The notorious Lou Lamoriello has been at the helm as New York Islanders general manager (GM) for the past six seasons. During his time, the Islanders have gone on two deep playoff runs, made the playoffs in five of six seasons, and gone through three head coaches, all hired by Lamoriello. His tenure has had more good than bad, but it is the future that will ultimately dictate his overall performance. Unfortunately for Lamoriello and the Islanders, the future looks bad, largely due to his disastrous contract philosophies.
The Sunk Cost Fallacy
There are many issues with the contracts signed by Lamoriello, but the best way to describe them is through The Sunk Cost Fallacy. As described by The Decision Lab, The Sunk Cost Fallacy is our tendency to follow through on something that we’ve already invested heavily in (be it time, money, effort, emotional energy, etc.), even when giving up is clearly a better idea. Translating to hockey terms, Lamoriello dictates salaries by past decisions and results such as what was given up, rather than the future of the team.
Evidence of Lamoriello falling victim to this fallacy is when he prioritized re-signing trade deadline acquisitions. Since he came to the Islanders, he has traded first-round picks at the trade deadline for Jean-Gabriel Pageau, Kyle Palmieri, and Bo Horvat, as well as a second-round pick for Andy Greene. All four of these players were brought back for additional seasons and two of them are still on unfriendly contracts.
Both Pageau and Palmieri were acquired and had immediate impacts on the Islanders. They filled a need and addressed it, immediately, proving the acquisitions to be worthwhile. However, the Islanders would undoubtedly have been better off today by having them leave in free agency rather than returning, at least with the contracts they were given. This is not to say they have not been valuable contributors to the team’s success since their new contracts kicked in, but Lamoriello brought them each back at a poor annual average value (AAV) rather than letting them test the free agent market to better gauge their values.
Related: Islanders Must Mirror Panthers’ Analytical Approach to Overhaul Bottom-Six
At least in my opinion, contracts are almost never worth signing if the team believes the player is overpaid. The only exceptions are to retain franchise talents like Ilya Sorokin, Mat Barzal, or even Horvat, or to incentivize free agents to sign during a…
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