The Laich Case

At 9 a.m on Monday in Toronto, an arbitration hearing to determine Brooks Laich’s salary for the 2007-08 season was held. Laich, a two-year veteran of the NHL, earned $551,000 as a rookie in 2005-06 and earned $606,100 as a sophomore in the league last season.

Judging by some of the things being written (mostly on other blogs and on message boards) about Laich and his decision to opt for arbitration, you’d think the guy had a screw loose or something. Lots of people are wondering why a guy who totaled eight goals, 18 points, had 29 penalty minutes and was a minus-2 in 73 games would be looking for a big raise. He could have just signed his qualifying offer, which would have given him a salary of $666,710 for the upcoming campaign. I guess most people figure that’s plenty for an 18-point guy heading into his third NHL season. I can see how some would think that, but as usual it’s just not that simple.

First of all, if an agent is worth his salt, he’ll look at Laich’s performance and salary and compare it to similar players around the league. This is why the arbitration process exists. If he thinks a lot of similar players make a lot more money, then he’ll probably advise his client to opt for arbitration. It’s also possible that Laich and/or his agent have no problem with the monetary portion of the club’s qualifying offer, and merely want a one-way contract for the same or similar money. It’s important to note that Laich had a two-way deal in each of the last two seasons. He more than likely would be angling for a one-way deal this time around.

One common misnomer in the process is the concept of “comparables.” Yes, both sides will present comparable players in their cases, but those comparables are looked at from the standpoint of when they signed the contract that made them comparable. In other words, you can’t just look at Laich’s stats from 2006-07 and find other players with similar numbers and see what their earnings are.

For the purposes of comparables, “platform years” are used. A platform year is the year in which a player “earned” his subsequent contract. Anyone signing a (non-entry level and non-UFA) contract this summer for 2007-08 would have a platform year of 2006-07. So “comparable” contracts basically include those negotiated by other Group II (restricted) free agents. For the sake of comparables, the players’ age and position should also be similar, if not exact. Any comparables in the Laich case are almost certain to have 2005-06 or 2006-07 as their platform season.

San Jose’s Marcel Goc and Minnesota’s Dominic Moore would both appear to be reasonable comparables. Both have similar career stat lines to Laich’s, both are close to Laich’s age and both players negotiated contracts for last season on the basis of 2005-06 platform seasons. Goc earned $775,000 in 2006-07 and Moore made $700,000 for the same season. Looking at these players and their platform years provides a snapshot of the player at that stage, and gives the arbiter a basis from which to make a salary determination; the arbiter will also take into account the players salary for the upcoming season.

Washington’s Brian Sutherby would not qualify as a comparable in Laich’s case because he has played more than 100 more games during the course of his NHL career.

Each side is allotted time to present its case to the independent arbitrator, and each side is also allowed time for rebuttal. Many factors go into the arbitrator’s ultimate decision, not the least of which is the use of comparable players introduced into evidence by the two sides. The club can elect for a one-year or a two-year award, unless the party is one-year away from unrestricted free agent status, in which case the club can only opt for one year.

Both sides prepare briefs that cannot be more than 40 pages in length. Both sides are looking to use the most advantageous comparables to their case, but the case is made up of much more than just comparables. Each is trying to paint a portrait of the player, but they’re obviously using different brushes.

If I were Laich’s agent, I’d note that my client didn’t play much early in the season when Rico Fata was still around and Richard Zednik was healthy. But from Dec. 1 on, Laich had eight goals and 17 points in 55 games to go along with a plus-7. He compiled that plus-7 during a stretch in which the team was 17-31-8. Laich was a healthy scratch just once in those final 56 games of the season.

Of course if I were representing the club, I’d argue that he only got significant playing time once injuries began to decimate the roster and that there was a reason he was not playing much early in the season.

