O is for Opportunity Cost

Well, despite my hopes to the contrary, it looks like it’s official: Adam Gaudette will make his début with the Canucks tonight.

Don’t get me wrong. I think this is a great opportunity for Gaudette, and for Canucks fans to see a much-hyped prospect in action. Whether he lives up to that hype, is another thing entirely, but from an entertainment perspective it certainly adds an element of interest to the conclusion of yet another dreadful season.

Either way, how he does over these last five games is rather meaningless at this point.

What may be significant, however, is the long-term cost this opportunity brings with it.

As our own Ryan Biech recently explained, by playing just one professional game this season, Gaudette will be credited with a “professional season” for the purposes of expansion draft eligibility. Given that on the current timetable, the expansion draft for a new Seattle franchise will take place in the summer of 2020 and under the same rules as the Vegas expansion draft, this means that Gaudette will have three professional seasons to his credit, making him eligible for the draft. That means the Canucks will need to protect him as one of their seven forwards, or eight skaters if they were to protect more that three defensemen (lol!).

Big deal, you say. And it’s true. It’s not a huge deal. But it isn’t nothing, either.

The game of hockey has changed in a salary cap world. And like in many walks of life, if you’re still doing things because that’s the way you’ve always done them, there’s a good chance you’re doing it wrong:

The fact remains that in today’s game, other than landing a generational talent in the draft, success is found by finding incremental gains not only at the margins, but in every decision management and roster decision you make.

So by needlessly doing something today, that will make Gaudette eligible for the expansion draft, the Canucks are giving up an opportunity to do something else with that protected slot. Sure, you might look down their roster and think they don’t have seven forwards worth protecting, and you wouldn’t be wrong. But even an ability to protect an additional player is an asset. It would allow the Canucks to trade for another team’s surplus player. Not just near the expansion draft, but in the two years leading up to it. Any trade that happens between now and the summer of 2020 will need to have that expansion lens put on it.

Given the way George McPhee was able to hold some of these teams hostage and wrangle significant concessions out of them, I’m going to guess that more teams will be making moves ahead of time so that they don’t wind up in a similar position the second time around. This should open up opportunities for teams with protection spots available to pick up some upgrades from those trying to get ahead of the problem.

And this is where the opportunity cost comes in. The Canucks are gaining some utility from showcasing Gaudette in this meaningless stretch of games, but they are giving up the potential to benefit from some of the opportunities discussed above. Opportunity cost is a common term used in economics and investing:

The issue is, that the utility they are gaining by playing Gaudette does little to make the team better and advance them on path back to a rebuild. But the opportunity they are giving up would do just that.

Keep in mind that there is an opportunity cost for Gaudette here as well. He is giving up his final year of university. And burning the first year of his Entry Level Contract by signing him now was certainly one of the reasons he was willing to make that trade-off. But as I explained when Boeser did the same thing last year, that first year is burned whether he plays in a game or not:

Beyond that, I’m sure that if the Canucks were completely up front with Gaudette and his agent that they would be willing to sign him early, which gives him his signing bonus, a prorated salary for the last two weeks of the season, and burns a year of the ELC, but that he wouldn’t actually get into a game, I think he would still make the decision to sign. There’s little added value there for Gaudette in playing these last five games.

But hey, I hope the kid has a great début tonight. And I hope even more that he develops enough over the next two years that the Canucks have not choice but to use a protection spot on him. Unfortunately, that will also mean that the opportunity to benefit in some other way will be lost.

Hope that cost is worth it.