Get ready for a skyrocketing salary cap in the NHL, even before the league’s new Canadian TV deal gets factored in.
According to a report on Monday from Chris Botta of the SportsBusiness Journal, NHL revenues for the 2013-14 season are expected to hit $3.7-billion, which would be a 12-per-cent increase over the league’s last full campaign.
With the new TV revenue added in a year later, meanwhile, that figure will for the first time crack the $4-billion mark in 2014-15.
That’s obviously a good business story for Gary Bettman and Co., but the more pertinent result of much higher hockey-related revenues for fans (and general managers) is the impact it’ll have on the cap.
As a reminder, the basic formula for calculating the NHL’s cap under the new CBA is:
((Half of total revenue - player benefits) / 30 teams) x cap inflator x 15 per cent
Revenue we have a pretty good idea of due to Botta’s report and others. I’m told by multiple sources that player benefits are projected to be approximately $120-million, a noteworthy rise due to some of the concessions players got from the league during the lockout.
The inflator is an optional 5 per cent boost that is almost always in play and the 15 per cent takes you from what’s known as the midpoint to the ceiling.
So if revenues come in at exactly $3.7-billion, next year’s cap would be roughly $69.6-million.
If they rise to $4-billion a year later, the cap climbs to nearly $76-million for 2015-16.
(The floor in both cases is approximately $18-million to $20-million lower.)
Those cap numbers are both a bit higher than what we had been hearing previously, as a dip in the Canadian dollar was expected to potentially limit its growth.
That extra $1.5-million or so for each team will make for an even crazier free agent period starting July 1, as there’s not a whole lot of high-end talent available and many teams will be desperate to use some of those new dollars.
Matt Niskanen, among others, is going to become a very wealthy man.
Higher revenues also mean that players will take less of a hit due to escrow. All season, they have had 14 per cent of their paycheques withheld as part of the league’s linkage system, but it’s expected they’ll ultimately only end up having to forfeit somewhere in the neighbourhood of 8 or 9 per cent of their salaries.
That $150-million loss can then be made back up through the “make whole” provision that became a contentious part of the lockout, although it’ll fall to the NHLPA to decide precisely what they’ll do with that money at their summer meeting.
Any escrow pain players feel, in other words, could quickly be alleviated with a lump sum payment.
Credit for all this goes to the league’s strategy of six outdoor games and to the simple good fortune of having four huge markets in the final four. Add in a World Cup of Hockey in 2016, and there should only be good news on the HRR front for the foreseeable future.
At least until the next lockout approaches…