It's hard to say which statistic is stranger – that in the fourth year of the salary-capped NHL, the spending floor, or the amount that every team is obliged to commit to payroll, is higher ($40.7 million) than the actual cap was in the first year of the new collective bargaining agreement ($39 million). Or that based on last year's payrolls, three teams are going to have to pay a lot more in salary than they did a year ago in order to comply with their spending obligations under the current CBA. Based on last October's payrolls, a trio of teams - the Washington Capitals ($40.3 million), the Phoenix Coyotes ($37.1 million) and the Nashville Predators ($35.4 million) – were all under the new spending floor and thus will need to increase payrolls next year.
For Washington, it won't be an issue, not after Alex Ovechkin's new contract kicks in, while it's easy to see why the Coyotes thought they could go out and land Olli Jokinen and his $5.25 million salary to their payroll. Nashville, meanwhile, has been signing up all its best young talent – Shea Weber, Ryan Suter and the rest – to long-term contracts, partly because they need to spend the cash somewhere, and why not give it to the players that'll be their core group going forward. A quartet of other teams - the San Jose Sharks at $41.5 million, the Pittsburgh Penguins at $41.7, the Columbus Blues Jackets at $42.4 million and the New York Islanders at $42.9 million) - were all dangerously close to the floor as well. They, along with the Florida Panthers, will all be in a position to throw money at free agents – their own or other teams – in order to meet their salary obligations as well.
Things sure changed in a hurry – and you wonder if the hard salary cap of $49 million offered by the players association just before commissioner Gary Bettman pulled the plug on the 2004-05 season wouldn't look good to half-a-dozen teams, who now see the gap between haves and have-nots rising again every day.
In four years, the ceiling has grown from $39 million to $44 million to $50.3 million to $56.7 million, the figure jointly announced by the NHL and the players association Thursday. Not many teams want to disclose their bottom lines, but you can be sure based on all those empty seats in Phoenix and Nashville and elsewhere in the southern United States, a lot of teams in non-traditional markets are still operating in the red, even though they achieved their much-vaunted “cost certainty” in the bitter negotiations that characterized this current labor agreement.
In the last 12 months, most of the revenue growth came from the six Canadian teams, propped up by the strength of the Canadian dollar and the fact that virtually every seat for every game played in Canada last season was sold at full price. In other hockey hotbeds, such as Sunrise, Florida, the attendance figures are often padded by deeply discounted tickets; at the end of the last regular season, the Los Angeles Kings disclosed they were losing more money now than in the pre-salary cap days.
So where does it go next? For the players, the day of reckoning is coming, sooner rather than later. So far, the monies withheld in escrow by the NHL have mostly been returned to the players (and in the first year of the new agreement, players were actually paid a post-season bonus because hockey came back far stronger than anticipated). That can't go on indefinitely. One of these years, perhaps even next year, revenues will plateau, and when that happens, the players will lose a significant chunk of their salaries in escrow, which will create unhappiness among the 750 or members of the NHLPA. In the meantime, not every NHL team is as in love with the current CBA as they were when they signed off on the deal in the summer of 2005. Officially, that agreement runs until Sept. 15, 2011 and according to the language of the CBA, “shall remain in effect from year to year thereafter unless and until either party shall deliver to the other a written notice of termination at least 120 days prior to Sept. 15, 2011.”
The NHLPA has the right to terminate the agreement two years early, if they are dissatisfied with how it's going, which means they could theoretically put the league on notice one year from now that they want to sit down and renegotiate the deal. But would they? And if they did, would that play right into the hands of a group of dissatisfied owners, who wouldn't mind going to war again and seeing if they can actually negotiate an agreement that will keep costs from skyrocketing? Remember, this agreement that was supposed to be a clear victory for ownership. You'd be hard-pressed to find many who'd come to that conclusion right now.
