How much does a draft pick cost?
Plus how the Ryan O'Reilly trade impacts the long-term outlooks of the Leafs and Blues
Welcome to Hockey Curious.
There are 10 days until the NHL’s trade deadline. In today’s newsletter we are going over:
The history of the third-party trade broker
How Minnesota took advantage of a unique contract
How much other rentals could cost in real money
The long-term organizational implications of the O’Reilly trade
A central idea that I’ve been exploring in this newsletter is asset liquidity: the ease with which an asset can be converted into cap space without affecting its market price (trade value).
Related reading: Understanding Asset Liquidity in the NHL
Being liquid means being flexible and being flexible means having cap space.
Cap space is the equivalent of cold, hard cash in the hockey world. It is used to open positions, whether that is signing a star UFA, rewarding a breakout RFA, taking on salary in a trade, etc. But the fact that every team is limited to spending beneath the upper limit of the salary cap means that every dollar of the cap spent comes with opportunity costs.
The Minnesota Wild opted to use a chunk of their cap space to retain 25% of Ryan O’Reilly’s contract, acting as a broker between the St. Louis Blues and Toronto Maple Leafs, in exchange for a 2025 4th-round pick.
This move highlights the Wild’s long-term vision and the importance they place on what I call the asset pipeline. The asset pipeline is a team-building strategy that emphasizes maximizing the value of a draft pick as it goes through its life cycle.
Related reading: The Asset Pipeline
A 4th-round pick may seem inconsequential but when enough savvy asset management moves are compounded over time, the flywheel effects from the asset pipeline eventually create a surplus of trade capital. The Wild accelerated the growth of their top-15 ranked asset pipeline by using their available cap space.
Targeting a 2025 4th-round draft pick is intriguing as it lines up with when Zach Parise and Ryan Suter’s buyout penalty becomes more manageable.
In theory, if a window of contention opens up for the Wild after the 2024-25 season, they could monetize that 2025 4th-round pick at the draft in tandem with other assets in a trade to acquire a win-now type of player.
Leveraging cap space to broker trades and replenish the asset pipeline is a relatively new team-building mechanism. In NHL history, there have only been seven examples of a three-way trade where the third team was involved solely to retain salary.
This got me thinking - if I was the one paying the bills for an NHL franchise, how much would it actually cost me to be a third-party team and pay for a draft pick?
Below are the seven instances of a broker retaining salary to facilitate a trade.
Real money is calculated the same way current cap space is calculated but with a twist: Base Salary * (Days left in the season / Days in the season) * Amount Retained
Related reading: How Cap Space Actually Works
Rather than pro-rating the remaining cap hit, it’s the remaining base salary. This is an important distinction because contracts can be constructed in different ways but still amount to the same cap hit. For example, a 2-year contract with a $4 million cap hit can be paid out:
Scenario A is what happened in Max Domi’s case. He was on a contract with a $5,300,000 cap hit but his base salary was $6,000,000 in the final year so Florida ended up paying more than what met the eye.
Ryan O’Reilly’s contract was made up mostly of signing bonuses which meant that this year, his base salary was only $1,000,000. So, even though his cap hit is $7,500,000, he was only owed $291,891 for the rest of the season.
The Wild retained 25% which equals $72,972 - fascinating because it is by far the cheapest draft pick ‘purchased’ in history.
If owners truly are committed to unturning every stone to improve their team, using cap space creatively to acquire draft capital is a no-brainer. In order for owners to buy in and be aligned with the decision, being able to show how much real money retaining a contract costs in return for a draft pick is crucial. The Wild made out like bandits acquiring a 4th for just $72k.
I wanted to look at some other potential deadline rentals and see if there were any ‘cheap’ costs in relation to the player’s actual cap hit like Ryan O’Reilly.
Patrick Kane’s future is still up in the air but if he were to be moved, there aren’t many teams that could fit him into their cap plans without using a third team to retain part of the contract. Kane was also paid a signing bonus in the summer making his base salary this year just $2,900,000. That means a team retaining 25% would pay him $3,918 a day. If he went right at the deadline - 42 days left in the season - the third-party team would owe Kane $164,594. Right in the 5th round range that we’ve seen in the past but based on the quality of the player, it is probably bumped up to a 4th.
James Van Riemsdyk is also ‘cheaper’ than advertised with a $4,000,000 base salary. Where there is good value for a broker is Shayne Gostisbehere who would only be owed $56,757 if a team retained 25% of his contract past the deadline day.
Conversely, Vladislav Gavrikov is more ‘expensive’ than his cap hit suggests as his base salary comes in at $1,400,000 above his cap hit.
Let’s quickly talk about the long-term impacts of the O’Reilly trade on the main parties of the deal.
St. Louis continues their fire sale, replenishing one of the shallowest asset pipelines in the league. These cards won’t be updated until post deadline but between the Tarasenko and O’Reilly trades, they have amassed quite the draft pick surplus in the next couple of drafts.
They now own six picks in the first two rounds over the next two years.
The Maple Leafs are in the all-in stage of their life cycle and are fully monetizing their asset pipeline. This is as big of a ‘go-for-it’ move as they come. The Leafs have many large contract decisions looming as they have only committed 10% of their 2026 cap. This means key players are due for a raise and the group as currently constructed will most likely be unable to stay together.
Being in a position where it makes sense to deplete an asset pipeline is the ultimate goal of NHL GMs.
The Leafs have a seat at the table and they have pushed their chips into the middle.