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Building a model to evaluate the assets value of hockey teams

Every summer, teams look at each other and compare the strength of their line-up. This provides mostly information about the upcoming season. From there, each team knows where they stand compared to the others. However, this exercise doesn't provide information about where the franchise stands if you look at a longer horizon. You can glance over prospects and draft picks, but that's a lot of information to take in without ratings associated to each asset.

In order to build a strong comparison of long term value, a model needs to be built that gives proper value to each category of assets. This is not an easy task by itself. In the model built, here are the different factors that were included or excluded:

- Not all players/prospects/picks have been assigned value. Roughly 500 pro players have a value assigned to them ranging from 1 to 11 for skaters and from 1,5 to 20 for goalies. Draft picks from rounds 1 to 3 have values ranging from 0,75 to 4 for top picks (2021 only). Prospects have assigned value ranging from 0,5 to 5 as long as their value can be approximated to picks in the 1-3 rounds.

- Value of draft picks was loosely based on past trades valuations and also in an asset growth perspective (some prospects get better and gain value, others lose value). As an example, Jack Hughes has a worth of 5 since he's a top pick but if he reaches his upside, that worth will rise to 7.5+ (for an average ST player, that's around 80 OV). In general, 1st round picks have had an assigned value of 2.5 or 1/3rd of a top player.

- Value of picks/prospects takes into account that there are a limited number of roster spots available on pro rosters. An implied rotation of players over 12 years was used. In other words, the model takes into account that new players coming in means other players are coming out. This makes total value of picks, prospects, and pro assets relatively stable from year to year.

- Age and salaries were not taken into account when assessing value. A team with older players or high salaried assets will have a harder time recycling those assets and will see the overall franchise value trend down in future years.

- General asset value can be used as a broad rule to see how teams can improve. However, on a smaller scale, the asset value may not directly translate into trading value on the market, due to age, salaries and availability of assets.

The result of this model is a comparison between franchises that score both the current team and its potential for sustainability. The pro roster strength is the most robust measure as it is mostly composed of "finished" products. The prospect pool and draft picks asset value aren't as safe: they can increase or decrease over time depending on the development of the prospects. As such, the conversion of those assets to pro assets can either lead to an even higher franchise value or for those that whiff could send the value straight back down.

The next article will provide an analysis of where teams rank and how it relates to the concepts introduced in the "building a long-term contender" article.