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NHL Economics Part II The Salary Cap
It’s time for Part II of NHL Economics. Part I was an exploration of the development and viability of the NHL economic model. In Part II we examine the National Hockey League Salary Cap.
It has been 1 month since the cash began to flow out of NHL coughers to free agents. Well actually the more appropriate term is probably something along the lines of gushing out. Hundreds of millions of dollars and decades of contracts have been doled out this past month. It has become an annual event in hockey for the 30 clubs to go to join the free agent bonanza at the NHL free agent super store. Every off season teams fight for the premiere talent available and are prepared to offer top end money to those players, but there are also teams that like to dish out a whole lot of silly money. It seems a new trend has developed in the post lockout years; an explosion of over inflated contracts in both term and dollar.
Six not so long years ago the NHL owners locked out the players to try and facilitate economic change. Many teams were losing money and some teams were considering relocating because they could no longer compete with the top spending teams. After a 300+ day slug fest between the NHL and NHLPA a new CBA was ratified and a salary cap was in place.
In theory every team would now be guaranteed economic parity and that parity should in theory transfer onto the ice. With cost certainty in place small market teams would have a better chance at economic viability and all teams would have the same chance at signing the world’s premiere hockey players. The salary cap minimum was set out at 22 million USD and the ceiling was 39 million USD. It seemed all teams would have an equal shot at top players and there would be more than enough to go around.
Skip ahead to July 1 2011; the salary cap is now just north of 64 million dollars and the floor is over 48 million. The salary cap appears to be in some ways successful and in some ways it appears to be failing. Consider this there isn’t one NHL player going into the 2012 campaign that will earn more than 12 million dollars. When you compare top player salaries between the NHL and the other big three leagues the NHL has the lowest top paid players in North American pro sports.
Below are two charts one showing the top 4 cap hits for 2011-2012 and the other showing the top 4 NHL player salaries for 2011-2012
As you can see no single player in the NHL will earn more than 12 million dollars for the upcoming season. This is much better than the other 3 big North American Leagues which will all have players earning more than the NHL maximum. It appears that the NHL salary cap has been effective at stopping runaway upper dollar contracts, but the floor of the salary cap is almost 10 million dollars more than the original cap and many teams have been signing players to mega front end loaded contracts in recent years. So the question must be asked is the NHL Salary Cap effective?
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It has become an annual event in hockey for the 30 clubs to go to join the free agent bonanza at the NHL free agent super store. Every off season teams fight for the premiere talent available and are prepared to offer top end money to those players,
The second fight between these two that is featured on this countdown, but not the last. The two just keep going until they can't. Once Cairns finally got his arm free of Corson's grip, there was no stopping the beating. They go toe-to-toe until Odgers
Toronto Maple Leafs: Luke Schenn Contract Talks Heating Up? The Toronto Maple Leafs and defenseman Luke Schenn have resumed contract talks, according to the National Post, via Pro Hockey Talk. Schenn is a very good young player, and led the NHL in hits
The Post-Gazette points out that Jeffrey was a restricted free agent when he re-signed with the Penguins last month. It's a two-year deal that is a two-way contract for the 2011-12 season -- but he now will require waivers to be sent to Wilkes-Barre.
No, we were the underdog, and we were going to win the fight to keep our hockey team because we couldn't let the outsiders be right about us. I mean, without the Jets we'd be no better than, say, Saskatoon. We lost that fight, for economic reasons.
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