Two effectively retired players have been traded so far this offseason, and the reason for those deals has been simple: the salary cap. While the importance of effectively managing the salary cap is ever increasing, the cap itself is not. The NHL and NHLPA officially announced today that the league’s payroll upper limit (salary cap) for next season would be $82.5MM. The league also announced that the lower limit, or salary floor, would be set at $61MM.
The announcement confirms what many believed, that the salary cap would rise only $1MM from this past season’s number, a small increase due to the financial implications of the COVID-19 pandemic on the league. Because the NHL and NHLPA have collectively bargained a 50-50 split in terms of the league’s hockey-related revenue, a portion of player salaries are held in escrow and potentially surrendered to the league in order to ensure the integrity of the 50-50 split. The NHL lost a significant amount of money during the pandemic, in large part due to the fact that they needed to play games in arenas without fans or with significantly reduced capacity crowds. While the NHL’s clubs lost significant sums due to that lost revenue, the players’ salaries were unchanged, meaning the players have a “debt” that they owe to the league in order to ensure a proper 50-50 split, and that “debt” is paid through the escrow system. So, until the players fully “pay off” the “debt” that they owe as a result of the pandemic, the cap will rise only a minimal amount as we see for next season.
For some teams, this “flat-cap” reality has created significant problems. Many teams gave out significant, long-term contracts likely with the idea that those contracts would age better as the salary cap rose. That hasn’t happened yet, though, which is part of why we’ve seen such increased attention to how teams manage the salary cap. For other teams, the salary cap staying flat is largely irrelevant to their own payroll management. Teams like the Buffalo Sabres are actually below the cap floor, meaning their main concern is adding enough salary to stay above the league’s minimum team payroll. The Sabres and other teams now have certainty on the league’s cap floor, and it’s possible that we see more trades like the recent Ben Bishop deal as rebuilding clubs look to reach the cap floor with as much efficiency and as little real cash paid as possible.
No wonder the players wanted Fehr out at the NHLPA, lol!
Players are screwed and the owners get richer…very interesting setup in the NHL
This only happened because of the pandemic, which nobody could’ve seen coming when the CBA was being negotiated. The amount of player salary held in escrow each season isn’t enough to make up for how much the league lost during COVID, hence it’ll take several years for the cap to get back to a normal progression. If the league had done well in terms of revenue, they’d owe the players.
While it’s true what you’re saying here, the league itself deserves some fault here too for not pushing back against some of the covid insanity being pushed by various states and provinces. Playing to empty buildings this year was an absurdity.
The % each side gets is laid out in the CBA.
So, no.
Like Covid was the players fault. I smell Bettman on this outcome.
Wasn’t the owners’ fault either.
Nobody likes it, but I’m 100% behind the idea of maintaining the financial integrity of the league, and this does that.
It may indeed do that, but it also creates a disincentive for the league to increase revenue. If you can just even out the finances thru escrow like this, it can create an auto pilot approach to marketing the game.
Baseball needs a cap floor and ceiling desperately.