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A Lost Season for “Cost Certainty”

In light of the recent debacle, known as the Ilya Kovalchuk contract saga, and listening to and reading wide ranging opinions on various radio stations and print media, I can’t help but thinking back to the lockout and lost season of 2004-2005.

The main issue of the CBA negotiations was the idea of creating “cost certainty” for the owners.  Gary Bettman wanted to ensure that player salaries were linked to league revenues.  After a lost season, Bettman and the owners were able to get the salary cap or “cost certainty” that they desired.  Player’s salaries are now guaranteed to be 54% of league revenues and teams must meet a salary cap floor.

The salary cap for the 2005-2006 season was set at $39 million with a salary cap floor just over $21 million.  In comparison, the current salary cap for the 2010-2011 season is set at $59.4 million with a cap floor of $43.4 million.  The salary cap has increased by over 40% in its first five seasons of existence and the cap floor has more than doubled!  That is a pretty impressive growth rate considering that returns in the stock market and most people’s pensions have shrunk.  What is even more perplexing is that the salary cap floor is now more than 10% higher than the original salary cap.

With the astronomical rise in the salary cap over the past five years, one must think that the league is doing exceptionally well.  Unfortunately, one can argue that the league is in worse shape financially than it was back before the lockout.  The league still does not have a legitimate national television contract, there are numerous teams that are struggling to survive, and the league actually OWNS a team. 

So what is the problem here?  With players salaries tied to league revenues and a salary cap, how aren’t the NHL and its individual teams prospering?  I am not going to sit here and go through all of the issues with the CBA, as there are many, but I can’t help but think about what is going to happen in September 2011 when the current CBA expires (players can extend agreement to September 2012).  Are we, the fans, going to have to sit through another lockout?  Are we going to have to endure another lost season?  Just thinking about makes me cringe.  What spin can Gary Bettman and the NHL owners put on it to make the fans accept another stoppage?  In my opinion, there is nothing that they can do or say.  They were given the system that they wanted and the owners and general managers of individual teams have found ways to circumvent that system.  The Ilya Kovalchuk contract is just the latest example, but there have been numerous contracts handed out that fit the bill including, but not limited to, the Hossa, Savard, Luongo, and Franzen deals.

The funny part about all of this is that the players presented a $49 million cap at one point during the CBA negotiations that was flat out rejected by the league as they were desperate for their “cost certainty”.  Well they got it and they better be satisfied with it.

Filed in: | KK Members Blog | Permalink
  Tags: bettman, cba, kovalchuk

Comments

Primis's avatar

Honestly, of all the major 4 sports i think the NHL got it the most right.

MLB still operates without any cap or restrictions at all.  And MLB is facing a work stoppage possibility, though not as great as in the NBA or NFL.

The NBA has messes like the James, Wade, Bosh thing, and a guy like Chris Paul now seeing eveyrone else get theirs so now he wants it to even though he’s under contract—and you know he’ll get it.  The NBA is facing a probabl;y work stoppage.

The NFL has the spector of an uncapped season and further labor problems and a possible stoppage again.

The CB and new rules didn’t change owner and GM intelligence in the NHL unfortunately.  So you get an owner like Wang who clearly has no clue still not succeeding..  You have Edmonton continuing to struggle because they are a joke of an org and operate like it (what else would anyone expect?).  The NY Rangers continue to struggle because they’ll hand you a huge contract so long as you’re breathing, presumably.  PHX struggled because they never really tried to actually ice a winning team before (novel concept, I know).  ATL is struggling because Waddell has run them into the ground.  Tampa struggled because their ownership and management were a bunch of clowns up until now.

As far as the whole TV contract thing, ESPN’s witnessed the NBA (their horse they bet on) sinking and facing an imminent-looking work stoppage which will probably murder the value of the league and product.  The NHL, in comparison, pretty much put a cable channel on the map and has slowly watched the little channel turn into a player that at times can outdraw ESPN’s ratings, as we saw this past season.  As painful as it is to say, the NHL probably made the right move in walking away form ESPN’s offer where they’d have been second-fiddle.

The league as a whole is doing fine.  Some markets are in miserable shape, and to a team it’s because their orgs have been run very poorly.

Posted by Primis on 07/23/10 at 12:03 AM ET

Avatar

I agree with what you are saying.  My biggest issue is that when this CBA is expired, are we going to hear the same story from Gary Bettman and the owners that we got for the last two lockouts?  Are we going to have to lose another season because owners and managers can’t control themselves?

Posted by @TheDailyBites from Hamilton, Ontario on 07/23/10 at 12:29 AM ET

J.J. from Kansas's avatar

As a minor correction, the players were only guaranteed as low as 54% in the first season.  It’s a sliding scale that maxes at 57% of league revenues at the $2.7B threshold, which they reached before the economic downturn.

However, the cap is not to blame for the problems, it’s the salary floor which is set too high and leaves small teams behind with a revenue-sharing system that doesn’t properly share enough revenue for even the well-run small market teams.  Even with the Hossa deal and all of the other horrible accounting decisions made by the Blackhawks, I can just about guarantee you that their salary expenditures last year did not exceed even 53% of their revenues.

Posted by J.J. from Kansas on 07/29/10 at 11:22 AM ET

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