the Leafs have excelled at.
The same argument can be made for other team sports but if one assesses the efficacy of a star-tilted payroll by the amount of time a star is actually playing, hockey looks like an unlikely sport for that type of payroll structure. After all, an elite hockey forward like Mr. Matthews will barely log much more than 20 minutes a game in actual ice time. And you can’t score if you’re not on the ice.
By contrast, the National Basketball Association’s stars routinely log 35 minutes a game on the court. And there are only 48 minutes in a basketball game compared with 60 minutes in hockey. That means that an NBA star is typically on the court for more than 70 per cent of the game compared with a hockey star’s third of the game. An NBA team gets a lot more bang for their buck from paying their stars in terms of actual playing time than an NHL team.
An NFL quarterback or MLB pitcher can tilt the playing field even more, as nearly every offensive play goes through his hands. But a hockey team needs all four lines going hard if its going to win. Sometimes a call-up from the minors will give you more than a superstar.
Of course, in the Leafs’ case winning might not matter that much to ownership as it does elsewhere. But for the less fortunate owners of the NHL’s other franchises, a balanced payroll is the only strategy that makes sense. Take a look at the teams squaring off in the finals. By the time a team gets this close to the ultimate prize, everyone is pulling his weight, and the guys in the dressing room will all say that no one is more important than anyone else. The teams whose payrolls best exemplify that tend to be the ones that win.
It’s a pretty good bet that the guy who fights through his check and buries the series winner is playing on the third or fourth line. But no one will be calling him expendable when he’s lifting the Stanley Cup over his head.