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Puckin' Around With Spector

Big Market NHL Teams to “Max Out” This Summer?

For the seventh consecutive year, the NHL salary cap limits are expected to increase.

Thanks to a projected $3.2 billion in revenue for the 2011-12 regular season and playoffs (the most for a single season in NHL history), the salary cap “ceiling” for 2012-13 could rise to $69 million, as well as raising the salary cap “floor” to over $53 million.

It could go even higher, for if the NHLPA employs its five percent salary escalator clause, the ceiling could go as high as $72 million, and the floor to $56 million.

In other words, the projected cap minimum for next season could be as high as the salary cap ceiling of 2009-10.

While the salary cap’s constant escalation leaves NHL fans wondering what the 2004-05 lockout was about, it’s good news for the nine teams (Philadelphia, Pittsburgh, Boston, Buffalo, Chicago, Toronto, San Jose, Vancouver and Los Angeles) with payrolls currently in excess of $54 million for next season, giving them considerably more available cap space to worth with.

It’s also good news for traditionally free-spending clubs like the Detroit Red Wings, and New York Rangers, as well as the Montreal Canadiens, Calgary Flames and Washington Capitals, who’ve been big spenders for some time under the salary cap.

That projected increase, however, could be short-lived.

In the upcoming CBA negotiations, it’s believed the league will seek to reduce the players’ share of revenue, from its current 57% to a 50-50 split with the team owners, as well as lowering the cap floor by widening the spread between it and the cap ceiling from its current $16 million to over $20 million.

That would require the players accepting a rollback on existing salaries, which would also have an effect upon unsigned players, forcing them to accept comparable salaries based on the rolled-back rate.

The end result could be a cap ceiling dropping back for next season to within the same level ($61-$63 million) as this year’s rate of $64.3 million, with a cap floor declining perhaps to $44 million.

League commissioner Gary Bettman said he’s told the team owners to conduct their business as usual for this summer under the terms of the current CBA, which expires on September 15th.

Given the uncertainty over what could be contained in the next CBA, one would expect the league owners, especially traditional free-spenders or those with committed payrolls north of $54 million would exercise some caution heading into this summer.

That, however, doesn’t appear to be the case.

CSNPhilly.com’s Tim Panaccio last week quoted an unnamed NHL Board of Governor member claiming all the big money teams intend to “max out” on the salary cap, because if it is adjusted downward next season, it will be done “across the board” without penalizing the top spenders.

In other words, it’s okay to spend up to the projected cap ceiling during the summer, because if the cap drops, so too will the value of existing player contracts, ensuring the free-spenders remain cap compliant without having to shed salaries to do so.

That’s a bold assumption, which would indicate the team owners expect the NHLPA membership to once again give back a portion of their salaries – and share of revenue – if they wish to continue playing NHL hockey next season.

Even if there isn’t a reduction in the cap ceiling in the next CBA, it still won’t hurt those deep-pocketed, free-spending teams. They can afford to keep pace with the rising cap, regardless of its number.

It’ll be a different story for those teams struggling to keep pace with the rising cap floor, especially if it isn’t reduced.

They’ll lose out in bidding competitively for the best available free agent talent, risk losing their own best UFAs to the free market, and could be forced to trade those they cannot afford to re-sign, or those too expensive to retain.

In other words, it’ll be the same situation they faced prior to the great lockout of 2004-05.

As usual, it’s win-win for those teams with the deep pockets and the willingness to spend, while those which can’t afford to do so hope for some form of relief in the next CBA.

That could result in the league once again attempting to squeeze the players, rather than working with them to come up with an improved revenue sharing plan to assist the struggling franchises.

Wash, rinse, repeat.

Filed in: | Puckin' Around With Spector | Permalink
  Tags: cba, nhl, nhlpa, salary+cap

Comments

Avatar

Watching Ryan McDonugh on the Rangers makes me a very sad sad former Habs fan, and look at the bum we got for him, Scott Gomez, thank goodness Gainey and his puppet Gauthier are Both gone. This once proud franchise is the laughing stock of the league now.

Posted by Cournoyer12 from New York City on 05/16/12 at 11:04 AM ET

Lyle Richardson's avatar

Cournoyer12: I fail to see what your comment has to do with the subject.

Posted by Lyle Richardson on 05/16/12 at 12:57 PM ET

Matt Fry's avatar

I just don’t understand why it has to keep getting raised, especially with the uncertainty of the next CBA.  Half these teams weren’t even spending the cap floor before these shenanigans started.  Salaries are already escalating enough and so are ticket prices.

I personally believe the whole “parity” party is going to end soon enough.  Some of these low-payroll teams are already hemorrhaging money.  How is this going to help?

Posted by Matt Fry from Winnipeg on 05/16/12 at 02:11 PM ET

Avatar

I think it’s time to start thinking of a static cap with a reduced floor.  With the possibility of the cap going up to $69-72M, which is pretty close to the highest payrolls ever in the NHL (wikipedia has the Rangers going as high as $76M and the Wings as high as $77M).  If they were to decide to have a permanent cap of $70M or so while maybe keeping the floor around where it was this year (or maybe even going a little lower) you’d have teams who want to spend and can afford to spend happy and you’d also not force teams to spend more than they can afford.

Or just scrap the cap altogether and only have a floor that teams would have to spend to.

Right now there are four teams left.  One is in the bottom ten of league spending, two are in the top ten and one is around the middle.  If you expand the list a bit more you’ve got the Sens, Predators, Blues and Coyotes all icing competitive teams while having payrolls in the bottom ten.

Posted by Garth on 05/16/12 at 03:02 PM ET

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About Puckin' Around With Spector

I’m Lyle Richardson. You might know me from my website, Spector’s Hockey, my thrice-weekly rumor column at THN.com, my weekly column at Eishockey News (if you read German), and my former gig as a contributing writer to Foxsports.com.

I’ll be writing a once-weekly blog here with my take on all things NHL. Who knows, I might actually find time to debunk a trade rumor or two.