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Puckin' Around With Spector

NHL GMs Face Salary Cap Headaches This Summer.

Over the past couple of weeks, reports have appeared suggesting the NHL salary cap, under the current collective bargaining agreement (CBA), could increase as high as $69 million for 2012-13, and if the NHLPA uses its right to escalate that figure by five percent, to potentially $72 million.

Given the established $16 million gap between the cap maximum (“ceiling”) and the cap minimum (“floor”), if the ceiling is $69 million, the floor would be $53 million. If it were $72 million, the “floor” would be $56 million.

That number, however, could be temporary, for it’s expected the league will seek to reduce the players share of revenue, from the current 57 percent down to around 50 percent, in the next CBA, which would mean a salary rollback to facilitate a reduction of the cap ceiling and floor.

Enlisting the aid (via Twitter) of James Mirtle of The Globe & Mail, and David Johnson of HockeyAnalysis.com, I examined this possibility in a recent post on my website.

From my “Soapbox” article, “The Upcoming Rise & Fall of the NHL Salary Cap”:

“Mirtle pointed out going from 57% to 50% is “about a 12 % drop in salaries available”, a bigger bite than 7 percent, while Johnson observed it would also depend on the spread between the cap ceiling and floor (assuming the latter is lowered beyond the current spread of $16 million from the ceiling).

Johnson also noted a $69 million cap “implies $61 million midpoint” on around $107 million/team revenue. He concluded (and Mirtle concurred) a new mid-point would be $53.5 million, so the new cap ceiling would be $61.5 million.”

So, the cap ceiling itself won’t substantially decline below the current level of $64.3 million, but if the PA triggers its escalation clause, it could mean next season’s cap maximum might be close to this season’s figure.

Of course, these numbers are merely based on the assumption the league will successfully lower the players’ revenue share to 50 percent. Those numbers could fluctuate if the final figure is lower or higher, assuming, of course, the league is successful in achieving a reduction in the next CBA.

ESPN.com’s Pierre LeBrun recently reported NHL general managers face what he called “the bizarre scenario” of having a higher salary cap number for July and August, with the knowledge it would probably drop by September, assuming a new CBA is implemented by then.

That raises the question of how much the GMs can comfortably spend this summer before the implementation of the new CBA.

The answer appears simple enough: a self-imposed cap, depending upon how much each club was willing to spend heading into this off-season.

For the twenty NHL teams with payrolls for next season currently below the current cap minimum of $48.3 million, it shouldn’t be a significant issue, especially for those – Ottawa, NY Islanders, Winnipeg, Phoenix, St. Louis, Nashville and Colorado - with payrolls under $40 million. Indeed, if the gap between the cap floor and ceiling increases from its current $16 million to, say, $20 million, it makes life even easier for those seven, since most wouldn’t feel pressured to significantly increase their spending on salaries to get above the cap minimum, depending of course on how many players they currently have under contract for next season.

It could get dicey, however, for the ten teams – Pittsburgh, Philadelphia, Buffalo, Toronto, Chicago, Boston, San Jose, Vancouver, Los Angeles and Calgary - with payrolls currently in excess of $50 million.

If they gamble on, say, $64 million, and the cap ceiling comes in at $61 million, they’ll have to slash payroll to become cap compliant, which could prove easier said than done. The more players they have to re-sign, the more difficult it becomes.

The GMs of those ten teams can operate under a self-imposed number of $60 million until the real figure for next season is finally established, but the higher their current payroll over $50 million, the greater the likelihood of missing out on bidding competitively for the best available unrestricted free agents.

More troubling is the possibility of having to wait to re-sign their key restricted free agents until the new CBA is implemented, and the new salary cap numbers revealed, leaving those players open to being poached away by offer sheets from other teams.

In recent years, the offer sheet hasn’t been a serious threat. Indeed, last summer, superstars like Tampa Bay Lightning winger Steven Stamkos and LA Kings defenseman Drew Doughty never received a single offer.

It’s quite likely this summer could pass without anyone receiving an offer sheet, but with some of those high-salaried teams forced to operate under a self-imposed lower cap, it could provide temptation for a GM without that concern to make a pitch.

The possibility also exists we could see some of those high-salaried teams opt to make salary-dumping moves in anticipation they won’t get the significant cap raise needed to re-sign key players.

Again, this is merely speculation. We don’t know what the next CBA will contain, and how it will affect the respective payrolls of the 30 NHL teams heading into next season.

It would be a smart decision by the general managers, however, to err on the side of caution and work within a lower, self-imposed cap ceiling than the anticipated $69-$72 million.

If they end up with more cap space than anticipated when the new cap limits are established, they could use that to finalize their rosters, even if it means putting contract negotiations with some star restricted free agents on hold until the new CBA is implemented.

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

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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.