On the surface of things, Atlanta’s Jim Slater would appear to be perhaps the perfect “comparable,” especially if you’re Laich’s agent. Both players have completed two seasons in the league, serving mainly as third- and fourth-line centers. Slater has played in 145 games, totaling 15 goals, 39 points, 108 PIM and a plus-9 while playing just over 10 minutes a night. Laich has 15 goals, 40 points, 57 PIM and a minus-12 while playing about 12 and a half minutes a night.

Slater had five goals and 19 points with a plus-8 in 74 games last season. Laich had eight goals and 18 points with a minus-2 in 73 games last season. Slater earned $900,600 last season, getting nearly 50% more compensation than Laich for essentially the same production.

But Slater is not deemed to be a comparable simply he has not come to terms on a 2007-08 contract. As the final year of an entry level pact, Slater’s last deal originated on the basis of draft position more than anything else. Slater was a first round draft pick (30th overall in 2001) while Laich was selected in the sixth round (193rd overall) of the same draft.

Ironically, Laich’s upcoming award may be used in Slater’s own arbitration case next week.

It’s useful to think of buying a house when you’re thinking of comparables. An appraiser looks at the house and assigns a value to it, and part of that process involves comparing it to similar homes that recently sold in the same neighborhood. But you can’t compare a four-bedroom duplex with a two-bedroom ranch. And you can’t compare a house built in 1948 to one constructed in 1998.

The arbiter must issue his ruling within 48 hours of the hearing. It’s important to note that once the hearing begins, whatever negotiations that may have been ongoing between the player and the team cease. At that point both sides have agreed to leave the matter in the arbiter’s hands.

Finally, clubs are permitted to walk away from arbitration awards above a certain monetary threshold. That is not likely to be a factor in the Laich case. In order for a club to walk away from an arbitration award this summer, the arbiter would have to award that player an annual salary greater than $1,221,304.

All that said, it’s hard to hazard a guess as to what the arbiter might award Laich for 2007-08. Not being present at the hearing or knowing the comparables, etc., I’m guessing he could get anywhere from $650,000 to $900,000, but he is almost certain to get a raise over his qualifying offer. This whole process illustrates the diligence that each club must attach to the negotiation of each contract, though. If you throw money around in a cavalier fashion when you negotiate RFA deals, it can come back to bite you and your 29 peers via the arbitration process.

It’s been said before (by a major league baseball GM, I believe), but it bears repeating: “We operate at the mercy of the worst decisions of our dumbest competitors.”

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26 Comments on “The Laich Case”

  1. strungout Says:

    I think your article could be summed up with this one sentence you typed….

    He more than likely would be angling for a one-way deal this time around.

  2. dumpnchase Says:

    Strung,
    If it was that simple, it never would have gone to arbitration.

  3. Murshawursha Says:

    I don’t really understand why arbitration exists… I may not completly understand the process, but the way I see it is like this.

    If someone is trying to buy a house (to use your example) and they make an offer, which the owner of the house declines, then they can either attempt to negotiate a lower price or walk away. As far as I know, they can’t bring in an independent third party to tell the owner that his house is not worth as much as he thinks it is and force him to sign that contract.

    Is a team/or player aloowed to walk away before the hearing once arbitration is declared? Do both sides have to agree to arbitration, or can one party declare it on his own? Cause it doesn’t seem fair to me that one party can bind the other to a decision and force them to sign a contract they may not want to. I know the walk-away rules apply, but if the award is under that threshold then a team is forced to sign a player they may not want, or at least at a price they don’t want to pay him. I don’t understand why the team can’t just say, “Tough, you aren’t worth that,” and walk away, regardless of the amount of the award.

  4. strungout Says:

    I don’t think a one way contract compared to a two way contract is that simple of an issue when it comes to this current roster. Clymer, Bradley, Sutherby, Brashear, Gordon, and Pettinger all have one way deals. Adding a one way deal to Laich would really bunch up the bottom six and leave players like Steckel and Fleischmann on the outside looking in since they will likely both be on two ways (Flash to be determined of course). Poor Steckel is going to have a two way and be waiver exempt….poor fella.

