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Salary Floor Economics

The salary cap is a tool to keep team expenses down, as teams cannot exceed a certain payroll.  Conversely a salary floor is a tool to keep team expenses up.  The most significant flirt with the salary floor has been the Dallas Stars.  The team is going through bankruptcy and is trying to keep expenses down.  They had a bit of a crisis when Sean Avery was sent to the minors by the New York Rangers.  The Rangers had claimed Avery from the Stars on re-entry waivers and as such the Stars had half of his salary cap hit ($1.9375 million) count toward them.  With Avery in the minors his salary cap hit disappeared and Dallas was in salary floor difficulty.  They got short term relief when Adam Pardy was injured.  This allowed Philip Larsen onto their roster.  The problem is Pardy is expected to come back soon.

The solution was to trade for Eric Nystrom from the Minnesota Wild, but to do it in the way to make his salary cap hit as big as possible.

Minnesota had waived Nystrom and sent him to the minors.  They put him through re-entry waivers, in hopes of some team claiming him.  In this case, the claiming team would get Nystrom for half of his $1.4 million salary cap hit ($700,000).  Nobody claimed him despite the fact Dallas was interested.  After he cleared re-entry waivers, Dallas traded for Nystrom giving up future considerations (believed to be a conditional draft pick).  Dallas needed Nystrom’s entire $1.4 million salary cap hit on their books.  They stood about $300,000 below the salary floor.  Dallas needed their incoming player to exceed the salary of the player who he would replace on their roster by at least that much.  Tomas Vincour and his $800,000 salary cap hit was the player in question.  So Nystrom at full cost qualified, but Nystrom at half price did not.  The Dallas Stars could not accept him on re-entry waivers.

Eric Nystrom will do little to improve the Dallas Stars.  He is coming off of a 12 point season where he posted the fourth worst Corsi rating in the league.  He is exactly what is needed to solve their salary floor problem for now.

The Dallas Stars salary floor issue is probably not solved.  They will likely want to trade some expiring contracts for draft picks as they fall out of contention.  They cannot do that as things currently stand.  Look for Dallas to try to acquire a player or two who is paid less than his salary cap hit in an attempt to keep costs down if they wish to make such deals.

The Dallas Stars are not going to contend this year.  They are going to be a cheap team as they go through bankruptcy.  They were forced to add Eric Nystrom in the most expensive way possible just to stay above the salary floor.  That isn’t the kind of move a contending team makes.

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Comments

elphantasmo5000's avatar

so the devils get fined for creatively screwing the salary cap with kovy. other teams are threatened as well.

isnt dallas doing the same thing, but in regards of the salary floor? how is this legal and not trying to loophole the CBA?

i get dallas has no money, but they are making a joke of the CBA and should be punished just like the devils were. or at least threatened if something like this happens again this season.

Posted by elphantasmo5000 on 10/13/11 at 09:19 PM ET

Avatar

What loophole is Dallas exploiting?  What rule is being bent through unintended context or sneaky, dishonest or misleading actions?  Their cap figure has to be above a certain amount, and they are acquiring players and shuffling their roster in order to ensure that cap figure remains above the floor level. 

I mean, it sucks for Dallas fans that this once deep-pocketed team has become budget-conscious to the point of scrapping a season, but there’s nothing wrong or underhanded about what Dallas is doing.

Posted by jonquixote on 10/13/11 at 10:01 PM ET

Faux Rumors's avatar

1) The whole salary floor forcing low income teams to spend beyond their means is going to craftily be used by Bettman and the owners to show how the current CBA needs to be altered because so many teams are losing money
2) The solution is simple. If the NHL wants to place franchises in low income areas, they better set up a better revenue sharig system from the rich to the poor. Else allow the teams to move to more eailiy move to more profitable locations
3) Also if they need a “floor” it shouldn’t be so close to the ceiling number.  When a team is in rebuilding mode they naturally will have a lower payroll than a contending vetern-laden team.
4) Put it simply, the crap we were fed that the salary cap(cost certainty) was the panacea to correct all the financial ills of the game was a boat load of nonsense!

Posted by Faux Rumors from Globally- Here, there, Everywhere on 10/14/11 at 02:19 PM ET

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imageThe Puck Stops Here was founded during the 2004/05 lockout as a place to rant about hockey. The original site contains over 1000 posts, some of which were also published on FoxSports.com.

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