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Rogers CEO Nadir Mohamed (left) shakes hands with NHL Commissioner Gary Betman following a news conference in Toronto on Tuesday 26, 2013 as they announced a long term broadcast and multimedia agreement, which provides Rogers with all national rights. (The Canadian Press)

Rogers CEO Nadir Mohamed (left) shakes hands with NHL Commissioner Gary Betman following a news conference in Toronto on Tuesday 26, 2013 as they announced a long term broadcast and multimedia agreement, which provides Rogers with all national rights.

(The Canadian Press)

James Mirtle

Rogers mega TV deal to boost NHL salary cap Add to ...

In NHL terms, $5.2-billion is a massive amount of money.

Especially when you consider the league has never made more than $3.3-billion in a season.

The new Canadian TV deal with Rogers will obviously have a considerable affect on viewers and league coffers, but what it will also do is change the NHL’s salary structure and the cap itself. This is very good news for cap-strapped teams that want to spend more than the current $64.3-million limit, which will quickly be blown away as the new TV money is worked into the equation.

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Keep in mind, however, that the NHL doesn’t start collecting on that cash until next season, which means its impact on the salary cap will not be felt until the following year (2015-16).

Below in the chart are my projections (with input from several league and NHLPA sources) for where the league’s cap and floor are headed in the next two years. A few things to keep in mind about these numbers:

a) This season’s revenue will be affected by the boost from having six outdoor games, and the full impact of that is hard to quantify. I’ve accounted for an 8 per cent rise in revenue from 2011-12, the NHL’s last full season, and a cap in the $68-million range.

b) NHL revenues grew at a rate of an average of 7.1 per cent under the last CBA, so growth should be expected. After the first year, I’ve only used 5 per cent growth in my calculations, prior to factoring in the new TV deal.

c) This is all in U.S. dollars. As always, a sharp drop in the Canadian dollar could affect NHL revenues in a big way as the seven Canadian teams make up a disproportionate amount of hockey-related revenues (HRR).

 

Previous year
projected HRR*

  

Season

Floor

Cap

2014-15 (no impact from deal)

3564

50.0

67.7

2015-16 (w/o new TV deal)

3742

52.7

71.3

2015-16 (with TV deal boost)

3918

55.3

74.8

 

*- in millions (USD)

 

A brief explanation of how to arrive at these revenue figures. This season’s HRR total is exactly 8 per cent more than $3.3-billion, which is in-line with what people around the league are expecting.

Next season is a simple 5 per cent jump from that. And the “TV deal boost” I’ve included is the $375-million from the new Rogers deal the NHL gets next season (including the up front $150-million split over two years) minus $190-million (the old national TV contract) and converted to Canadian dollars.

That’s how the NHL will become a nearly $4-billion business and have a salary cap of almost $75-million in less than two years.

The crazy part is what happens if you project that continued 5 per cent growth into the future. With the new TV deal added in, the league could easily have an $80-million cap by 2016-17 and a $100-million cap by the time the CBA expires in 2022.

The floor projects to more than $75-million by that point.

The good news for the league is that these national revenue sources benefit all teams. But the higher cap is really the best for high spending franchises, including many of the Canadian ones, several of which would like to have higher payrolls than the league’s current $64.3-million limit.

"We aren't worried about the cap going too high," NHL deputy commissioner Bill Daly said on Wednesday. "The cap is a function of revenues."

If, as expected, the cap rises by more than $10-million here within about 18 months, there are going to be a lot of teams flush with cash, especially considering how many high profile players are locked up on long-term deals already.

The next two or three years, in particular, will be a great time to be a free agent. And the average NHL salary could easily top $3-million by 2018.

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