    Laich wants to get paid and to be in the NHL. I think the Caps are willing to pay him…just not at an NHL rate if he doesn’t make the roster (which is extremely possible).

    It’s tough….the whole process…and understandable from both sides of what they want and why.

  5. Mike L Says:

    There are any number of factors that can be put into play in contract negotiation: money, length of cotnract, one-way/two-way, special clauses (no trade, limited trade, etc.) and of course other miscellania (there was a guy in baseball who had it in his contract that his hotel room couldn’t be above the 5th floor…)

    The comprable system is what’s used in baseball and in hockey and I’m sure both sides have players that make their case look stronger, and if they’ve done their homework, will have a good idea of the comprables the other side will present, so they can prepare for rebuttal. I am surprised that Laich actually got to arbitration, only because I don’t think that he or the team would have been arguing over too much money (his salary would be between his QO and $725K, so they’re arguing about a few thousan $$ in cap space), and I doubt the length was an issue either. I think you hit it on the head that the main impasse is the one-way/two-way portion of the deal.

    The Caps have added a bunch of forwards in the offseason (Nylander, Backstrom, Kozlov) while only a few have been let go. If you figure that along with the three new comers you’re going to have AO, Semin, Clark, B. Gordon, Sutherby and Pettinger, that leaves three spots available for a whole bunch of players (Laich, Clymer, Brashear, Fehr, Fleischmann, Klepis…). For Laich, getting a one-way contract is something he might take less money for….

  6. Rink Raith Says:

    Would Laich’s decision to apply for arbitration be also based on the increasing probability (with the latest free agent signings) that he might be playing somewhere other than Washington in 2007-08?

  7. Tracy Says:

    Mike,

    Please confirm “The arbiter must issue his ruling within 48 hours of the hearing” means that we will know by tomorrow vs. 48 hrs after the team’s last hearing meaning after Jurcina’s is over assuming we get that far.

    And consensus is that Laich isn’t going anywhere because he won’t be awarded $1M plus. He’ll be in DC this season for sure.

    Thanks,

  8. dumpnchase Says:

    There are always more to these things than meets the eye, especially when the case actually goes all the way to arb. That’s the main point. We may think we know what a guy is asking for or what a team is offering within a ballpark range, but sometimes we’re off.

    Mursha,
    In the home-buying comparison, no third party settlement is available. But the CBA does provide arbitration rights to players and clubs in cases such as Laich’s and many others. I was merely using the home appraisal as an analogy to the concept of comparables, an individual component of the arb process.

    The team can walk away, the player cannot. Teams can only walk three times in a two-year span if memory serves. If a team walks, the player becomes a free agent. If another team signs him at or above 80% of the awarded salary, the original team has the right to match and keep the player.

    Strung,
    That’s a great point about the number of players already with one-way deals, but not sure how much impact it has here. The Caps are going to go with the best players at camp, they have to. This season is too important. Maybe two years ago a vet with a one-way would have been given a job over a kid, but not this fall. I don’t think they can let contracts make hockey decisions this season. (And not saying that happened often in the past, but it does from time to time all around the league.) And I don’t think they’re worried about numbers too much, they’ll let players sort that out among themselves at camp.

    If anything was learned from last season, it’s the idea that you can never have enough depth. You need more than eight defensemen and 15 forwards to get through a season of 82 games. That said, you always want to limit your payroll total as much as possible for flexibility’s sake in both the long- and short-term, and you’d probably want to limit your one-way obligations, too.

    Mike L,
    Baseball is different in that the arbiter must pick one figure or another, there is no middle ground. In hockey, the arbiter is not even bound by a range. He can go above the player’s figure or below the team’s. But you’re right, half the battle is likely in successfully anticipating the other side’s arguments.

