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The NHL Salary Structure

In 1996/97 Mario Lemieux became the highest paid player in league history.  He was paid $11.35 million that season.  That season was 16 years ago.  The highest paid player next season barring future signings will be a four way tie between Brad Richards, Tyler Myers, Zach Parise and Ryan Suter.  Each of whom is to be paid $12 million next season.  Since the NHL deals with average salaries as salary cap hits, each of these players will see reductions in salary in the future to keep their salary cap hits down.  In terms of salary cap hit no player has an average salary greater than Alexander Ovechkin who has a slightly greater than $9.5 million.

The highest paid players in the NHL have not seen any raise in their pay in sixteen years.  The highest paid players next season are not the best players in the league.  Thus superstar talent players are underpriced in the NHL market.  As an example we can look at the contract Sidney Crosby recently signed.

He signed a twelve year contract worth $104.4 million in total.  This gives him an $8.7 million salary cap hit - though the contract is frontloaded so he is paid more than that in its first years.  This contract may be longer than they were signing in the mid 90’s but it is not more lucrative per season. 

Despite the fact that superstar salaries are not going up, the total money paid to players is climbing.  This money is being paid to lesser players.  The minimum salary in the mid-90s changed by year but was around $150,000 per season.  It is now $525,000.  The lowest paid players have increased their pay by a factor of 3.5 while their highest paid counterparts have not seen a raise.

The mid-level players have also seen a significant raise.  In 96/97 Patrick Roy and Pat LaFontaine were some of the ten highest paid players in hockey and they both made around $4.5 million each.  Today run of the mill players like Olli Jokinen and Matt Carle make that kind of money.

This has created a situation where superstar players are underpaid relative to the rest of the league.  Jokinen and Carle make more per season than Sidney Crosby and it should be clear that Crosby is of more value to a successful team.

This situation may not remain true indefinitely into the future.  A dominant player will sign a contract extension where they get paid closer to the maximum allowed for a player of 20% of the salary cap.  With the current cap that would be about $14 million.  A leading candidate is Evgeni Malkin who is eligible to sign a contract extension next summer.

Right now superstar players are underpaid in the NHL by a significant margin.  The top salaries in the league have not gone up in well over a decade while the lesser player salaries have.  Those players currently collecting top salaries are not the most talented players in the league.  Whatever is paid to a superstar player is not enough in the current NHL salary structure.  These players are bargains right now.

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Comments

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As I said (quoting Bill Simmons -about the NBA), the issue isn’t the stars making too much money. They’re probably underpaid.

The problem is role players being paid like 2nd liners and good players getting superstar money,.

(also, I assume you’re not counting the bonuses on Fedorov’s 1998 contract)

Posted by Herm from the office on 07/06/12 at 03:50 PM ET

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Yeah, I’d say a league where James Wisniewski, Tyler Myers and Brent Seabrook make more money next year than Drew Doughty—who signed a contract more recently than any of the others-is a little weird. As is one where Zach Parise makes way more than Steven Stamkos and John Tavares.

Posted by larry from pitt on 07/06/12 at 04:14 PM ET

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“The mid-level players have also seen a significant raise.  In 96/97 Patrick Roy and Pat LaFontaine were some of the ten highest paid players in hockey and they both made around $4.5 million each.  Today run of the mill players like Olli Jokinen and Matt Carle make that kind of money.”

I fail to see why you include this in your analysis, as it significantly contradicts your point. Indeed, Roy might be the be the best goaltender ever, and he was 31-32. Lafontaine was a superstar. Both were superstars at the top of the pay scale.

Fast-forward to now. A superstar player in the top 10 highest-paid players is making DOUBLE what Lafontaine and Roy were making, according to your uncredited numbers.

I found some numbers here, and they seem to indicate that Mark Messier, at 6 million a year, was the second-highest paid in the NHL. According to CapGeek, at least 50 players now make that much money.

Take a look at the 21st-25th highest salaries of 96-97. Turgeon, Verbeek, K. Stevens, Modano, Robitaille. Basically, all-star players, superstars, 3 of them potential HOFers. They earned 2.9 to 3mil.

Now take a look at the 21st-25th, current. That’s Campbell, Iginla, Brière, Cammalleri, Thornton. Again, all-stars, superstars, 2 HOFers. They’re being paid 7 to 7.2mil a year. That’s roughly 2.5 times as much, and these aren’t exactly third line grinders. They are superstars.

Mario Lemieux was the exception. The rule is that star players make significantly more than they did 15 years ago.

The salary cap, which I loathe, makes every contract a team has have an effect on every subsequent contract. Before the salary cap, signing Mario Lemieux to 50 million dollars a year, if we know that he will earn the team the same amount, is a brilliant signing - you basically get arguably the most talented player ever on your team for free. With the current rules, if you know that Crosby will earn you 50 million dollars a year, you still can’t offer him more than 20% of your team’s payroll - technically, right now, 14mil. Not only are you limited to what you can offer him, but it also means that you now only have a maximum of 56mil for the rest of your team, something that wasn’t present before.

Furthermore, you claim that the top paid players aren’t the most talented - that is a much different claim than claiming that the best players are underpaid. The former, which isn’t addressed anywhere else in your post, means that GMs are worst at assessing value than 15 years ago, and the latter means that salary ratios are out of whack. Why even bring up the former? Where does it come from and why don’t you address it?

So, in conclusion, I don’t agree with your premise, I think you contradict yourself, and if you do want to point out that good players are undervalued, do so based on evaluating players’ values, not by looking at a single data point from 15 years ago. What could be interesting to find out, and a topic I recommend you explore (as I do think you frequently write on interesting topics), is potential causes of superstar players accepting less money to sign long-term contracts. Why do Stamkos and Getzlaf accept less money than they are worth?

Posted by Jean on 07/06/12 at 05:31 PM ET

Guilherme's avatar

is potential causes of superstar players accepting less money to sign long-term contracts. Why do Stamkos and Getzlaf accept less money than they are worth?

Because they know they are good. Go Stamkos and say “Hey, can you sign for a little less so we can build a contender?”, and he’ll agree, because he’ll have another big contract ahead in his life.

No go to Brian Campbell, who knows that contract is the only good one he’ll have. Of course he won’t take a discount.

Also, how much money will a star make in advertisement?

Posted by Guilherme from Brazsil on 07/06/12 at 07:08 PM ET

The Hurricane's avatar

Yay for unions!

Posted by The Hurricane on 07/07/12 at 02:59 AM ET

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Mario’s contract was an oddball one and not reflective of other superstar salaries at the time. The next four players averaged around $5 million.

Compare early 90’s top player salaries to early 00’s and you will see a huge jump.

Crosby is underpaid. Some of these contracts are absurd for average players.

Posted by StatsProfessor from North America on 07/17/12 at 07:02 PM ET

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