How the NHL’s salary cap could hit $90-million

TORONTO — The Globe and Mail

A man wearing a Boston Bruins jacket walks by a photo display of Bruins hockey players outside a pro shop at TD Garden Monday, Jan. 7, 2013.

(Associated Press)

More and more details continue to roll in about the NHL’s new collective agreement, and one thing that’s clear is that the deal will be more of a tweaking than a complete revision of the last CBA.

I took a run in this space at projecting the salary cap and floor a couple days ago, but since then, a lot more information has come in as to how it will be calculated and the numbers have shifted.

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Here’s all that we know at this point, which should allow us to make better assumptions about where the two numbers will go in the coming years:

- The salary cap will be $70.2-million this season, $64.3-million next season and cannot ever go below that $64.3-million figure for the life of the deal.

- The salary floor will be set at $44-million the next two years and then will shift with the midpoint as per usual.

- The basics of how the cap and floor will be calculated is that they will be 15 per cent above and 15 per cent below the midpoint. I’ve written in the past about calculating the midpoint, and according to Bill Daly, the new CBA keeps the same formula.

- The only other key stipulation is that the cap and floor cannot be less than $8-million away from the midpoint or more than $14-million away from it. Looking at various revenue projections, that seems unlikely to happen anyway.

So, with all that under consideration, here’s what the cap and floor will look like if NHL revenues grow at 5 per cent annually and the NHLPA decides to apply the 5 per cent midpoint inflator every season (which they did all but one year in the last CBA):

Season

Revenue

Players' share*

Salary cap

Salary floor

Range

2012-13

$2,275

$1,138

$70.2

$44.0

$26.2

2013-14

$3,303

$1,652

$64.3

$44.0

$20.3

2014-15

$3,468

$1,734

$64.3

$46.4

$17.9

2015-16

$3,642

$1,821

$66.1

$48.8

$17.2

2016-17

$3,824

$1,912

$69.5

$51.4

$18.1

2017-18

$4,015

$2,007

$73.1

$54.1

$19.1

2018-19

$4,216

$2,108

$76.9

$56.9

$20.1

2019-20

$4,426

$2,213

$80.9

$59.8

$21.1

2020-21

$4,648

$2,324

$85.1

$62.9

$22.2

2021-22

$4,880

$2,440

$89.5

$66.2

$23.4

      

*- player share doesn't include $300-million in make whole payments

 

As Sean Gordon and I covered off in a different article this morning, those numbers have to be at least a little bit troubling for teams on the low end of the NHL totem pole.

If you’re the Florida Panthers or New York Islanders, who had trouble keeping pace with the floor under the last agreement when it went over $48-million, how will you feel about one that nears $60-million before the league can opt out of this agreement?

Yes, there will be a little bit more money ($55-million or so) in revenue sharing, but it seems highly likely that’s mitigated by the fact that (a) quite a few more teams are now eligible to receive that money (think: the Islanders, Dallas, Anaheim, New Jersey, etc.) and (b) the floor will make them spend more than before.

The thing too is that’s only based on 5 per cent revenue growth annually. The NHL grew at a rate of about 7.2 per cent in the last agreement, which if it continued, would mean that in Year 8, this league would top $5-billion in revenues.

Let’s assume that’s not possible. But even if the league grows at 6 per cent a year, it’s remarkable to look at where the cap and floor could wind up:

Year

Season

Revenue

Players' share*

Salary cap

Salary floor

6

2017-18

$4,170

$2,085

$75.3

$55.7

7

2018-19

$4,420

$2,210

$80.1

$59.2

8

2019-20

$4,685

$2,343

$85.1

$62.9

9

2020-21

$4,966

$2,483

$90.3

$66.8

10

2021-22

$5,264

$2,632

$96.0

$70.9

 

Basically every tiny percentage shift in annual revenues can have a major effect, over time, on the cap and floor. The difference between 5 per cent and 6 per cent revenue growth by Year 8, for example, is a cap that’s almost another $5-million higher.

Of course, if revenues stagnate and there isn’t that type of robust growth, this won’t be an issue. But it’s something to keep in mind given it got the league in trouble during its last agreement.

Follow on Twitter: @mirtle

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