    Rink,
    Looking at the sheer numbers, you’d think that some of these guys might not be here in 2007-08. But funny things happen, and injuries happen too. There are a lot more guys with the ability to make this roster this fall than there were one or two years ago. And when you’re rebuilding, that’s the idea.

  9. dumpnchase Says:

    Tracy,
    That’s true. The arbiter has 48 hours from the conclusion of the hearing in which to render a decision. The Caps and Laich negotiated throughout the process, as the Caps and Jurcina are doing now.

  10. Rink Raith Says:

    Mike,

    Don’t get me wrong…. I think it is great that the Caps have multiple options at almost every level and position. I am glad that Ted and GMGM have held to their strategic plan and have put the Caps in this position.

    If I were in Laich’s shoes, I should be realistic that my opportunity with the Caps has shrunk and posistion myself accordingly.

  11. JP Says:

    It’s worth noting that the team cannot walk away from the arbiter’s decision unless the award is above a certain threshhold (the number is over $1,000,000, but indexed, so the number in the current CBA is not accurate – see section 12.10(e) of the CBA). Point being, Laich’s going to be a Cap (since the award won’t be above that threshhold), at least for a little while after the decision is handed down.

    Personally, I like Laich and hope he’s around for a good while longer.

  12. JP Says:

    Oops – somehow I missed that point when it was made in the post. My bad, Vogs.

  13. dumpnchase Says:

    JP,
    No problem. And I’m with you in that I like Laich and see some upside. I mentioned to him before last season that he reminded me somewhat of Matt Pettinger at a similar stage, and he replied that coaches have told him the same thing.

    Here’s Pettinger through two full seasons: 143 games, 14-8-22, 83 PIM and minus-18.

    Here’s Laich through two full seasons: 151 games, 15-25-40, 57 PIM and minus-12.

    It’s also worth noting that Pettinger turned 25 at the very beginning of his third season, while Laich will be just over 24 when his third season gets underway this fall.

  14. Tracy Says:

    Mike and JP – Agree. Laich is one of my favorite players and I want him to stay a Cap for a good while longer! I’m happy to see we cannot walk away from him. Thanks for providing great info!!!

  15. Absaraka Says:

    And, too, if the arb award is way off the charts–upper nines or low mill–but not enough to let the Caps walk out, that’s no small salary hit they’d be stuck with. Don’t get me wrong, Laich’s pretty darn good and I want to see him back in the red, white, and blue for a season or two. But now with Laich and Jurcina both headed to arbitration, and Ovechkin still unsigned last I heard, all the Caps’ penny-pinching is starting to make a LOT more sense.

  16. Empty Maybe Says:

    I’m going to have to respectfully (as always) disagree with Mike on this one. McPhee eats arbitration cases for lunch. I’m neither a particular Laich supporter or detractor, but I don’t see enough in the stats for him to be awarded more than Sutherby received, for example.

    Hardly a big deal either way, and while I agree depth is a good thing to have, if the Caps are in the very unlikely position of being able to walk away from Laich’s award, it’s a no-brainer, IMHO. Laich can be replaced, as can most of the contestants for the bottom 6 jobs, outside of Brashear, Pettinger, and (Boyd) Gordon. Steckel may finally step up, or one of the college kids (who are older than your average rooks) may be able to provide the same defense and effort, with a any offense being a bonus. Cheaper and waiver-proof, too.

    Development takes time, absolutely, and having 140+ NHL games under his belt at age 24 is something most youngsters can’t claim. But players in the bottom lines need to start distancing themselves from the pack and their veteran competition, and that hasn’t happened in an obvious fashion yet. The Caps have had the luxury of being able to throw the kids into the breach the past two seasons, with little regard for results in the long-term. This training camp is where players need to take those experiences and actually do something with it, and if Laich (or Sutherby, or Steckel, Kelpis, or Fleischmann, or the AHL signings, etc), then they are waiver-eligible spare parts – not bad to have, but how much do you want to pay them?

