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.