Kukla's Korner

The Malik Report

Even more cap talk

As SportsBusiness Journal’s Liz Mullen and the Montreal Gazette’s Pat Hickey reported, NHL deputy commissioner Bill Daly stated that the salary cap could rise to anywhere between $62 to $63.5 million for the 2011-2012 season, but the final figure depends on two factors: first and foremost, the players’ share will increase if the NHL reaches $3 billion in total revenues, and Daly told Mullen and an audience at the Sports Lawyers Association’s convention that the NHL is going to exceed $2.9 billion in revenues, but he didn’t have the final numbers.

The other issues involves escrow withholdings, because the players can either agree to or choose to decline their right to increase the cap by 5%, but as the Score’s Rick Moldovayni and Forbes’ Mike Colligan suggest, the fact that players have been giving around 10-13% of their salaries back to the league because so many teams spend more real-world dollars than the cap limits them to thanks to long-term contracts whose averaged salaries drop players’ cap hits and LTIR exemptions (mostly the former):

Theoretically, the escrow effect of contracts like these will reverse a decade from now on the tail end of the deals when the cap hit exceeds actual salary paid, but a different generation of players will reap the benefits (assuming the same system is in place and the star players haven’t already retired by that time).

In a sense, the escrow tensions have pitted [Canucks goaltender Robert] Luongo and the ‘haves’ against the ‘have-nots’ of the NHL.  This leads to an important and perhaps polarizing strategic choice for the NHLPA.

After HRR is determined and a salary cap level is established, the players also have the ability to increase the salary cap number by 5-percent to account for expected revenue growth in the coming season.  The NHLPA has always taken this escalator option and on the surface it seems like a no-brainer decision.

A higher salary cap means teams with full pockets can spend more and drive up the market price of this summer’s free agents.  But if HRR doesn’t increase 5-percent next year to match the escalator, players with existing contracts are forced to surrender even more money to the league in escrow.

Continued with lots of Donald Fehr/Gary Bettman/lockout bluster, but here’s what I know: the players chose to let the inflator do its thing and deal with escrow last year and the vote will be close again, but especially going into a possible lockout year, it’s very hard to believe that the PA’s conservative front will out-duel those who want to make sure that players can earn bucks in a rebounding economy and then complain about whatever they have to give back when the NHL tries to make its de-facto rollback permanent.

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About The Malik Report

The Malik Report is a destination for all things Red Wings-related. I offer biased, perhaps unprofessional-at-times and verbose coverage of my favorite team, their prospects and developmental affiliates. I've joined the Kukla's Korner family with five years of blogging under my belt, and I hope you'll find almost everything you need to follow your Red Wings at a place where all opinions are created equal and we're all friends, talking about hockey and the team we love to follow.


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