  17. Empty Maybe Says:

    Think I got a little off-track there, at the end, so my main point:

    San Diemas high school football rules.

  18. dumpnchase Says:

    Empty,
    Laich’s hearing was in Toronto and McPhee ate lunch in DC. The stats aren’t the only means of determination, and Sutherby is not a comparable, so Laich “could” get more than Sutherby. We’ll find out tomorrow. I agree that a walk away award is not going to happen no way no how, but beyond that, none of us (expect those in the room y-day) really knows how it’s going to turn out. And that’s exactly why GMs and owners hate arbitration.

    It’s not so much of an excellent adventure for them. 😉


  19. […] The Laich Case At 9 a.m on Monday in Toronto, an arbitration hearing to determine Brooks Laich’s salary for the 2007-08 season […] […]

  20. doug Says:

    Mike, good information on the arbitration process, but isn’t it usually the case that arbitration hearings drive a wedge between players & manaagement? e.g. won’t Laich and Jurcina feel at least slightly “bitter” towards the Caps because of this process? What if Jurcina has a great year and we would like to have him around for awhile, won’t that enter into the players mind when they start talking a long term deal? As a fan, I guess I forget that hockey is still a business, and a business has to be run by business personnel, and NOT the fans.

  21. Caps Nut Says:

    I agree that Laich could be looking for a one-way deal but what about the possibility that the player just wants to get the whole process over with? If I remember correctly, that’s why Brendan Witt chose arbitration many years ago. While he got his feelings hurt, he was more interested in getting the contract finalized rather than dragging the whole process out and didn’t even bother with an agent.

  22. FS Says:

    Ok, Mike, it’s been 48 hours. Where’s the verdict?

  23. Mike L Says:

    Hey Mike,

    The fact that Mr. Arbitrator can pick any figure at all is a good thing as opposed to baseball’s take this one or that one. (Bill James wrote a terrific essay on the arbtration process in baseball a few years ago, it really opened my eyes. Before that I thought it was a hostile process, but what it really is is a simple way to settle an impasse.)

    I still say that the big issue in this is the one-way/two-way. Since we don’t know the figures the two sides filed it, is possible that the Caps filed a higher salary figure with a two-way deal, while Laich’s people filed a lower number on a one-way deal.

    There was acutally a case back in the late 1990s where a player held out for less money so that his salary would be under the league average, so he could become a UFA one year earlier….

  24. dumpnchase Says:

    Doug,
    There’s always the possibility of hurt feelings, but that’s another reason why you try to avoid the process if you can. Just checked this year’s arbitration scoreboard. So far, Laich’s is the only case to be heard. Sixteen have already settled prior to hearing and 13 more are still on the books, waiting to be heard if necessary.

    Caps Nut,
    Wanting to get the process over is a possibility too. My take on this one is that the one-way is something the Laich side wants, but as I said before if it was merely the one-way deal it never would have gone to a hearing. If memory serves, Witt whacked his agent after his “bad beat” in arb and negotiated his next deal on his own.

    FS,
    It’s 48 hours from the end of the hearing, not the beginning. Not sure how long the Laich hearing actually took, but each side is allotted somewhere between 60-90 mins to make its case, and then there is also time allowed for rebuttals, etc.

    Mike,
    Agree that the hockey system is better than baseball’s. I remember that case you mention where the guy filed for a lower salary to get UFA status a year earlier. Wish I could remember who it was.

  25. GoBucks9 Says:

    Paul Kariya declined 10million from the Ducks and then took under the league average (something like 1.2m) to become a UFA after his one year in Colorado.


  26. […] what the hell Brooks Laich was thinking. They wondered why a guy with eight goals and 18 points would choose to have his salary for the upcoming season decided via the arbitration process. As with many things in this great game, it’s never as simple as the […]


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