Graphic Comments: Not So Great Expectations
8 years ago
So in the last few weeks we’ve had a rash of blog posts and commentary about Jim Benning’s “plan” for the Canucks. The takes range from “Benning has a great plan and he’s making great deals just like when Gillis brought in Sundin” to “Benning has a plan, and don’t worry if it makes you uneasy because look at the dumb moves Gillis made in his first couple years, like bringing in Sundin.”
Now, do I think Benning has a plan? Sure. He has a plan. I don’t particularly think it’s a great plan, but he has one. The question, really, is whether or not this plan to retool on the fly, rather than tear it down and rebuild it is the way to go.
The interesting bit to me, is that Trevor Linden doesn’t seem to think the full rebuild can work in this market. That the fans won’t put up with it. But I’ve been around here long enough to know that what this fan base really won’t put up with, is unrealistic expectations.
Now, there’s been plenty of digital ink spilled on the topic of whether or not the retool can actually work in building a contender. Over at VancityBuzz, @RobTheHockeyGuy put together a qualitative analysis of what makes a Stanley Cup winner and concluded that a) winning teams rely on elite players, and b) you can acquire elite players without blowing up your team and building through the draft. It’s less likely to lead to success, but it’s doable.
Our very own @Moneypuck_ put together a great five part series on how to build a contender, which concluded:
It’s hard to avoid the reality that in today’s NHL reality, elite players are more often found in the top 5 picks in any draft than anywhere else, and it’s not even close.Of course this approach doesn’t guarantee success. Far from it. The Sabres may never become contenders, despite the additions of Jack Eichel and Sam Reinhart. Critics are quick point to the Oilers “lost decade” as the prime example of how a tank rebuild can fail. The point of a tank isn’t to guarantee success at all, but rather the choice to follow the highest probability path to creating a contender, and sacrificing the present to attempt to meet that objective.
The real issue, however, goes back to Linden’s contention that this market wouldn’t put up with a full tear it down, rebuild it from the ground up strategy. It has to come incrementally, in dribs and drabs, or the fanbase would desert the team en masse. And hockey is a business, after all, so egads! we can’t have that. As a result, here we are with Linden and Benning taking one bite out of the cherry.
The problem is, nobody takes just one bite of a cherry.
I borrowed that idiom from a recent Paul Krugman blog post on China’s devaluation of their currency, which I thought was a rather apt comparison to the situation we have here.
If you’ll bear with me as we diverge into the world of international macroeconomics, here’s the crutch of the matter: much like the Canucks, China’s economy has had a good run for the last decade or so, but has hit hard times recently. Investors (fans) see this and they are starting to head for the exits.
So what does China do? Well, they are one of the few countries that has a fixed exchange rate tied to the US dollar. So in an effort to stem the outflow of investment, they have devalued their currency, but just a little bit. They hope this will make their economy more competitive again, and thus keep investors from pulling their money out.
But here’s the problem with that strategy, as Krugman explains it:
When Japan loosens money, it creates an incentive to move funds abroad, causing the yen to fall. This process only stops once the yen has fallen enough that investors consider it undervalued, and are willing to buy Japanese securities in the expectation of a future yen rise. Exchange rate overshooting is an essential part of the story.China, however, did not let the renminbi float, nor did it devalue by enough to persuade investors that any future move was likely to be up. Instead, it only devalued a little.
The result is that investors see this, and realize that (a) there China is willing to devalue the currency in the face of a serious problem, but (b) this devaluation wasn’t nearly enough to solve the problem. So the expectation is that the exchange rate will need to fall even further. Rather than ripping the band-aid off and letting the exchange rate float to find its own bottom, the Chinese are trying to rebuild their economy on the fly.
But the result has been even more capital flight as investors realize that the future direction is still down, not up.
The same is true of the Canucks.
This team is slowly getting worse. The core is aging and/or being shipped off one piece at a time. Yes, there are some potential younger pieces coming along, but not nearly enough to fill the holes. The fans, as a whole, see this and if there’s one thing this market has had enough of, it’s mediocrity.
But if the expectation is that the team will continue to get worse for years, the bleeding of season ticket holder support will continue until such a time as those expectations turn positive.
So with all due respect to Linden, I believe this current course of action will actually make the business side of the franchise worse in both the short and long term than if you let it bottom out quickly and got fans excited about an upward trajectory.
Yes, that strategy could falter if the players and prospects you bring in don’t pan out as well as expected. But as we’ve seen, the probability of succeeding on the hockey side, is much better going that route.
And I’m here to say that the same is true on the business side.
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