Kukla's Korner

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Too Much Money Spent

from Damien Cox of the Toronto Star,

It was another week for the economics of the NHL to defy the laws of, well, economics.

This is a league, let’s not forget, that has lost hundreds of millions of dollars in the past 18 months because of COVID-19. Maybe a billion. Maybe more.

To deal with these losses, the NHL has added about 25 NHL jobs through expansion. This has happened at a time when all 31 teams were limited to just 28 home games in the 2020-21 season. For those games, the seven Canadian teams were able to entertain no fans in their buildings, and the rest had partial crowds.

Have we illustrated accurately the nature of the NHL’s misery during the pandemic? The only uptick has been selling decals on helmets and cutting a new TV deal south of the border, for the tiny percentage of Americans who actually watch.

Despite the depths of this financial despair, teams went out and spent wildly this week on free agents. Not just any free agents. Players who, for the most part, aren’t stars. Players who generally don’t drive attendance or play at such a level that they can really be described as difference-makers.

On Wednesday, the first day of free agency, NHL clubs signed 163 players to contracts worth $785 million (U.S.), according to Capfriendly.com. On the second day, they spent another $133 million.

continued

Filed in: NHL Teams, | KK Hockey | Permalink
 

Comments

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Has he ever heard of salary cap? The owners pay the same whether they spend $0 or $200M on contracts.

Posted by Davor on 07/31/21 at 11:54 AM ET

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Not to mention he thinks the only thing that justifies a contract’s price is the number of goals scored. Take Bonino, for example. His $2M contract is based on a lot more than just the goals he gets.

The money coming in from the new TV deal plus the expansion fee will go pretty far to offset the COVID losses. The actual value of those contracts will be less if league doesn’t meet expected revenue.

Sure, there will be bad contracts awarded during free agency. There always are. But it is one tool that management has to change their team. Those who can afford to do it will continue to do it.

Doesn’t he realize that Seattle had to reach the cap floor?

Posted by evileye on 08/03/21 at 10:13 AM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

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