Photo credit: Rob Carr

The signing of Alex Semin to a one-year $6.7 million deal may be slightly overpaying him for a year’s work, but the length of the contract is a smart move from a cap management perspective; the chance he will perform well enough to deserve it, even over one season, is a longshot.

It’s true that Semin is one of the more talented players in the NHL, but eventually talent gives way to age and the law of averages, at which point a long-term contract can become an albatross around a club’s neck.

A great way to measure a player’s production is by using Tom Awad’s Goals Versus Threshold, or GVT, because it summarizes all different types of contributions into one measurement, regardless of whether they are offensive, defensive, goaltending or during the shootout. The higher the GVT, the more goals contributed to the team above what a replacement player (AHLer or fourth liner) would add. From there we can calculate a player’s Goals Versus Salary (GVS) which, instead of comparing a player’s contributions versus a replacement player like GVT does, compares those contributions against what you would expect for the same amount of money.

Computing GVS is simple:

1. Take the player’s actual salary and subtract from it the approximate cost of a replacement player, which is the current minimum NHL salary ($500,000).
2. Multiply the remainder by three. We use three since a team of 20 replacement players will cost roughly 10 million in salary, leaving about $40 million in cap space, depending on the season. By definition the league average GVT per team is 120, meaning each player should contribute 120 GVT / $40 million = 3 goals for every $1 million in salary.
3. Subtract the player’s GVT rating (found here) from what we would expect given their salary to get their GVS. The higher the number, the more he “outplayed” his contract.

Using Alex Semin’s 2010-11 campaign as an example we have:

1. His salary of $6 million, from which we subtract the league minimum of $500,000, which equals $5.5 million.
2. Multiply 5.5 times 3 = 16.5 proj GVT based on salary expectations.
3. Semin posted a GVT of 14.5 last season, so we subtract 16.5 from his actual of 14.5 and get a GVS of -2.0. In other words, the Caps got 2.0 less goals than they should have for the $6 million they paid Semin last year.

We can also figure out what GVT level is necessary to justify a certain contract value by working the equation backwards. To justify Semin’s $6.7 million contract next season he needs a GVT of 18.6, or produce almost 19 more goals than a replacement player would on both sides of the puck.

Since the lockout there have been 139 wingers who played at age 27. Only five of them produced singular seasons in excess of 18.5 GVT: Marion Gaborik, Brian Gionta , Henrik Zetterberg, Dany Heatley and Marian Hossa.

As you can see, the chances of a winger regressing to the mean are greater than the chances of them taking a big leap forward — especially as they get older.

Using similar players at similar ages we can project Semin to score 32 goals and 67 points in 2011-12 over 70 games played for which Washington will pay $6.7 million, quite a bit short from the 43 goals/89 points on average he would need to justify it. And that’s okay since the risk is only for one season of a one-year contract. Plus, there just aren’t that many skaters who can score over 30 goals a season, and Semin is one of them.

Many speculate that Semin’s contract is prohibitive to a trade, but since it is only one year I disagree. Getting fair value back for Semin would be way more difficult than convincing another team to assume his contract, which is why I think you roll the dice for one more year with Semin on the second line.

It is rare for a skater, especially one as one dimensional as Semin, to justify his salary over the life of the contract through on-ice production. That is why the Capitals would be smart to keep the long-term contracts to a minimum and employ the “show us what you got” approach it has recently taken with Semin. Perhaps players won’t be here in the twilight of their careers, but neither will those expensive contracts that accompany them.